Slower decarbonisation tempering H2 demand growth: Hydrogen Council
The slower progress on global decarbonisation has tempered overall hydrogen demand growth, despite positive momentum on hydrogen uptake, says the Hydrogen Council in a new report released Thursday.
The Global Hydrogen Flows 2023 Update report, co-authored by McKinsey & Company, predicts the demand for clean hydrogen to reach 375 million tonnes/year by 2050. This is a downgrade from the 660m t/y it forecast last year, following the adoption of a new “Future Acceleration” (FA) reference case for its modelling assumption, Kallanish notes.
The new scenario assumes that net-zero targets are not reached by 2050 due to financial and technological constraints, resulting in a global temperature rise of 1.9°C. Since the 2022 Global Hydrogen Flows report was released, “it has become clear that the world is not on a Net Zero trajectory, at least not by 2030,” the industry body warns.
While it believes that hydrogen will continue to play a “critical role” in decarbonising the world by 2050, the “dampened outlook reflects a reality that cannot be ignored.”
“Despite positive trends, both producers and would-be users of hydrogen continue to face challenges, from increasing costs to technological uncertainties to a lack of coherent and stable regulation, including a global price on carbon, that impact the pace and buildout of the hydrogen economy,” the report notes. “This serves as a stark reminder that, for hydrogen to achieve its full potential, there is a need to step up efforts that address challenges and unlock investments.”
With nearly half (200m t/y) of the 2050 hydrogen demand likely to be transported over long distances, the report highlights that global hydrogen trade will be key to transitioning to a hydrogen economy. By 2050, the long-distance transport sector is predicted to account for around 40% of the hydrogen demand. Synthetic kerosene and ammonia make 20% each of the estimated consumption, followed by 10% of shipped hydrogen, 5% of methanol and 5% of green steel.
“By leveraging the potential of global trade, we can maximise clean hydrogen production in optimal locations and deliver it cost-effectively to demand centres,” says Yoshinori Kanehana, co-chair of the Hydrogen Council. “We need strong government support and cross-value chain collaboration to drive down costs and build out infrastructure for global hydrogen trade.”
The association believes under a scenario where hydrogen trade progresses, total hydrogen investments could reach $8 trillion by 2050, representing cost savings of around $4 trillion. Facilitating long-distance hydrogen transport, however, would require around $70 billion of investments/year by 2050 in transportation, conversion, and reconversion infrastructure.
More free articles from our archive
More Global Prices
Take a Free trial
Get daily steel news redirect to your inbox each day,
along with prices.