Hydrogen production gap creates huge investment opportunity
First the bad news: The world needs more clean hydrogen than is currently forecast to be produced over the coming 3 decades if it is to meet the Paris climate goals and keep global warming to below 1.5 degrees Celsius.
The good news: That leaves a huge opportunity to invest in hydrogen production and blow past those forecasts.
That’s the conclusion of a recent report by US-based assurance and risk management specialist DNV. In Hydrogen Future to 2050 , DNV predicts hydrogen should meet about 15% of energy demand by 2050 but is currently set to reach just 5% by that time.
The world needs more clean hydrogen than is currently forecast to be produced over the coming 3 decades if it is to meet the Paris climate goals and keep global warming to below 1.5 degrees Celsius.
Even to meet 5% of energy demand, $6.8 trillion will be invested in clean hydrogen production by 2050, with a further $180 billion spent on hydrogen pipelines and $530 billion on building and operating ammonia terminals, according to the report.
The dominant source of clean hydrogen will be electrolysers, which use renewable electricity to split water into hydrogen and oxygen, while so-called blue hydrogen, derived from natural gas with carbon capture, will account for about one quarter of production by 2050, DNV says.
Regional transport of hydrogen will mainly happen via pipelines, of which between 50% and 80% will be repurposed from natural gas pipelines. That’s because repurposing will cost just 10%-35% as much as building a new hydrogen-ready pipeline, according to the report.
However, pipelines are rarely suitable for intercontinental transport, so seaborne transportation will be the primary method of distribution. Because ammonia is safer and more convenient to transport over long distances, 59% of it will be used for inter-regional transportation, with the remaining consumed within region, DNV forecasts.
The biggest consumers of clean hydrogen will be transport and manufacturing, according to DNV. Transport will consume almost 56% of clean hydrogen production, the majority of which will be in the form of hydrogen derivatives such as ammonia, methanol and e-kerosene in the aviation, maritime and trucking sectors.
Regional transport of hydrogen will mainly happen via pipelines, of which between 50% and 80% will be repurposed from natural gas pipelines.
Manufacturing will take about one third of clean hydrogen output, with the remainder used in buildings, electricity generation and other energy uses.
DNV’s report echoes what other experts are saying. The International Renewable Energy Agency sees the global hydrogen trade being responsible for meeting a quarter of global energy demand by 2050, around half of which will be via pipelines and half via ammonia shipping.
IRENA estimates that about 3% of the $3 trillion a year that needs to be invested in the energy system by 2030 will need to be funnelled into hydrogen. That’s about $90 billion a year or $810 billion in total.
The dominant source of clean hydrogen will be electrolysers, which use renewable electricity to split water into hydrogen and oxygen
The International Energy Agency estimates $1.2 trillion of investment in clean hydrogen is needed through 2030.
The message is clear: the world needs clean hydrogen to keep the world from catastrophic heating. And that requires serious investment. Let’s be part of the solution.
To learn more about HYCAP click here.