Green Hydrogen Poised to be a Key Player in the Upcoming Energy Transition

The advantage of hydrogen as a fuel lies in its ability to emit no carbon when burned. However, it is crucial to ensure that the synthesis of hydrogen does not generate significant carbon emissions.

Hydrogen and its derivatives have the potential to play a key role in decarbonizing sectors such as heavy industry, shipping, aviation, and heavy-duty transport, where reducing emissions is challenging due to limited alternative options. According to the International Renewable Energy Agency (IRENA), by 2050, hydrogen and its derivatives could meet up to 12 percent of global energy demand and contribute to a 10 percent reduction in carbon emissions.

Achieving this target requires substantial progress in the hydrogen industry. Notably, electrolyzer manufacturing capacity has nearly doubled since last year, reaching over 8 GW annually. Furthermore, completing ongoing projects is expected to result in an installed electrolyzer capacity of 134–240 GW by 2030, more than doubling last year’s forecasts.
 
Europe remains the global leader in green hydrogen project proposals, with investments amounting to USD 117 billion, accounting for 35 percent of global investments. In 2023, the European Union implemented stringent standards for renewable hydrogen as part of its clean-energy transition strategy. By 2030, the EU aims to produce 10 million metric tonnes of renewable hydrogen, ammonia, and other clean fuels annually, requiring approximately 14 percent of total EU electricity consumption. The European Commission’s guidelines, released by the EU’s executive arm, aim to leverage the demand for renewable hydrogen to encourage investment in wind and solar farms.
 
Furthermore, hydrogen policies are already being influenced by geo-economic considerations. In Europe, there are concerns about the potential dominance of China in the hydrogen market, similar to its current position in solar photovoltaic (PV), batteries, and rare earth mining. As a result, many national hydrogen initiatives serve as decarbonization tools and industrial strategy tools. In critical areas of the energy transition, countries have a strategic interest in being technology creators rather than technology consumers, aiming to maintain their competitive edge and ensure energy security. 

                                                                                                                   
The electrolyzers required for the production of green hydrogen could become a vital asset in the hydrogen value chain. Electrolyzers are a modular technology with a steep learning curve, reminiscent of the trajectory of solar PV technology ten to fifteen years ago—on the brink of becoming mainstream. Notably, electrolyzers manufactured in China are 75 percent less expensive than those produced in the West, even though this emerging market still exhibits some volatility. The potential cost reductions and scalability of electrolyzers make them a key focus for countries aiming to enhance their position in the global hydrogen market.
 
Green hydrogen, generated through electrolysis using renewable energy sources, is the most sustainable form of hydrogen. It is poised to be a key player in the upcoming energy transition necessary for achieving carbon neutrality and addressing climate change.

Several countries, including Germany, Chile, the UK, the US, China, and India, have recognized the importance of green hydrogen and are focusing on electrolysis technology for its synthesis. For instance, in January 2022, Shell and Zhangjiakou City Transport Construction Investment Holding Group Co. Ltd. announced a joint venture to produce green hydrogen in Zhangjiakou, Hebei Province, China. The project’s first phase involves a 20 MW power-to-hydrogen electrolyzer and hydrogen refueling stations, with plans to scale up to 60 MW in the next two years.

MnM has identified a $500+ billion opportunity across the Hydrogen Economy value chain – Upstream, Midstream, and Downstream.
 
Market Outlook

The global hydrogen generation market is projected to reach USD 263.5 Billion by 2027, at a CAGR of 10.5 percent between 2022 to 2027. The factors driving the growth of the hydrogen generation market are increasing hydrogen demand in the industrial sector and rising demand for hydrogen in transportation and power generation applications.
 
Low-carbon hydrogen production is expected to generate USD 70 billion opportunity in the hydrogen economy by 2030. Blue hydrogen production technologies such as steam reforming, coal gasification, gas heat reforming, and biomass gasification with a TRL level less than seven will play a crucial role in the hydrogen economy by 2030.
 
Factors that further propel the demand for green hydrogen are low variable electricity costs, technological advancements, global plans for net zero emission by 2050, and high demand for FCEVs and the power industry. Within green hydrogen, the production from alkaline electrolysis is expected to grow to USD ~4 billion by 2027, driven by the initiatives such as the European Green Deal, which aims to reduce greenhouse gas emissions and prepare Europe’s industry for a climate-neutral economy.
 
The global electrolyzers market is estimated to be valued at USD 1.2 billion in 2023 and is projected to reach USD 23.6 billion by 2028, growing at a CAGR of 80.3 percent during the forecast period. The electrolyzers market has promising growth potential due to the rising deployment of electrolyzers for green hydrogen production.


The global hydrogen storage market is projected to reach USD 7.7 Billion by 2027, at a CAGR of 21.5 percent between 2023 to 2030. The physical hydrogen storage market size is projected to grow from USD 1.5 billion in 2023 to USD 6.3 billion by 2030, at a CAGR of 21.5 percent during the forecast period. The hydrogen storage market is growing due to rising demand for fuel cells across various industries and stringent government regulations globally. The material-based storage further aims to improve volumetric and gravimetric capacities.
 

Repurposed existing pipeline infrastructure is the most viable mode for hydrogen transportation over long distances. Whereas LH2 is the most economical transportation mode in small-scale truck transportation.

The global hydrogen fueling station market is projected to reach USD 1,129 million by 2030 from an estimated USD 380 million in 2023, at a CAGR of 16.8 percent during the forecast period. The key factors, such as the growing demand for zero-emission vehicles and strong government support, have led to many top OEMs investing in fuel cell electric vehicles (FCEVs) research and development. Due to increasing demand for the FCEVs, there is a need for the hydrogen fueling station infrastructure. Furthermore, growing public and private investments in emerging economies have accelerated the growth of the hydrogen fueling station market.
 
The on-site hydrogen fueling station market is expected to be the fastest-growing market during the forecast period. Governments of various countries are taking initiatives to shift toward clean and green fuels, which is possible through the onsite production of hydrogen through electrolysis. The on-site segment's growth is attributed to rising investments in green hydrogen projects and an inclination toward zero-carbon fuel to power fuel cell vehicles.
 
Impact of Green Hydrogen on Energy Transition
 
Green hydrogen has vast applications, particularly in powering fuel cells that convert hydrogen into electricity without emitting pollution. Furthermore, it holds the potential to meet future electricity demands at a lower cost. According to research conducted by the Indian government, green hydrogen could fulfill around 14 percent of India’s electricity needs by 2030, significantly reducing greenhouse gas emissions.
 
The US announced a goal to reduce emissions by 50 percent to 52 percent by 2030. The country highlighted hydrogen among the solutions needed to provide clean power and decarbonize energy-intensive industries. Moreover, the National Industry Trade Organization and the Fuel Cell and Hydrogen Energy Association (FCHEA) have long identified fuel cells and hydrogen as vital for growing market sectors.
 
According to the roadmap to the US economy, a report by the Fuel Cell and Hydrogen Energy Association (FCHEA), hydrogen could meet 16 percent of the energy demand of the US by 2050. Several states, such as California and Connecticut, have policies on increasing the share of renewable energy in the overall energy mix. Additionally, The Government of California has announced to invest USD 20 million annually until 100 public hydrogen refueling stations (HRS) are in operation—the state of California targets to deploy 1,000,000 fuel cell electric vehicles by 2030.
 
Germany has the largest public hydrogen refueling infrastructure in Europe. The Federal Ministry of Transport, Building and Urban Development (BVBS) supports the National Innovation Program (NIP) to improve the role of hydrogen and fuel cell technology in Germany’s energy system. Additionally, the Federal Ministry of Transport and Digital Infrastructure (BMVI) provided a fund of USD 65 million for the construction of public hydrogen fueling stations, focusing on heavy-duty transport. The funds were granted to support the construction of hydrogen filling stations that dispense renewable hydrogen when in operation. The fund also contributes to constructing electrolysis plants to supply the filling stations with hydrogen from 100 percent renewable electricity.
 
Chile, is among the first Latin American countries to invest heavily in hydrogen, has unique conditions for developing a competitive green hydrogen sector, given its geographical and institutional advantages. Through its National Green Hydrogen Strategy, Chile aims to provide clean fuel to industries that are challenging to decarbonize, such as mining, construction, and cargo transportation. The strategy sets objectives to develop 5 GW of electrolysis capacity by 2025 and manufacture the world’s cheapest green hydrogen by 2030. The successful implementation of policies and advancements related to green hydrogen will not only navigate an uncertain market but also unlock opportunities for accelerated growth.
 
In conclusion, hydrogen has enormous potential to accelerate the energy transition to a sustainable future. It is a crucial component in lowering carbon emissions and tackling climate change due to its adaptability, zero-emission status, and capacity to support the integration of renewable energy. Hydrogen is positioned to transform the energy landscape and usher in a new era of clean and efficient energy systems thanks to continued breakthroughs and expanding worldwide focus.

- MarketsAndMarkets