Investment has reached a critical threshold, with urgent, decisive policy action needed to fully unlock hydrogen’s climate and societal benefits, a report has said.
On 3 November, the Hydrogen Council published Hydrogen for Net Zero, highlighting that hydrogen can provide the lowest cost decarbonisation solution for over a fifth of final energy demand by mid-century, making it an essential solution to securing a 1.5°C future. The next decade could see global demand for renewable and low carbon hydrogen grow by 50%, translating into an annual CO2 emissions abatement equivalent of the total volume of CO2 emitted by the UK, France and Belgium. However, a significant scaling up of production, infrastructure and end uses is needed now to make this a reality.
It outlined how with an annual abatement potential of 7GT in 2050, hydrogen would be capable of contributing 20% of the total abatement required in 2050. This would call for the use of 660mn metric tons (MT) of renewable and low carbon hydrogen by mid-century, which is equivalent to 22% of global final energy demand.
Scaling through to 2030, therefore, will be critical to meet long-term targets and unlock cost efficient decarbonisation opportunities, with use of clean hydrogen by this point capable of abating as much as 730MT of CO2 annually.
By 2030, it estimated that 75MT of clean hydrogen will be needed, replacing 25MT of grey hydrogen in ammonia, methanol and refining; 60MT of coal used for steel production; and 50bn litres of diesel in ground mobility. This mix of renewable and low carbon hydrogen would require 200-250GW of electrolyser capability, 300-400GW of new renewables and 45-55MT of low carbon hydrogen production capacity and associated carbon infrastructure to store 350-450MT of CO2 a year.
With 260GW of renewable capacity commissioned in 2020, a step up in deployment is needed to meet rising electrification demand. It further noted that this deployment of clean hydrogen will not happen without the right regulatory framework being in place, with both governments and businesses needing to act. There is a need for sustainable policies, such as mandates and robust carbon pricing, the development of large-scale infrastructure and targeted support, and de-risking of large initial investments.
Such investments will pay off, it assured, with scaling hydrogen up key to reducing costs through economies of scale, making it available to end-users through the necessary infrastructure and ultimately, making hydrogen a competitive, available, cost efficient decarbonisation vector.
In terms of how likely it is that the necessary scaling occur, a significant gap to the net zero scenario remains, despite strong momentum across the globe. Over 520 projects were announced in 2021, translating to 18MT of clean hydrogen supply, as well as infrastructure and uses, totalling around $160bn. However, this accounts for just 25% of what is needed to achieve the deployment laid out in the report, leaving a gap of $540bn. Yet, when considering that the total figure of $700bn accounts for only 15% of cumulative investments in upstream oil and gas in the same timeframe, the report stressed this means that the required investment levels are possible.