Hydrogen could be an over €120bn industry in Europe by 2050, according to analysis by Aurora Energy Research.
A new report said that hydrogen demand could grow to 2500 terrawatt-hours by mid-century from 327TWh currently.
Demand for low carbon hydrogen in industry would double to up to 700TWh by 2050, it said.
Aurora said in the 2030s and 2040s there is significant potential for hydrogen use in transportation particularly in heavy duty vehicles, such as buses, trucks, trains and potentially planes, and heating to replace natural gas.
Germany would emerge as the most attractive market for hydrogen development, the researchers found.
The country already has the highest usage of hydrogen across Europe with more than 70TWh, which accounts for over one fifth of the European total, Aurora said.
“Germany released an ambitious hydrogen strategy earlier in 2020, with planned incentives for hydrogen production and usage in industry and a focus on renewables-derived hydrogen,” the company said.
It added that the country also has access to significant salt cavern capacity, which can be used for hydrogen storage, and is already a cornerstone of the European gas grid.
“Future growth in green hydrogen production will be facilitated by strong growth in solar and wind capacity in the coming years,” the report added.
The Netherlands, UK and Norway are also identified as strong markets for both green and blue hydrogen – green hydrogen is developed by renewable energy, while blue is made from natural gas with carbon capture.
France, Spain and Portugal could emerge as leaders in green hydrogen production, the report said.
Aurora Energy Research head of global commodities Anise Ganbold said: “In the last year and a half, the buzz around hydrogen has been picking up quickly.
“Hydrogen from low-carbon sources could play a key role in decarbonising Europe’s heaviest polluters, and some projects are already underway.
“However, there is huge potential for more investment – we estimate the market size of the hydrogen economy in Europe at up to €120m by 2050.
“Currently, the European market for hydrogen is small, and limited largely to oil refineries and ammonia for fertilisers.
“Aurora’s analysis suggests the market could grow eightfold by 2050, to 2500TWh per year.
“Some projects are already underway to scale up hydrogen production, particularly for ‘green’ hydrogen production, which uses renewable electricity to split water.
“To decarbonise Europe by 2050, significantly more investment will be needed into all segments of the hydrogen supply chain.
“Our analysis concludes that Germany is now the leader in Europe, based on its developed policy, strong hydrogen demand outlook and significant growth in renewable electricity generation.”