The pace of development of green hydrogen is not fast enough to meet global energy demand despite developers announcing 50 projects in the last year, according to a new study.
The Institute for Energy Economics and Financial Analysis (IEEFA) analysed the 50 projects and found the supply of global green hydrogen is likely to be three million tonnes a year, while global demand is forecast to reach 8.7 million tonnes annually by 2030, indicating an “incredible supply shortfall”.
The report identifies production of green hydrogen as a “key technology enabler” for integrating ever cheaper but intermittent renewables.
Author of the report IEEFA Yong Por said: “Asia, Europe and Australia are backing the majority of new green hydrogen projects.
“The EU is also a heavy lifter in the new global technology race, with green hydrogen projects backed by improving economics, falling renewable costs, the option to produce hydrogen on-site economically, and existing gas pipelines which can be used for transport to meet local demand.
“However, many of the 50 newly announced green hydrogen projects could face delays due to uncertain financing, cumbersome joint venture structures, and unfavourable seaborne trade economics.”
Por added, “More public-private efforts are necessary for green hydrogen supply to overcome apparent obstacles.”
Por’s analysis found that for new projects to be successful, the manufacture of electrolysers, fuel cells and associated equipment (hydrogen compressors, boilers, drive trains, storage tanks, bunkering facilities, pipelines, sensors, measuring equipment and liquefaction plants) would need to be significantly scaled up, while seaborne hydrogen transportation costs would need to be “substantially lowered”.
“Governments will also need to get behind these new projects and work hand-in-hand with industry as the world transitions away from fossil fuels into cleaner renewable energies,” said Por.
The study found China, Japan and South Korea’s strategies are primarily focussed on blue hydrogen (produced from fossil fuels with carbon capture) or grey hydrogen (which relies on fossil gas and coal-based feedstocks with zero carbon abatement), rather than the renewables-rich green hydrogen.
Por found the EU’s July 2020 hydrogen plan to be the most ambitious, being the only plan with a key focus on green hydrogen in the longer term.
The study also noted that Saudi Arabia is pioneering a “world-scale” green ammonia project located by the Red Sea, putting it in a “prime position” for transport to Europe, with Australia having the “most ambitious hydrogen export plans that are well supported by government agencies”.
Por added: “Governments need to urgently back this industry by developing policy settings encouraging private industry to invest the much needed capital, given the industry must ‘learn by doing’.
“Until then, we are likely to see project delays as proponents struggle with still absent project viability, evidenced by only 14 of the 50 new projects having started construction with 34 at a study or memorandum of understanding stage.