The Paris Agreement will not be achieved without the emergence of a large-scale hydrogen economy, according to research.
Rising to the challenge of a hydrogen economy, published by DNV, explored the outlook for emerging hydrogen value chains through a survey of more than 1,100 senior energy professionals. Over the past 12 months, three-quarters (74%) felt the outlook for a hydrogen economy has improved substantially while 67% expect this to continue in the coming year. The energy industry looks set to rise to the challenge of establishing a hydrogen economy, with two thirds (64%) of hydrogen revenue generators and consumers expecting hydrogen to account for more than 10% of their company’s revenue or spending by 2030. Over a quarter (26%) expect it to account for more than 50%.
On the reasons why companies are getting involved in the hydrogen economy, the fact it is a profitable business opportunity (54%) was seen as the main driver, followed by an ethical conviction of the need to contribute to a net zero energy system (46%) and the need to replace a carbon intensive part of the business (46%).
Its role in the fight against climate change was emphasised by respondents with 84% believing it to have the potential to be a major component of a global, low carbon energy system, 73% warning the Paris Agreement will not be achievable without a large-scale hydrogen economy and 74% stating that, whether economically viable or not, it will be impossible to achieve a zero carbon economy in 2050 without hydrogen.
However, despite hydrogen’s value to a future energy system, seven in 10 (71%) feel current ambitions underestimate the practical limitations and barriers to adoption. Infrastructure and cost were highlighted as the biggest hurdles, whereas the right regulations and carbon pricing were deemed to be the biggest enablers. Proving the safety case for hydrogen was also cited as important to scaling the hydrogen economy.
In terms of the future, 80% expect hydrogen and electrification to work in synergy by 2030, helping one another to scale up, while half (47%) think more blue hydrogen will be produced and consumed than green hydrogen by 2030, compared to 35% who believe the opposite. A majority (52%) believe hydrogen markets will be highly regional, without significant imports and exports and intercontinental transport, compared to four in 10 (42%) who feel it will be a fully globalised market by 2030.
As for pricing models, 43% feel hydrogen will be priced like electricity or water, with industry receiving a regulated, stable rate of return. In contrast, 41% expect it to be priced like oil and gas in 2030, with market forces determining a highly variable rate of return.