Hydrogen’s Growing Role In Heavy Industry

Low-carbon hydrogen is gaining traction as a highly promising solution to hasten the decarbonisation of high-emitting industries and promote a more environmentally friendly future. According to a recent report by the Capgemini Research Institute, 62% of heavy industry companies in various sectors are considering the implementation of low-carbon hydrogen to replace carbon-intensive systems. Energy and Utilities companies, on average, anticipate that low-carbon hydrogen will account for 18% of total energy consumption by 2050, and they are mobilizing investments in the hydrogen value chain to advance infrastructure development, cost-effective electrolysers, and fuel cells.

The report highlights the widespread belief among organizations that low-carbon hydrogen will play a significant role in achieving emissions and sustainability objectives over the long term. Specifically, 63% of Energy and Utilities (E&U) organizations regard low-carbon hydrogen as crucial to decarbonizing economies, and 62% believe it can reduce reliance on fossil fuels and boost energy independence.

Survey respondents indicate that low-carbon hydrogen has the potential to satisfy as much as 55% of hydrogen mix targets by 2050. E&U organizations are allocating an average of 0.4% of their total annual revenue towards low-carbon hydrogen initiatives by 2030, with the majority of investments focused on hydrogen energy transport and distribution (53%), production (52%), and research and development (45%).

Energy and Utilities companies, on average, anticipate that low-carbon hydrogen will account for 18% of total energy consumption by 2050

Group ClimateTech Lead at Capgemini, Florent Andrillon, says “Low-carbon hydrogen is crucial in the clean energy mix for decarbonising priority high-emission sectors such as industry and transportation, and thus combating global warming. Scaling the initiatives we see today will require significant investment in R&D, collaboration across the value chain, clear partnership strategies, and tailored business-case assessments. Organizations must establish the right collaboration throughout the value chain, secure their offtake, develop hydrogen-competence centers, and harness technologies like simulations, digital twins and traceability solutions to scale their low-carbon hydrogen initiatives successfully. While achieving measurable success won’t be easy, we have the opportunity to create a decarbonized future.”

Over the last three years, the global demand for hydrogen has surged by over 10% across various industries and regions. This trend is forecasted to persist, especially in conventional hydrogen uses like petroleum refining, chemicals, and fertilizers. Petroleum refining firms, in particular, project a considerable impact on their industry by 2030, with 94% anticipating such an effect. Likewise, 83% of chemical and fertilizer organizations predict a similar outcome.

The rise in hydrogen demand continues apace from applications including heavy-duty transportation, aviation, and maritime. Although these sectors may take longer to mature, organisations in these fields are optimistic about their potential and exploring innovative cost-saving measures and business models to enable scalability.

However, the most significant potential for low-carbon hydrogen lies in sectors where electrification is not feasible, and localized volumes can sustain use cases in the near term. For example, 71% of E&U organizations view low-carbon hydrogen as a viable solution for energy storage from intermittent renewable sources. It acts as a battery, enabling renewable energy, such as wind and solar, to power more applications.

The rise in hydrogen demand continues apace from applications including heavy-duty transportation, aviation, and maritime.

The rising demand for low-carbon hydrogen is accompanied by known challenges in its production. Meeting the necessary investments and growing supply and demand requires partnerships, ecosystems, and collaboration between established and new hydrogen players, as well as transparent and open markets.

Despite the challenges in sourcing low-carbon electricity and the high costs of electrolysers, E&U organisations are optimistic about low-carbon hydrogen. Almost half (49%) of these organizations expect its cost to decrease steadily by 2040.

Furthermore, many organizations are still in the early stages of exploring low-carbon hydrogen, with most at the proof-of-concept or pilot phase. Only a small percentage have fully integrated low-carbon hydrogen projects into their operations. To achieve widespread adoption and commercialisation of low-carbon hydrogen, crucial infrastructure and engineering challenges must be overcome, in addition to addressing cost and energy issues. But the enormous scale of the opportunity in the growing hydrogen sector for investment, decarbonisation and job creation is evident.

Different sectors face unique challenges when it comes to scaling up the use of hydrogen. For instance, in heavy transport, 65% of organisations cite the need to scale up the production of hydrogen fuel cells as the biggest infrastructure and engineering challenge. In aviation, 58% of respondents report the need for aircraft design modifications to accommodate low-carbon hydrogen as a fuel source. Meanwhile, 72% of those in the steel industry say that significant infrastructure upgrades are necessary for large-scale hydrogen-based steel production.

Apart from infrastructure, engineering, and cost challenges, growing demand for specialized skills and expertise is also identified as a significant obstacle to scaling up the use of hydrogen.

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