A summary of Hydrogen Council report dated February 2021: Hydrogen Insights. A perspective on hydrogen investment, market development and cost competitiveness.


Hydrogen is gathering strong momentum as a key energy transition pillar
At the beginning of 2021, over 30 countries have released hydrogen roadmaps, the industry has announced more than 200 Hydrogen projects and ambitious investment plans representing USD 80 billion considered as « mature ».
This momentum exists along the entire value chain and is accelerating cost reductions for hydrogen production, transmission, distribution, retail and end applications.
If all projects come to realization, total investments will exceed USD 300 billion in Hydrogen spending through 2030.

Supply: If scaled-up with the right regulatory framework, clean hydrogen costs can fall faster than expected
With the advent of hydrogen giga-scale projects, hydrogen production costs can continue to fall. The biggest driver is a quicker decline in renewable costs than previously expected. 
But lower renewable costs are not enough: for low-cost clean hydrogen production, value chain for electrolysis and carbon management need to be scaled-up.
In combination, projections show that renewable hydrogen production costs could decline to USD 1,4 to 2,3/Kg by 2030 meaning that renewable (green) and grey hydrogen supply could hit cost parity by 2032-2034.
In parallel to renewable hydrogen production, low carbon hydrogen production from natural gas has continued to evolve technologically. With higher CO2 capture rates and lower capex requirements, low carbon hydrogen production is a strong complementary production pathway.

Distribution: Cost-efficiency transmission and distribution required to unlock hydrogen applications
With hydrogen production costs falling, transmission and distribution costs are the next frontier when it comes to reducing delivered hydrogen costs. A hydrogen pipeline network offers the most cost-efficient means of distribution. 
For transport by ship, hydrogen needs to be converted to increase its energy density. These 3 neutral-carriers are gaining most traction: Liquid Hydrogen (LH2), Liquid Organic Hydrogen Carriers (LOHC) and ammonia (NH3).
At scale, international distribution could reach by 2030 a total cost of 2-3 USD/Kg (excluding cost of production). These global cost levels would enable global trade in hydrogen connecting major demand centerS to abundant low-cost hydrogen production areas.

End applications: Falling clean hydrogen costs and application specific cost drivers improve the cost competitiveness of hydrogen applications
From a Total Cost of Ownership (TCO) perspective, hydrogen can be the most competitive low-carbon solution for 22 end applications, including long-haul trucking, shipping and steel.
In industry, lower production and distribution costs are particularly important for costs competitiveness and they represent a large share of total costs. Refining is expected to switch to low-carbon hydrogen in the next decade. For fertilizer production, green ammonia should be cost competitive by 2030.
Steel, one of the largest industrial CO2 emitters, could become one of the least-cost decarbonization applications.
In transport, lower hydrogen supply costs will make most road transportation segments competitive with conventional options by 2030 without a carbon cost. Hydrogen is likewise advancing in trains, shipping and aviation.
Clean ammonia as a shipping fuel will be the most cost-efficient way to decarbonize container shipping by 2030. Aviation can achieve competitive decarbonization via hydrogen and hydrogen-based fuels.

Implementation: Capturing the promise of hydrogen
Strong government commitment to deep decarbonization, backed by financial support, regulation and clear hydrogen strategies and targets has triggered unprecedented momentum in the hydrogen industry. This momentum now needs to be sustained and the long-term regulatory framework set.
To get things started, strategies should aim at the critical “unlocks”, like reducing cost of hydrogen production and distribution.
Support is also required to scale-up carbon transport and storage; Hydrogen shipping, distribution and retail infrastructure.

Adinergy note: This article has not been written by Adinergy. It is only a summary of the Hydrogen Council report dated February 2021 “Hydrogen Insights – A perspective on hydrogen investment, market development and cost competitiveness”.
Adinergy is delivering a training course on Hydrogen covering all issues and challenges of Hydrogen as alternative fuel:  https://www.adinergy.com/courses/introductions-/introductions-to-oil-gas-operations/introduction-to-hydrogen-the-alternative-fuel/