The industrial sector is expected to dominate hydrogen demand in the approaching decades and not transportation, according to a new report from the International Chamber of Shipping.
The Turning Hydrogen Demand into Reality: Which Sectors Come First report found that hydrogen demand could double by 2040, mostly coming from industrial sectors due to the fact it’s “easier to uptake.”
The rest of the demand will come from new industrial uses, with a small share of less than 5% from the transport sector.
The report stated, “Current hydrogen scenarios for the coming decades depict the main use cases for hydrogen (and its derivatives) in the early stages being in energy-intensive industry (chemicals, fertiliser, steel and cement), followed by the transport sector (road, aviation) and finally the buildings sector.”
The demand comes from multiple sectors, however, the rate and timeline of uptake are forecasted to vary between sectors due to infrastructure and regulatory challenges and is likely to take place in stages.
“Industries that already use hydrogen currently as a feedstock are technically in an advanced position since they merely have to change their hydrogen source – if the economics allow it,” the report added.
“Additionally, those sectors that can relatively easily pass through additional hydrogen costs to their customers are economically in an advanced position – if they develop technologies based on hydrogen. Nonetheless, the pressure on the industry to decarbonise globally will lead to a certain baseload demand for hydrogen.”
H2 View understands that if the required hydrogen demand for the Net Zero by 2050 scenario is met, it would need to scale five times from its current levels to reach nearly 500 million tonnes from 2030 to 2050.
This ranges from 90 tonnes to 600 tonnes by 2050, equivalent to 4% and 11% of the total global energy supply by 2050.
The power demand for electrolytic hydrogen could reach up to 25TWh, meaning the global power system would need to triple the amount of renewable energy commitment announced at COP28 to make a hydrogen economy a reality.
Read more:COP28: global certification standard and hydrogen takes centre stage at Energy Transition Hub
Data from the IEA found that 464 electrolytic hydrogen projects are currently at final investment decision (FID), under construction, or operational, with a combined capacity of 2,542 kilotonnes per annum.
Speaking on H2 View’s Make Hydrogen Happen Panel at gasworld’s North America Hydrogen Summit in April, Aline Ingram, Senior Consultant – Hydrogen and Clean Fuels at Poten & Partners, said hydrogen and derivative offtake will be the main challenge project developers face.
Read more:Analysis: Where’s the demand for electrolytic hydrogen?
Whilst there are growing use cases for hydrogen, ammonia and methanol, Ingram said, “There is no market today for these products, and therefore there is no pricing.
“When these projects are trying to raise debt, the finance community is still looking at projects in the same way they used to for oil and gas projects: is the technology proven? Is there a long-term offtake? Is there a long-term supply agreement? And the offtake is the key part.”
Ørsted recently scrapped its FlagshipONE e-fuels project due to there being no offtake, insufficient incentives and high prices. Olivia Breese, Ørsted’s Region Europe CEO, told H2 View that continuing to develop the project would not be sustainable, due to a lack of offtake demand.
Read more:High prices, no offtake, insufficient incentives: why Ørsted scrapped FlagshipONE
