The ballooning number of global green hydrogen projects won’t produce nearly enough to meet early global demand for the fuel that's seen as key to the energy transition, warned a new study.
Despite 50 new projects being announced in the last year alone, the Institute for Energy Economics and Financial Analysis (IEEFA) reckons green hydrogen supplies will hit 3 million tonnes annually by 2030, well short of a projected demand of 8.7 million tonnes.
The IEEFA’s analysis said many of the projects announced may struggle to proceed on time due to due to “uncertain financing, cumbersome joint venture structures, and unfavourable seaborne trade economics”.
It urged governments to step up support for green H2 – hydrogen made via electrolysis powered by renewables such as wind and solar – for it to play its full part in the energy transition, where it's seen by many as crucial for decarbonising sectors such as heavy industry and transport.
IEEFA report author Yong Por said: “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.”
The ability of green hydrogen to meet spiralling global demand – and whether so-called ‘blue’ H2 from abated fossil fuels are better placed – has become one of the defining questions of the energy transition that was debated in a recent Recharge digital roundtable on the subject.
Renewable hydrogen proponents – notably among the world’s greenest power utilities – argue that retaining a role for fossils undermines the energy transition, while blue supporters claim it is the only viable option on cost and scale grounds to kick-start a hydrogen economy by 2030.
The IEEFA said markets such as the EU and Australia are setting the pace on green hydrogen, but added: “There remains ample room for more hydrogen projects to meet global demand and further policy support will be necessary to grow this nascent industry.
“This is the next global technology race.”