The outlook for hydrogen is now entering a ‘critical phase’, according to a new GlobalData report. With the new US government throwing its full weight behind fossil fuel development and the uptake of hydrogen remaining sluggish in many markets, the omens don’t look particularly favourable.
However the report forecasts green hydrogen – bedevilled by grid, electrolysis, water and finance challenges – will account for 83% of low-carbon hydrogen capacity coming online by 2030. This positive outlook appears at odds with many forecasts foreseeing blue hydrogen will be dominant in the short-to-medium term.
Source: GlobalData
Indeed, GlobalData concedes ‘the demand from the oil and gas industry will remain the dominant driver for hydrogen in the foreseeable future. Additional demand for this commodity is expected to emerge from industries such as metallurgy, power generation, and transportation.’ That points to support for blue with carbon capture.
It is unclear from the report how green will make its meteoric rise, beyond a commitment that oil and gas companies ‘are investing in this energy source for their long-term goals, with a preference for green hydrogen’.
Interestingly, with countries such as Germany now actively looking at nuclear again, it believes purple and turquoise hydrogen capacities are anticipated to be ‘miniscule’, accounting for only about 2% of the total expected capacity by 2030.
Ravindra Puranik, Oil and Gas Analyst at GlobalData, said low-carbon hydrogen is set to occupy a crucial role in the decarbonisation efforts of several energy-intensive industry verticals.
“As hydrogen is an essential feedstock in downstream oil and gas processes, switching to low-carbon hydrogen would help companies reduce their emissions footprint. It also has massive potential in the transportation sector, especially in marine and heavy vehicle applications, due to its energy density properties,” he said.
Conventionally, hydrogen has been consumed in the oil and gas industry as a reagent in the refining sector and as a feedstock in the petrochemical sector.
Puranik said, “There has been a significant jump in low-carbon hydrogen project announcements in the last few years as industries unveiled plans to decarbonise their operations. Nearly 75% of these projects are in the feasibility stage of development. This reflects the momentum in new plant announcements within this market to reap from the global energy transition.”
Scaling green hydrogen and converting projects to FID, along with clear and consistent policy drivers across markets, are ongoing challenges.
Another major challenge concerns hydrogen distribution networks which need to expand at scale, including the addition of new pipelines, added Puranik. “The current scenario signals a critical phase for the development of the global hydrogen economy. Its fate and momentum in the coming years will be decided by how things pan out in the near future.”
Speaking on the Energy Gang podcast, Austin Knight, Vice-President for hydrogen at Chevron New Energies, said, “Blue can be integrated more readily, at scale, today more quickly – the green pathway, electrolytic with renewable electrons, could work as well but it’s not yet mature enough at scale to bring those solutions as effectively as blue would be in the near term.”
Today, Johnson Matthey’s (JM) board ordered the suspension of further capital spending on its hydrogen technologies business after the firm’s largest investor demanded its de-risking or sale.
Read more: JM cuts hydrogen spending again following investor pressure for strategic overhaul
Hydrogen and electric truck manufacturer Nikola is reportedly exploring strategic options, including the potential sale of parts or even the entirety of its business.
Read more: Nikola explores strategic options amid financial challenges: reports
President Donald Trump’s suspension of funding from two key pieces of Biden-era laws has cast uncertainty over the future of clean hydrogen development.
On his first day in office, Trump issued an executive order to halt further funding from the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA), which offered production tax credits of up to $3/kg and a combined $7bn of funding for seven hydrogen hubs, respectively.
Read more: Analysis: What does Trump’s IRA and IIJA funding suspension actually mean for hydrogen?
