GlobalData: clean hydrogen production set to increase

GlobalData’s latest report, ‘Hydrogen Transition Outlook and Trends – Q3 2021’, reveals that recent announcements have brought the total capacity of low carbon projects in the pipeline to over 20 million tpy. Out of this capacity, 85% is from ‘green hydrogen’ projects, those where hydrogen is produced from renewable sources, while the remaining 15% is contributed by ‘blue hydrogen’ projects, which produce hydrogen from natural gas but are equipped with carbon capture technology.

The majority of the capacity in the pipeline comes from projects that are still in the feasibility stage and not certain to go ahead. GlobalData’s 2030 outlook envisages low carbon hydrogen capacity reaching 14 million tpy in a high case scenario while the low case scenario would see more measured growth to 8 million tpy, though still over 10 times higher than the currently active capacity of 0.6 million tpy.

Will Scargill, Managing Energy Analyst at GlobalData, comments: "Low carbon hydrogen can offer path to reduced emissions in the refining and chemicals sectors, as well as decarbonization of hard to abate sectors such as heavy transport and industry. The sector has the potential for rapid growth this decade, with green hydrogen leading the charge. However, the pace will depend on progressing major projects through to investment, particularly as the pipeline is relatively top-heavy with the top 10 projects representing 65% of pipeline capacity."

In addition to progressing production capacity developments, key determinants of low carbon hydrogen sector growth will be policy support and development of the wider value chain. The EU announced an ambitious hydrogen strategy in 2020 and many governments globally are developing policies to capture a share of this growth market and accelerate their own energy transitions.

Partnerships are also springing up between companies representing different parts of the value chain to build a coherent strategy for development. This includes collaborations between companies developing production capacity and those with potential customers to underpin these developments. 2Q2021 alone witnessed over three times the number of hydrogen-related partnership deals as in 1H2020.

Mr Scargill concludes: "A rapid build out of the low carbon hydrogen sector will rely on a collaborative effort between companies and with governments. This should allow commercialisation of the sector by developing new demand segments alongside capacity, scaling up technologies and bringing costs down."

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