The International Energy Agency (IEA) recently published its ‘Global Hydrogen Review 2022’ report which depicts a positive picture of the global hydrogen market. The report analyzes the global hydrogen market and shows that the momentum behind hydrogen continues to be strong. The world is beginning to recognize and adopt hydrogen as a key option to achieve the carbon-neutrality targets that the governments all around the world have announced in recent years.
Some of the key takeaways from this report are as follows:
1. Hydrogen demand:
The global hydrogen demand increased 5% in 2021, as compared to the previous year which shows that the hydrogen market is finally recovering from the effects of the pandemic. Most of the increase came from hydrogen usage in traditional applications, particularly in refining and chemicals sector whereas demand for hydrogen in new applications such as the heavy-duty transport, power generation and production of hydrogen-derived fuels was very low i.e. around 0.04% of global hydrogen demand. Among new applications, hydrogen usage in the road transport sector topped the list. The report terms China as the world’s largest consumer of hydrogen followed by USA, Middle East, Europe and India.
2. Hydrogen production:
Much of the increase in hydrogen demand was met by hydrogen produced from unabated fossil fuels (grey hydrogen). The production of low-emission hydrogen was less than 1 Mt in 2021 and almost all of it came fossil fuels with carbon capture, utilization and storage (blue hydrogen). Natural gas without CCUS is the main technique being used to produce hydrogen and it accounted for 62% of the total hydrogen production in 2021. However, a lot of low-carbon hydrogen projects are being announced and hence, the pipeline of projects for the production of low-emission hydrogen is growing at an impressive speed.
3. Current state of hydrogen projects:
A significant portion of hydrogen projects are currently at advanced planning stages, but only 4% of the total announced projects globally are under construction or have reached final investment decision (FID). Among the key reasons for this is the uncertainty related to hydrogen demand, lack of regulatory frameworks and non-availability of infrastructure to deliver hydrogen to end users.
4. Electrolyzer Manufacturing Capacities and cost of electrolyzers:
According to IEA, expanding electrolyzer manufacturing capacity is critical to rolling out of hydrogen supply chain. Today, electrolyzer manufacturing capacity sits at nearly 8 GW/year, and based on industry announcements it could exceed 60 GW/year by 2030. There is a lot of uncertainty regarding how the hydrogen market plays out over the next few years but according to IEA, if electrolyzer projects in the pipeline are realized and the planned scale-up in manufacturing capacities takes place, costs for electrolyzers could fall by around 70% by 2030 as compared to today.
More governments are starting to consider hydrogen as a key aspect in the transition towards clean energy. Nine new national hydrogen strategies have been released since September 2021. Some countries are now moving towards the next step which is the implementation of these policies and are developing regulations or legislations to support the development and adoption of hydrogen. The US Inflation Reduction Act is the most notable among these.
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