Global race on hydrogen
Aug 16, 2022
After its hydrogen strategy in 2020[i], the EU has recognized hydrogen as a key technology for achieving policy goals such as the European Green Deal. Its strategy is heavily focused on emissions-free green hydrogen, with a target to install 40 gigawatts of renewable hydrogen electrolyser capacity by 2030.[ii] How Europe is positioned against other global players in the race on hydrogen?
In 2019, around 120 million tonnes of hydrogen were produced globally, two-thirds of which is pure hydrogen and one-third of which is a mixture with other gases. China is the world’s largest producer and consumer of hydrogen, followed by the US and India (Figure 1).
Figure 1. Hydrogen consumption in 2020 (million tonnes per year) Source: IRENA[iii]
Note: Values are derived from the production of ammonia, methanol, refining and direct reduced iron for steel.
Production costs vary from less than €2 to €14/kg for green hydrogen. The low end of these ranges can be achieved most easily in locations with access to low-cost renewable energy plants. Importantly, hydrogen production costs are estimated to decrease by around 50% through 2030, and then continue to fall steadily at a slightly slower rate until 2050. By 2050, green hydrogen production costs in some parts of the Middle East, Africa, Russia, China, the US and Australia will be in the range of €1 to €1.5/kg.[iv]
Motivated by such projections, a growing number of countries and companies are engaged in intense competition for leadership in clean hydrogen technologies.
Motivated by such projections, a growing number of countries and companies are engaged in intense competition for leadership in clean hydrogen technologies. In 2017, just one country (Japan) had a national hydrogen strategy. Today, around 45 countries are devising or have published hydrogen strategies, and several agreements have been concluded between countries to set up tomorrow’s trade routes for hydrogen (Figure 2). Furthermore, countries without specific hydrogen strategies are including hydrogen as part of their decarbonisation policies.
Despite these efforts, we are still far from a world where green hydrogen plays a key role as a source of energy, given that demand for green hydrogen is limited and the infrastructure for green hydrogen is confined to industrial areas. Moreover, global electrolyser capacity amounts to just a few hundred megawatts, which lies significantly below the target of 115 GW by 2030 to meet the GH2 demands for all the published and announced strategies, and again far below the forecasted target of 5 TW by 2050, according to IRENA’s World Energy Transitions Outlook.[v]
Figure 2. Green hydrogen strategies around the world. Source: WEF[vi]
In March 2022, the National Development and Reform Commission (NDRC) in China released a hydrogen energy industry planning document for the period 2021-2035[vii]; instead of a focus on subsidising the purchase of fuel cell vehicles (FCV), the policy will focus on developing China’s FCV sector in four key areas:
Achieving breakthroughs in core technologies and key components along the FCV value chain
Carrying out demonstration projects promoting the use of fuel cells in medium and heavy-duty commercial vehicles
Reducing costs and creating economies of scale across the FCV value chain from hydrogen production through to distribution
Improving the policy and institutional environment to support the adoption of fuel cell vehicles across the whole value chain from capability in core technologies through to construction and operation of refuelling stations.
China consumes and produces more hydrogen than any other country – its current annual usage is more than 24 million tonnes. Most of the country’s production is “grey” hydrogen using fossil fuels, but more than 30 projects involving “green” hydrogen – created using emissions-free renewable energy – have been set up since 2019. China issued its first hydrogen roadmap in 2016, leading to it having the world’s third-largest fuel cell electric vehicle (FCEV) fleet and to the country becoming a pioneer in developing fuel cell trucks and buses. China’s five-year economic plan recognizes hydrogen as one of the six industries of the future. Hydrogen features also in 16 provincial and city energy strategies.[viii]
The United States Department of Energy (US DOE) released its (research-focused) Hydrogen Program Plan in late 2020 and has been tasked to prepare a national strategy and roadmap to facilitate a clean hydrogen economy.[ix] The plan describes the overarching, cross-office framework for its hydrogen research, development, and demonstration (RD&D) activities and provides an overview of core technology areas, challenges, and R&D priorities that the US DOE is pursuing in hydrogen technologies development.
When the government passed into law the Infrastructure Investment and Jobs Act of 2021, it contained a $9.5 billion budget to boost clean hydrogen development. This was followed by the launch of the government’s Hydrogen Earthshot programme, with its so-called “111 goals” to cut the cost of clean hydrogen to $1 per 1 kilogramme in 1 decade. Furthermore, the DOE's USD8 billion programme to develop regional clean hydrogen hubs - H2Hubs will create networks of hydrogen producers, consumers, and local connective infrastructure to accelerate the use of hydrogen as a clean energy carrier over five years.
The US is the world’s second-biggest producer and consumer of hydrogen after China, accounting for 13% of global demand. US annual hydrogen production is currently about 10 million metric tonnes.[x] States such as California supported the country’s FCEV market growth for more than a decade with initiatives like the Clean Vehicle Rebate Programme. California published 2018 their vision of the Californian fuel cell revolution with an emphasis on mobility applications with key milestones including in 2025 – 200 refuelling stations, and 2030 – 1,000 stations, and 1,000,000 vehicles.[xi]
In February 2022, the Ministry of Power released a Notice regarding Green Hydrogen Policy. The Notice contains 13 points aimed at supporting India to meet its climate goals and making India a green hydrogen hub; such points include the waiver of inter-state transmission charges for a period of 25 years to the producer of green hydrogen and green ammonia from projects commissioned before 30 June 2025. The Notice also proposes the establishment of manufacturing zones for green hydrogen/green ammonia production plants. Media reports also noted that in a statement at the time of release of the Notice, the Ministry of Power noted that the initiatives included in the Notice would help in meeting the target of 5 million tonnes of green hydrogen production by 2030.[xii]
Policymakers are considering legislation requiring oil refineries and fertilizer plants to use a minimum quota of green hydrogen in their industrial processes. Green hydrogen could be a huge value-adding opportunity for India as it pivots towards renewables and away from imported fossil fuels.[xiii]
In 2017, Japan became the first country to formulate a national hydrogen strategy as part of its ambition to become the world’s first “hydrogen society” by adopting the fuel across all sectors. In December 2020, METI released Japan’s ‘Green Growth Strategy Through Achieving Carbon Neutrality by 2050’, which includes five cross-sectional policy tools (or support measures) and action plans for 14 sectors. Decarbonisation of both the electricity and non-electricity sectors includes the widespread use of hydrogen (and derivative) energy.[xiv]
The country lacks the natural resources needed to deploy sufficient levels of wind or solar to generate clean hydrogen at scale, so it is developing long-term supply agreements to import hydrogen from overseas. Alongside government investment in hydrogen and fuel cell technologies – totalling $670 million in 2020 – policymakers have set mobility targets of 800,000 FCEVs and 900 hydrogen refuelling stations by 2030.[xv]
South Korea’s 2019 hydrogen roadmap hailed clean hydrogen as a key driver of economic growth and job creation. The nation has its sights set on becoming a global leader in producing and deploying FCEVs and large-scale stationary fuel cells for hydrogen power generation. Its Green New Deal contains an ambitious target of deploying 200,000 FCEVs by 2025 – about 20 times more than in 2020. And last year, South Korea passed the Economic Promotion and Safety Control of Hydrogen Act, the world’s first law aimed at promoting hydrogen vehicles, charging stations and fuel cells. Plans are in place for hydrogen to provide 10% of the energy needs of its cities, counties and towns by 2030, with its share rising to 30% by 2040 before it becomes the country’s largest single energy carrier by mid-century.[xvi]
Net energy importers like Chile, in South America, and African countries such as Morocco and Namibia are emerging as exporters of emissions-free green hydrogen. Meanwhile, fossil fuel exporters like Australia, Oman, Saudi Arabia and the United Arab Emirates are looking to clean hydrogen to help diversify their economies.[xvii]
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[i] https://ec.europa.eu/energy/sites/ener/files/hydrogen_strategy.pdf [ii] https://www.weforum.org/agenda/2022/02/clean-hydrogen-energy-low-carbon-superpowers/ [iii] https://irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook [iv] https://www.pwc.com/gx/en/industries/energy-utilities-resources/future-energy/green-hydrogen-cost.html , https://h2v.eu/analysis/statistics/financing/hydrogen-cost-and-sales-prices [v] https://www.weforum.org/agenda/2022/08/green-hydrogen-climate-change-energy/ , https://irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook [vi] https://www.weforum.org/agenda/2022/08/green-hydrogen-climate-change-energy/ [vii] https://research.csiro.au/hyresource/policy/international/ [viii]https://www.weforum.org/agenda/2022/08/green-hydrogen-climate-change-energy/ , https://irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook [ix] https://research.csiro.au/hyresource/policy/international/ [x] https://www.weforum.org/agenda/2022/08/green-hydrogen-climate-change-energy/ , https://irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook [xi] https://research.csiro.au/hyresource/policy/international/united-states-california/ [xii] https://research.csiro.au/hyresource/policy/international/india/ [xiii]https://www.weforum.org/agenda/2022/08/green-hydrogen-climate-change-energy/ , https://irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook [xiv] https://research.csiro.au/hyresource/policy/international/japan/ [xv] https://www.weforum.org/agenda/2022/08/green-hydrogen-climate-change-energy/ , https://irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook [xvi] https://www.weforum.org/agenda/2022/08/green-hydrogen-climate-change-energy/ , https://irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook [xvii]https://www.weforum.org/agenda/2022/08/green-hydrogen-climate-change-energy/ , https://irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook
Laura Galante & Hywel Jones