International investment in Hydrogen continues to gain traction.
With recognition of hydrogen’s valuable contribution to reducing GHGs and decarbonising sectors such as transport, energy, and manufacturing; countries across the globe are investing heavily in their hydrogen economies.
Despite there still being questions over the infrastructure needed to support a global hydrogen economy, countries around the globe are making considerable investments into hydrogen production.
Therefore, we are going to take a look at just four key investors in the global hydrogen economy and explore their strategies and ambition.
China
China is still the largest producer of hydrogen producing approximately 34 million tons (Mt), or roughly a quarter of the global total per annum. However, of the 34 million tons of hydrogen which China produced in 2021, 80.3% was produced from fossil fuels, 18.5% from industrial by production and 1.2% from electrolysis (of this, less than 0.1% from electrolysis powered by renewable energy sources) (1)
Despite China’s current hydrogen production currently being produced primarily through fossil fuel, in 2022 China published plans to increase the production of green hydrogen as part of its medium and long-term plan for the development of their Hydrogen Energy Industry (2021-2035). However, one of the stumbling blocks to increasing green hydrogen production is that green hydrogen in China costs 3-5 times more to produce per kg than coal produced hydrogen.
China’s 2060 carbon neutrality commitment made in 2020 is a major policy-oriented development which could aid the shift in hydrogen production away from fossil fuels to renewables, greater deployment of FCVs, and the use of hydrogen in harder-to-abate sectors.
With the cost of hydrogen production from coal remaining very low in China, producing coal-based hydrogen costs roughly half as much as renewable-based hydrogen. The cost disadvantage hampers green hydrogen development, which currently accounts for 1.5 percent of the total national hydrogen supply. (2)
United States of America
The United States is currently the second largest producer and consumer of Hydrogen after China, accounting for 13% of global production.
In June 2023 the US released its U.S. National Clean Hydrogen Strategy and Roadmap which cites the United States hydrogen ambition.
The Strategy and Roadmap aligns with the Administration’s goals, including:
■ A 50% to 52% reduction in U.S. GHG emissions from 2005 levels by 2030
■ 100% carbon pollution-free electricity by 2035
■ Net zero GHG emissions no later than 2050
■ 40% of the benefits of Federal climate investments delivered to disadvantaged communities. (3)
The United States ambition for hydrogen production includes targets for production, GHG reduction and how the uptick in hydrogen production can boost the green employment market.
The U.S. National Clean Hydrogen Strategy and Roadmap cites its ambition for the following hydrogen schedule.
■ 10 MMT by 2030
■ 20 MMT by 2040
■ 50 MMT by 2050 (3)
These targets also support a 10% reduction in GHGs and aims to create 100,000 new direct and indirect jobs by 2030.
The U.S. National Clean Hydrogen Strategy and Roadmap has three focused strategies to achieve its ambition.
Its first strategy recognises the high-impact use of clean hydrogen and identifies chemicals, steelmaking, industrial heat, medium- and heavy-duty vehicles, maritime, aviation, rail, electricity generation, energy storage and stationary and backup power as key areas which could benefit from the clean hydrogen strategy.
The second strategy focuses on how the U.S plans on reducing costs both in production and transportation. Their targets are split into three areas:
Hydrogen Production Cost
■ By 2026 – $2 per kg
■ By 2031 – $1 per kg
Onboard Storage Cost
■ By 2030 – $9 per kWh (700-bar)
Delivery and Dispensing Cost
■ By 2030 – $2 per kg (3)
The third and final strategy point focuses on how regional networks will play a crucial role in the U.S clean hydrogen rollout.
Regional networks will enable large-scale clean hydrogen production close to hydrogen users, enabling the development and sharing of a critical mass of infrastructure.
Regional Clean Hydrogen Hubs
■ Locate large-scale clean hydrogen production near end users
■ Jump-start infrastructure development
Economic Benefits
■ Create well-paid jobs and tax revenue for regional economies
■ Establish a network of hydrogen producers and consumers (3)
Japan
Japan, being the first country in the world to formulate a national hydrogen strategy as part of its ambition to become the world’s first “hydrogen society”, (2017) announced early in 2023 that they are investing $3.4 billion from its green innovation fund to accelerate research and development and promotion of hydrogen use over the next 10 years.
However, having re-released their hydrogen strategy in June 2023 it would appear that Japan’s ambition in the hydrogen sector may be at odds with the reality of production and investment.
Analysis of the revised strategy by the Renewable Energy Institute, Japan, have highlighted some inconsistencies in the ambition of the Japanese hydrogen strategy.
The revised Hydrogen Strategy states that “hydrogen is a means of decarbonisation in hard-to-abate sectors, such as heat utilisation and carbon feedstock replacement, where electrification is difficult.” (4)
This appears to signal a shift in intention from the previous line of using hydrogen in all sectors. However, the report also states that in the automotive sector, “efforts will focus on the commercial vehicle sector” and that these efforts will be pursued “in addition to passenger automobiles.” (4)
Japan’s strategy of prioritising gray and blue hydrogen, whose impact on reducing emissions is unclear and relying on imports for much of that hydrogen, has left Japan trailing behind European countries and China in terms of domestic green hydrogen production. (4)
In contradiction of the original Hydrogen Strategy (2017), the revised Hydrogen Strategy promotes coal-ammonia co-firing, which runs counter to decarbonisation. Secondly, the strategy also outlines a policy of promoting gray hydrogen, at least until 2030, even though gray hydrogen does not contribute to reducing emissions overall.
Europe, the US, and other countries around the world have taken a common approach to decarbonisation strategies. The starting point for hydrogen production involves firstly decarbonising all electricity production and in doing so focus entirely on renewable energy.
Once all electricity production can be safely said to be ‘renewable’, a considerable increase in solar and wind power generation can then enhance the power grid. Hydrogen production can then rely on using abundant, cheap renewable electricity, including surplus electricity. With this approach, the clean hydrogen produced can support the decarbonisation of the industrial and transportation sectors.
Europe
The European Union and European Commission have continued to support the development of a hydrogen economy. The recognition of hydrogen as a future fuel for a broad spectrum of applications, for the automotive industry and for heating networks, was given a boost when on the 27th of March 23 European Union nations agreed to install hydrogen fuelling stations in all major cities and every 200km along core routes.
Following an agreement between the Council of ministers and the European Parliament the new Regulation for the deployment of the alternative fuel infrastructure regulation was reached.
The agreement saw EU states agree to build hydrogen fuelling stations in all major cities and at least every 200km along the core Trans-European Transport Network (TEN-T).
The regulation stipulates that the hydrogen refuelling infrastructure can serve both cars and heavy-duty vehicles such as buses and trucks and must be deployed from 2030 in all “urban nodes” — an EU term for 424 major cities in the bloc with ports, airports and rail terminals. (5)
Bearing this in mind, there is clearly a need for a considerable increase in the production of hydrogen and in particular green hydrogen produced from renewable energy sources.
Highlighting the interest in hydrogen versatility LCP Delta recognised that the total installed capacity of hydrogen installations across Europe could exceed 1GW for the first time in 2023.
The United Kingdom and Germany will play pivotal roles in creating significant milestones in hydrogen production for the European renewable energy market.
Both countries have over 400MW of projects in place for 2023, potentially bringing the total installed hydrogen capacity across Europe from around 236MW in 2022 to over 2GW in 2023. The report also indicates that increases in hydrogen capacity could reach over 22GW by the end of 2027.
Written and cited by Katy Mason for and on behalf of Dolphin N2
- https://www3.weforum.org/docs/WEF_Green_Hydrogen_in_China_A_Roadmap_for_Progress_2023.pdf
- https://www.csis.org/analysis/chinas-hydrogen-industrial-strategy
- https://www.hydrogen.energy.gov/pdfs/clean-hydrogen-strategy-roadmap-at-a-glance.pdf
- https://www.renewable-ei.org/en/activities/reports/20230720.php
- https://www.hydrogeninsight.com/policy/eu-nations-agree-to-install-hydrogen-fuelling-stations-in-all-major-cities-and-every-200km-along-core-routes/2-1-1426859
