Brussels, May 11, 2023 – The global hydrogen landscape is undergoing a transformative journey, as showcased by the latest edition of Hydrogen Insights 2023.
The report underscores the remarkable momentum propelling the hydrogen sector, as evidenced by over 1,000 projects demanding a staggering $320 billion in investments announced worldwide. However, a divergence is evident, with a mere 10% of these projects having moved past the Final Investment Decision (FID) stage. This discrepancy underlines the pressing need for investment decisions to keep pace with the ambitious goals set by the global hydrogen ecosystem.
The unveiled insights reveal a substantial increase in hydrogen-related projects, with 795 of them aimed at commissioning within the decade. These projects signify a massive leap from last year’s publication, showcasing an upsurge from $240 billion to $320 billion in investments anticipated until 2030. Notably, a substantial portion of these investments is allocated towards supply, accounting for around two-thirds of the projected investments.
Europe and North America are at the forefront of this green hydrogen revolution, accounting for nearly 60% of the total announced hydrogen production volumes between them. This surge in projects across all stages of development—ranging from planning to committed—attests to a healthy project funnel that bodes well for the industry’s future.
While the strides made in clean hydrogen supply are evident, the report also sheds light on the current operational landscape.
Approximately 0.8 Mt p.a. of clean hydrogen supply is operational, where 740 kt p.a. originates from low-carbon sources and 60 kt p.a. from renewable sources, equivalent to 700 MW of electrolysis capacity. The lion’s share of operational low-carbon capacity is found in North America, with China leading the market for operational renewable hydrogen projects.
In terms of committed volumes, North America takes centre stage, constituting 70% of the total committed clean hydrogen production. This impressive figure is powered by new incentives, including those under the Inflation Reduction Act, giving the region a significant boost. However, the journey towards net-zero objectives is far from over, as committed projects still lag behind the targets, necessitating a substantial increase to achieve the envisioned transformation.
Overcoming challenges through collaboration
As hydrogen deployment charges ahead, the industry is confronted by challenges such as supply chain strains, labour shortages, energy performance contracting (EPC) capacity limitations, rising inflation and permitting delays. Despite these obstacles, the global hydrogen economy remains resilient and robust.
Yoshinori Kanehana, Co-Chair of the Hydrogen Council, emphasises the importance of collaboration and strong communication among governments, industries and the public to achieve energy transition goals effectively. This sentiment is echoed by Tom Linebarger, Co-Chair of the Hydrogen Council, who underscores the urgency of accelerating actions against climate change.
North America’s hydrogen journey
Hydrogen Insights 2023 also delves deep into North America, which has witnessed a remarkable 55% increase in announced hydrogen investments within the past year. The Inflation Reduction Act (IRA) in the United States, offering production tax credits of up to $3/kg, emerges as a pivotal catalyst that could substantially expedite the adoption of clean hydrogen technologies.
Bernd Heid, Senior Partner at McKinsey, emphasises North America’s pivotal role in clean hydrogen production, accounting for a significant portion of both funding and committed capacity.
The Hydrogen Insights 2023 report paints a vivid picture of the future of hydrogen—one characterised by rapid growth, transformative technologies and global collaboration. With concerted efforts and decisive actions, the hydrogen economy is poised to become a cornerstone of the clean energy transition, paving the way toward a greener, more sustainable future.
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The full Hydrogen Insights 2023 report can be accessed on the Hydrogen Council’s website.
