The International Energy Agency (IEA) said green hydrogen production levels could be increased “substantially” by 2030 if all announced projects are realised and greater efforts are made to encourage uptake.
There are two approaches to producing hydrogen: blue hydrogen (made by splitting natural gas into hydrogen and carbon dioxide) and green hydrogen (produced by splitting water via electrolysis into hydrogen and oxygen).
Green hydrogen requires a large energy input from a renewable source to be considered carbon neutral, but blue hydrogen cannot be described as a zero-emission fuel source unless coupled with significant carbon-capture efforts. One study showed that hydrogen derived from fossil fuels can actually be more carbon intensive than using gas.
Some 95 per cent of today’s commercially produced product is blue hydrogen made by steam-methane reforming using natural gas feedstock.
The number of announced projects for low-emissions hydrogen continues to expand rapidly while more than 40 countries worldwide have set out national hydrogen strategies to date.
But installed capacity and volumes remain low as developers wait for government support before making investments, the IEA said. As such, low-emissions hydrogen still accounts for less than 1 per cent of overall hydrogen production and use.
The global energy crisis, high inflation and supply chain disruptions are causing new projects to face rising costs that threaten long-term profitability. This confluence of factors is particularly detrimental for an industry that faces high upfront costs related to equipment manufacturing, construction and installation.
But, despite economic headwinds, the IEA found that the deployment of electrolysers – used to make green hydrogen – is beginning to accelerate.
By the end of 2022, electrolyser capacity for hydrogen production reached almost 700MW. Based on projects that have reached final investment decision or are under construction, total capacity could more than triple to 2GW by the end of 2023, with China accounting for half of this. If all announced projects are realised, a total of 420GW could be achieved by 2030, an increase of 75 per cent compared with the IEA’s 2022 review.
“We have seen incredible momentum behind low-emissions hydrogen projects in recent years, which could have an important role to play in energy-intensive sectors such as chemicals, refining and steel,” said IEA executive director Fatih Birol.
“But a challenging economic environment will now test the resolve of hydrogen developers and policymakers to follow through on planned projects. Greater progress is needed on technology, regulation and demand creation to ensure low-emissions hydrogen can realise its full potential.”
The report also finds that efforts to stimulate demand for low-emissions hydrogen are lagging behind what is needed to meet climate ambitions. Hydrogen use globally reached 95 million tonnes in 2022, an increase of nearly 3 per cent compared with the previous year.
There was strong growth in demand in all major consuming regions except Europe, which suffered a blow to industrial activity because of the sharp increase in natural gas prices.
