The Global Market for Hydrogen Energy
A number of the world economies are focusing on the use of hydrogen as a central policy to resolve the issues caused by climate change and to meet the targets set by the Paris Climate Act to reach carbon zero by 2050.
Hydrogen has taken off this year as the future green fuel of choice, with governments and businesses betting big that the universe’s most abundant element can help fight climate change.
More than $150 billion worth of green hydrogen projects have been announced globally in the past nine months.
In total, more than 70 gigawatts of such projects are in development, which could require $250 billion worth of investment by 2040, research firm Rystad Energy estimates.
‘The path towards a European hydrogen eco-system step by step:
Today – 2024
From now to 2024, we will support the installation of at least 6GW of renewable hydrogen electrolysers in the EU, and the production of up to 1 million tonnes of renewable hydrogen.
2025 – 2030
From 2025 to 2030, hydrogen needs to become an intrinsic part of our integrated energy system, with at least 40GW of renewable hydrogen electrolysers and the production of up to 10 million tonnes of renewable hydrogen in the EU.
From 2030 onwards, renewable hydrogen will be deployed at a large scale across all hard-to-decarbonise sectors’.
Constatine Levoyannis, Head of Policy at Hydrogen Europe, believes around 14% to 25% of the energy demand could be met by hydrogen in Europe by 2050 and notes the gas represents ‘the missing link’ in the energy sector. You need hydrogen if you want to go to net zero by 2050, it can’t be achieved with just electrification. Hydrogen is absolutely necessary for industries like aviation, maritime or transport with heavy vehicles.
The European Commission has proposed rules to restrict funding for natural gas projects and instead funnel cash into low-carbon technologies to meet climate goals. The rules, which need approval from EU countries and European Parliament, would make more low-carbon technologies eligible for funding.
These include pipelines to carry hydrogen, offshore power grids to link wind farms at sea to countries’ electricity systems, and “smart gas grids” that integrate low-carbon gases into the network.
EU funding under the ‘TEN-E’ rules aims to leverage cash from national governments and the private sector, to help mobilise the massive investments needed to meet Europe’s climate aims – including 65 billion euros in hydrogen infrastructure investments this decade, by the EU’s own estimates.
Separately, The French government has earmarked 7 billion euros ($8.3 billion) this decade to support green hydrogen development. Germany announced a larger 9 billion-euro plan as part of its green recovery efforts.
European Commission is working on a big green energy support programme as outlined in a Policy Statement in July 2020.
The UK Government released it’s 10 Point Plan for a Green Industrial Revolution last year, one of the those point plans specifically referring to ‘Driving the Growth of Low Carbon Hydrogen’.
‘Working alongside partners in industry, our aim is for the UK to develop 5GW of low carbon hydrogen production capacity by 2030 that could see the UK benefit from around 8,000 jobs across our industrial heartlands and beyond. This will be supported by a range of measures, including a £240 million Net Zero Hydrogen Fund, and setting out next year, our hydrogen business models and a revenue mechanism for them to bring through private sector investment’.
To meet its goal to hit climate neutrality by 2050, the U.K. would need to scale up hydrogen capacity to about 270 terawatt-hours from as much as 27-terawatt-hours today, said Julian Critchlow, Director General for Energy Transformation and Clean Growth at the Department for Business Energy and Industrial Strategy.
The UK intends to sell its first ‘green’ government bond this year in a bid to capitalise on growing investor interest in assets designed to fund environmentally-friendly spending. The market for green bonds has expanded rapidly in recent years with about $250 billion (£190 billion) sold globally last year, or 3.5% of global bond issuance.
The Scottish Government published a hydrogen policy statement in December of last year, which suggests the technology could have “an important role in generating new economic opportunities in Scotland”.
Scotland has an estimated 25% of all the wind resource in Europe and is set to increase offshore capacity to 11GW by 2030, along with onshire wind power capacity of 8.4GW. The strategy is also being used to kickstart a recovery from the Covid-19 economic crisis – amid predictions the hydrogen industry could be worth up to £25 billion to the Scottish economy by 2045 with over 300,000 jobs supported by 2045.
The Scottish Government will put forward £100 million over the next five years into the expanding hydrogen sector in a bid to enable the country to become a key player in the clean hydrogen industry.
Scotland will generate enough power from revolutionary green hydrogen to heat 1.8 million homes by 2030. 300 households across Levenmouth will become the first to use zero carbon hydrogen for heating and cooking. Gas company SGN has now lodged a formal planning application for its ambitious project at Fife Energy Park in Methil. If approved, the first 300 customers will be given a free hydrogen connection, free replacement hydrogen appliances and free maintenance over the length of the project. There will be no need to replace radiators or plumbing, however, and household bills will stay the same. Using hydrogen for heat could save energy customers across Britain billions of pounds.
SGN said the hydrogen appliances will connect to existing pipes for zero carbon cooking and heating. Energy regulator Ofgem has provided £18m for the project, hailing it as revolutionary.
SGN said the aim is to demonstrate how renewable energy from offshore wind can create a reliable supply of hydrogen to heat homes.
China is looking to demonstrate its commitment to change through its own hydrogen strategy, detailed in a policy statement in July 2020, in which it wants to compete with the West for clean hydrogen ‘superpower’ status.
The country plans to have 5,000 vehicles powered by fuel cells – which convert hydrogen into electricity to power cars, buses, heating, etc – on the road by the end of the year, and a million by 2030.
In the first half of 2020, central and local governments collectively announced 37 policies related to the “hydrogen economy.” A majority of these policies originated from local rulers, who are even more eager now to seek new “sweet spots” to stimulate local GDP growth.
However, Beijing has taken action, too. The central government has introduced a reward-based scheme to push hydrogen demonstrations in the regional level. Although the long-term effect of the scheme remain in question, some regional government have introduced new hydrogen policies, as triggered by the national funding promises.
China is the world’s biggest greenhouse gas emitter, but last September said it would hit net zero before 2060.This was its first net zero target.
The Middle East
On the edge of the Saudi Arabian desert beside the Red Sea, a futuristic city called Neom is due to be built. The $500bn (£380bn) city is planned to become home to a million people. The City will be powered by green hydrogen, with surplus production transported around the world.
The Middle East, which has the world’s cheapest wind and solar power, is angling to be a major player in green hydrogen.