One sentence summary – Global hydrogen use in 2022 was 95 million tonnes, with only 0.7% being clean hydrogen, while hydrogen production emitted over 900 million tonnes of CO2; initiatives to boost demand for clean hydrogen accounted for only 14 million tonnes, and there is currently no dedicated coalition focused on encouraging the adoption of low-emission hydrogen in the chemical and refining sectors.
At a glance
- Global hydrogen use reached 95 million tonnes in 2022, with clean hydrogen accounting for only 0.7% of this demand.
- Hydrogen production in the same year emitted over 900 million tonnes of CO2.
- Initiatives to boost demand for clean hydrogen only accounted for 14 million tonnes, with less than half targeted at existing hydrogen uses.
- Contracts for the offtake of two million tonnes of clean hydrogen have been signed, but over half are still under preliminary agreements.
- The International Energy Agency projects hydrogen use to grow by 6% annually up to 2030, reaching 150 million tonnes per year.
The details
Global hydrogen use hit 95 million tonnes in 2022, with clean hydrogen making up a mere 0.7% of this demand.
Hydrogen production in the same year resulted in the emission of over 900 million tonnes of CO2.
Despite initiatives to boost demand for clean hydrogen, policies only accounted for 14 million tonnes.
Less than half of this policy-driven demand was targeted at existing hydrogen uses.
Contracts for the offtake of two million tonnes of clean hydrogen have been signed.
However, over half of these contracts are still under preliminary and non-binding agreements.
Some companies are developing three million tonnes of annual production capacity to meet their own demand.
Currently, there is no dedicated coalition focused on encouraging the chemical and refining sectors to adopt low-emission hydrogen at scale in the short term.
The International Energy Agency’s scenario for achieving net-zero emissions by 2050 projects hydrogen use to grow by 6% annually up to 2030.
This would result in hydrogen use reaching 150 million tonnes per year.
Despite these projections, project development for low-emissions hydrogen production capacity is lagging behind.
Only 4% of announced capacity has seen final investment decisions taken.
Inflation and the rising cost of capital are expected to be roadblocks for development in the short term.
Increasing the weighted average cost of capital from 5% to 10% would result in nearly a 40% increase in the cost of renewable hydrogen production.
The initial cost of projects that have taken final investment decisions has been revised upwards by 50% or more due to inflationary pressure.
However, there is potential for cost reduction in the future.
The cost of installing electrolyser equipment could decrease by 50% by 2025 and 60% by 2030 if manufacturing capacity increases in line with announcements.
Only 8% of announced electrolyser manufacturing capacity expansions have taken final investment decisions.
China has made significant progress in electrolysis capacity deployment.
1.2GW is expected to be installed by the end of this year, representing over 50% of global capacity.
Outside of China, there is a time lag between when subsidies are announced by entities like the US and the EU and when projects can access them.
The International Energy Agency recommends four key actions to address the lack of momentum in replacing fossil-based hydrogen with low-carbon alternatives.
These actions include promoting research and development, fostering international collaboration, providing policy frameworks for investment certainty, and supporting the development of infrastructure and end-use markets.
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A pixelated globe with a rising hydrogen molecule symbolizing global hydrogen use reaching new heights in 2022.
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| hydrogeninsight.com |
|---|
| – Global hydrogen use reached 95 million tonnes in 2022, with clean hydrogen making up only 0.7% of this demand. |
| – More than 900 million tonnes of CO2 were emitted due to hydrogen production in 2022. |
| – Policies to stimulate demand for clean hydrogen only account for 14 million tonnes, less than half of which is focused on existing hydrogen uses. |
| – Two million tonnes of clean hydrogen have been contracted for offtake, but more than half of this is under preliminary, non-binding agreements. |
| – Three million tonnes of annual production capacity is being developed by some companies to meet their own demand. |
| – There is no dedicated coalition targeting the chemical and refining sectors to adopt low-emission hydrogen at scale in the short term. – |
| The International Energy Agency’s scenario for net zero emissions by 2050 forecasts hydrogen use to grow 6% annually up to 2030, reaching 150 million tonnes a year. – Project development for low-emissions hydrogen production capacity is lagging behind, with only 4% of announced capacity seeing final investment decisions taken. – Inflation and the rising cost of capital are expected to be roadblocks for development in the short term. |
| – Increasing the weighted average cost of capital from 5% to 10% would result in a nearly 40% increase in the cost of renewable hydrogen production. |
| – |
| The initial cost of projects that have taken final investment decisions has been revised upwards by 50% or more due to inflationary pressure. – |
| The cost of installing electrolyser equipment could decrease by 50% by 2025 and 60% by 2030 if manufacturing capacity increases in line with announcements. |
| – Only 8% of announced electrolyser manufacturing capacity expansions have taken final investment decisions. – China has seen a massive ramp-up in electrolysis capacity deployment, with 1.2GW on track to be installed by the end of this year, equivalent to more than 50% of global capacity. – Outside of China, there is a time lag between when subsidies are announced by entities like the US and the EU and when projects can access them. – |
| The International Energy Agency recommends four actions for governments and companies to address the lack of momentum in replacing fossil-based hydrogen with low-carbon alternatives. |
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