Pipeline of green hydrogen projects will reach 134 GW by 2030, but it would take six times that to be on track to net zero: IEA
If all green hydrogen projects announced to date were built according to developers’ plans, the world would have 134 GW of electrolyzers in place by 2030, according to a new report from the International Energy Agency (IEA). ).
But that’s six times less than the 850 GW of installed capacity needed by the end of this decade if the world is to stay on track to net zero emissions by 2050, he adds.
The capacity of announced green hydrogen projects has more than doubled in the past 12 months – from 54 GW last year – which the IEA describes as growth “at an impressive speed”.
And if “very early stage” projects are included (i.e. those that have not progressed beyond a cooperation agreement between potential partners), the figure for 2030 would rise to 240. GW, explains the 284-page document. Global Hydrogen Balance 2022.
The 134 GW figure would produce 9-14 million tonnes of green hydrogen per year in 2030, it adds – still less than a fifth of the 94 million tonnes of mostly gray H2 produced each year today (including more than 20 million tonnes mixed with carbon gases in methanol production and steelmaking).
The report adds that 7-10 million tonnes of blue hydrogen would be available by 2030, if all current projects were realized – although it also points out that such facilities would not be competitive with green H.2 in Europe until the cost of natural gas drops dramatically from today’s exorbitant prices.
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The impact of subsidy programs
Currently, only 9.5 GW of electrolyser capacity has reached a Final Investment Decision (FID), and the study suggests that many announced clean hydrogen projects will not progress as planned.
“There are of course many uncertainties, even for projects planned in the short term,” he explains. “Some projects originally planned to be operational in 2022 and 2023 have been delayed due to funding issues.”
But it suggests that these problems will disappear once the announced subsidy programs are put into practice.
“Many projects in development are pioneers facing a combination of risks, including uncertain demand and uncertain regulatory frameworks, as well as a lack of infrastructure and operational experience.
“Governments around the world are initiating policies such as grants, loans, tax incentives or contracts for difference to de-risk early projects and leverage private investment. Such measures help developers access better financing conditions to improve the feasibility of capital-intensive hydrogen projects.
“Policies aimed at mitigating investment risks can boost production capacity, infrastructure development and equipment manufacturing capacity, to pave the way for future projects until the supply chains in hydrogen can shift from reliance on public capital to private capital.”
The study gives several examples of government subsidy programs, such as the Inflation Reduction Act and Bipartisan Infrastructure Act in the United States – which, respectively, provides up to $3/kg in subsidies for green hydrogen and allocates $8 billion to clean hydrogen hubs – as well as in Germany H2Global the initiative and its tenders on contracts for difference, and the UK £100m electrolyte allocation round to support at least 250MW of electrolysis capacity.
Russia’s invasion of Ukraine – and subsequent increase in natural gas prices means that methane-derived hydrogen is now much more expensive to produce, which “can accelerate the use of renewable hydrogen in [oil] refining.”
The IEA’s claim that 850 GW of electrolysers will be needed by 2030 to keep the world on track for net zero emissions by mid-century has been criticized for being too optimistic about the future hydrogen demand.
For example, the IEA Net zero emissions scenarioreleased in May last year, says there will be more than ten million hydrogen cars on the world’s roads by 2030 – up from 50,000 in June – despite higher purchase prices and running costs higher compared to battery electric vehicles, and a lack of both refueling infrastructure and green hydrogen.
The IEA also doesn’t have much to say about how much new renewable energy would be needed to produce all that green hydrogen. According to Recharge’s calculations, producing 14 million tonnes of green hydrogen per year by 2030 would require 186 GW of offshore wind or 444 GW of solar (using capacity factors of 43% and 18% , respectively). By the end of last year, the world had installed 55.7 GW of offshore wind and 843 GW of solar power.