Hydrogen is at risk of being “the great missed opportunity” of the energy transition, a report has warned, unless governments make urgent, significant policy interventions.
On 14 June, DNV published its Hydrogen Forecast to 2050 report, where it predicted the amount of hydrogen in the energy mix to only by 0.5% in 2030 and 5% by 2050. Therefore, to meet targets under the Paris Agreement, hydrogen uptake faces having to triple to meet 15% of energy demand by mid-century. Green hydrogen is set to be the dominant form of production, accounting for 72% of output, requiring a surplus of renewable energy to power an electrolyser capacity of 3,100GW. This, it noted, is more than twice the total installed generation capacity of solar and wind today.
In the shorter term, blue hydrogen has a greater role to play, accounting for around 30% of total production in 2030. An increase in renewable energy capacity, as well as a reduction in prices, will lead to its competitiveness dropping.
It went on to offer a more regional breakdown (pictured above) of how it foresees hydrogen’s future, with Europe set to be the forerunner – hydrogen will take 11% of the energy mix by 2050. This is as enabling policies kickstart the scaling of hydrogen production, while stimulating end-use. While OECD Pacific (8%) and North America (7%) have strategies, targets and funding on the supply-side, they have lower carbon prices and less concrete targets and policies. They are followed by Greater China (6%), with these four regions set to consume two thirds of global hydrogen demand by 2050.
It further mapped out how global spend on producing hydrogen for energy purposes, between now and 2050, is set to be $6.8tn. An additional $180bn will be spent on hydrogen pipelines, with $530bn on building and operating ammonia terminals, based on forecasts from DNV. It noted that cost considerations will mean that 50% of hydrogen pipelines globally are repurposed from natural gas pipelines. This is down to the cost to repurposing pipelines being 10-35% of the cost of constructing new ones from scratch.
Pipelines will be used to transport hydrogen between countries, over medium distances, but not between continents. It also noted that global hydrogen trade will be limited by the high cost of liquefying hydrogen for ship transport and the low energy density of hydrogen. Ammonia, which is more stable and can be transported by ship, will be traded globally. Other hydrogen derivatives such as methanol, alongside ammonia, will not scale until the 2030s, noted DNV, though are crucial to decarbonising the likes of shipping and aviation.
Elsewhere, it does not forecast hydrogen uptake in passenger vehicles, while sees limited uptake in power generation. Hydrogen for heating of buildings is unlikely to scale globally, but will see early uptake in some regions where there is already extensive gas infrastructure.
Looking ahead, with low and late uptake of hydrogen foreseen, it emphasised the need for stronger policies to ensure hydrogen can scale beyond this present forecast. This would include stronger mandates, demand-side measures that give confidence in offtake to producers, and higher carbon prices. Public perception risk and financial risk are also important to manage to ensure increased hydrogen uptake in future.
