Global perspectives on hydrogen market growth

clean hydrogen market
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Hydrogen has become one of the hottest topics in the energy sector as hard-to-decarbonise industries are embracing clean energy solutions. A digital panel discussion, hosted by Power Engineering International, explored how markets are developing around the world, with a specific focus on Europe, Africa and the United States.

Europe

Godart van Gendt, Senior Expert, McKinsey & Company & board member of the Asia”Pacific Hydrogen Association kicked off the conversation by focusing on the McKinsey & Company Path to Net Zero report, which looks at the least cost pathway to the energy transition.

The report shows the combination of and business cases for various renewable energy solutions that will reduce emissions and create value through their implementation. Hydrogen’s share of annual abatement starts slow in the first decade but grows rapidly until 2050.

According to Van Gendt, more hydrogen and electrification will be used in transport, buildings and industry, with green hydrogen reaching cost parity against blue hydrogen by early 2030 (taking into account the dynamics of domestically produced versus imported hydrogen).

Van Gendt: “We see a doubling of energy demand between now and 2050 [in Europe], with 60% driven by direct electrification, 45% driven by hydrogen demand, with hydrogen growth increasing after the first decade.

“The question is how long will it take for Europe to build that backbone to deliver low cost hydrogen … to develop the infrastructure to make hydrogen a greater part of the energy mix.”

Van Gendt explained that green hydrogen will eventually be the cheapest hydrogen, although differing LCOE of solar and wind will cause variations in market growth.

Andreas Gunst, Partner, DLA Piper, tackled the all-important question of how to map the development of the hydrogen supply chain into the current and future regulatory frameworks. Gunst delved into the value chain from production to consumption, looking at legislative and licensing requirements, the differences between European and international storage and transportation regulations and how the existing body of law in Europe and APAC is impacting the growth of hydrogen.

According to Gunst: “There exists a regulatory straightjacket into which hydrogen tries to fit,” although in Europe whitepapers and the Green Deal are making recommendations allowing flexibility to develop outside the regulatory sphere.

Gunst also covered the important aspect of hydrogen bankibility and how to overcome certain risks presented by legislative frameworks and the internal energy market.

USA

Connor Dolan, Director of External Affairs, Fuel Cell and Hydrogen Energy Association, USA, discussed the recently published report, Roadmap to the US Hydrogen Economy – a 10-year plan for the US hydrogen economy.

Dolan started by mentioning the main benefits of hydrogen.

According to Dolan, hydrogen has the potential to play a vital grid balancing mechanism in the US. In combination with renewable energy generation, it has the potential for seasonal and large-scale energy storage requirements.

Dolan mentioned that a number of developments are currently underway to expand the use of hydrogen in the transportation sector and hydrogen is being used in a blend with natural gas to power residential and commercial buildings. There are indeed a number of use cases, some are more mature than others.

Dolan: “The roadmap lays out a high growth pathway for hydrogen. Today we have about 11 million metric tonnes of hydrogen in the market… by 2050 we expect 14% of US energy demand could be from hydrogen, showing a huge growth potential for this industry.”

Hydrogen holds massive benefits for job creation, emissions reduction and economic stimulus, however, Dolan explains that in order to make progress, dependable, tech-neutral decarbonisation goals are needed, based on sound policy and supported by investment from Federal and state government. Development of large-scale infrastructure for refuelling stations is also required.

Africa

Ian Fraser, CEO, RTS Africa Group & Founding Member of African Hydrogen Partnership described the potential for a hydrogen economy on the African continent.

Fraser highlighted the importance of and the need for practical solutions and applications in the context of hydrogen in Africa. One of the main applications is for long-distance heavy road transport. Powering cell phone towers and distributed urban power supply were also highlighted as areas of potential.

According to Fraser: “Many African countries lack the excess capacity to produce the hydrogen required, in fact, the continent has many challenges to face however, the market must remain optimistic.” He explained that the continent has the space for both wind and solar to produce renewable energy for green hydrogen, a luxury not available to many European countries.



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