Clean hydrogen boom by 2030, but targets remain elusive

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BloombergNEF (BNEF) projects that clean hydrogen supply will soar to 16.4 million metric tons annually by 2030, a 30-fold increase from the current 0.5 million metric tons. This growth, fuelled by supportive policies and a maturing project pipeline, is nonetheless insufficient to meet most government targets. BNEF’s analysis shows that less than a third of the 1,600 announced projects will materialise.

Electrolysis will account for over half of the 2030 supply, with significant contributions from blue hydrogen due to favourable economics and strong demand from Asia. The US is poised to become the largest producer, contributing close to 40% of the global supply, bolstered by substantial blue hydrogen projects benefiting from tax credits. China, Europe, and the US are expected to dominate, collectively providing over 80% of the supply, while regions like Latin America and Australia may lag due to limited policy support.

Governments are projected to fall short of their hydrogen demand goals for 2030 by nearly two-thirds, hampered by project delays and inadequate policy backing. Although 31% of the forecasted capacity is aimed at exports, actual export volumes may be lower, with North America likely to lead in export-oriented production.

The global capacity for electrolysers is anticipated to reach 95 gigawatts by 2030, almost ten times the current capacity. However, this expansion is subject to uncertainties, particularly in policy implementation. Around 10 million metric tons per year of production capacity is in advanced planning stages, with a significant portion already past final investment decisions.

China’s deployment remains a key uncertainty, given the unpredictable nature of project announcements and the current lack of specific 2030 policy targets. As China is expected to host 38% of the forecasted electrolyser capacity, any changes could significantly impact the global outlook. Additionally, potential policy shifts, such as adjustments to US tax credits post-election, could further alter the forecast.

Despite the ambitious projections, the hydrogen market’s growth faces several significant challenges. For one, the dependence on electrolysis, which is still in relatively early stages of maturity, underscores the risk of technological and logistical hurdles that could impede progress. Moreover, the reliance on favourable policies and economic incentives raises questions about the sustainability of growth if political landscapes shift, particularly in the US where tax credits play a crucial role.

The dominance of China, Europe, and the US in the clean hydrogen supply chain may lead to geopolitical and economic imbalances, with other regions struggling to compete due to less robust policy frameworks. This could potentially slow down the global transition to clean energy, as equitable distribution of technology and resources remains a critical factor.

India, with its ambitious National Hydrogen Mission, has the potential to become a significant player in the clean hydrogen market. However, India faces its own set of challenges, including the need for substantial investments in infrastructure, technology, and policy support. The country’s focus on green hydrogen, leveraging its abundant solar capacity, aligns well with global trends, but realising this vision will require overcoming financial and technical barriers. India’s success in this sector could not only meet domestic energy needs but also position it as a key exporter in the future.

In conclusion, while clean hydrogen supply is set to experience dramatic growth by 2030, achieving government targets will require more robust policy support and timely project completions. The market must navigate technological, political, and economic uncertainties to realise its full potential.

 

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