Low-emission hydrogen production potential for massive growth by 2030

With announced projects indicating an annual production of 38 Mt, primarily from electrolysis and low-emission electricity or fossil fuels with carbon capture, the low-emission hydrogen production is expected to increase. China leads in electrolyser deployment, accounting for a significant portion of global capacity.

This according to the Global Hydrogen Review 2023, an annual publication by the International Energy Agency that tracks hydrogen production and demand worldwide. It also contains summaries of developments in infrastructure, trade, policy instruments, investment and innovation.

However, cost challenges, inflation, and slow implementation of support schemes are hindering progress. Hydrogen demand is increasing, mainly in traditional applications, and efforts to stimulate low-emission hydrogen use are falling short of meeting climate goals. Private sector initiatives and international cooperation are emerging but remain at a small scale. Despite strong political momentum, actual deployment of low-emission hydrogen lags, and substantial growth is needed to align with ambitious net-zero scenarios.

Some of the key takeaways from the report:

  1. Potential Growth of Low-Emission Hydrogen Production: Projections suggest a substantial growth in low-emission hydrogen production by 2030. Announced projects indicate a potential annual production of 38 million tonnes (Mt) of low-emission hydrogen, with electrolysis and low-emission electricity contributing 27 Mt, and fossil fuels with carbon capture contributing 10 Mt. The report also include a database of all hydrogen projects worlwide. It is fre to download here.
  2. Cost Challenges and Deployment Hurdles: Despite this potential, cost challenges pose a significant obstacle. Rising inflation is increasing capital and financial costs, impacting project viability. Delayed project execution due to supply chain disruptions and uncertainty in regulations further compounds the issue.
  3. Government Initiatives and Funding Challenges: Governments are offering funding to support large-scale projects, but slow implementation and lack of clarity in regulations delay investment decisions. Funding gaps persist due to increased costs and larger investments needed to compete with unabated fossil fuel-based hydrogen.
  4. Low-Emission Hydrogen Demand and Slow Adoption: While demand for hydrogen has surged, especially in traditional sectors, low-emission hydrogen uptake remains slow in existing applications, constituting only 0.7% of total hydrogen demand. Efforts to stimulate demand for low-emission hydrogen are falling short of climate goals.
  5. Need for International Cooperation and Scaling Up Usage: Collaborative efforts are crucial to aggregate demand for low-emission hydrogen and enable its trade. Scaling up usage is essential to realize the potential of low-emission hydrogen, necessitating coordinated actions and infrastructure development.
  6. Balancing Momentum and Deployment: Despite strong political support and growing momentum for low-emission hydrogen, its actual deployment lags behind. Bridging this gap is vital, requiring efficient utilization of funding, streamlined regulatory processes, and concerted efforts to drive large-scale adoption of low-emission hydrogen technologies.