Source: Institute for Energy Economics and Financial Analysis
The green hydrogen industry needs more government backing to reach demand goals
24 August 2020 (IEEFA): The renewable rich green hydrogen industry is accelerating with 50 new projects announced in the last year including five just last month, but a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) finds the pace is not fast enough to meet global energy demand, with massive capital shortfalls and government inaction stalling start-ups.
Author of the report IEEFA Yong Por says based on his analysis of the 50 new projects, the supply of global green hydrogen is likely to be only 3 million tonnes a year. Yet demand for green hydrogen has been forecast at 8.7 million tonnes a year by 2030, showing an incredible supply shortfall.
“ASIA, EUROPE AND AUSTRALIA ARE BACKING THE MAJORITY OF NEW GREEN HYDROGEN PROJECTS,” says Por.
“The European Union is also a heavy lifter in the new global technology race, with green hydrogen projects backed by improving economics, falling renewable costs, the option to produce hydrogen on-site economically, and existing gas pipelines which can be used for transport to meet local demand.
“However, many of the 50 newly announced green hydrogen projects could face delays due to uncertain financing, cumbersome joint venture structures, and unfavourable seaborne trade economics.
“MORE PUBLIC-PRIVATE EFFORTS ARE NECESSARY FOR GREEN HYDROGEN SUPPLY to overcome apparent obstacles.”
Por’s in-depth report reviews 50 global green hydrogen projects recently announced, and ten in detail, to assess the sufficiency of projected global green hydrogen supply.
Por found that for new projects to be successful, the manufacture of electrolysers, fuel cells and associated equipment (hydrogen compressors, boilers, drive trains, storage tanks, bunkering facilities, pipelines, sensors, measuring equipment and liquefaction plants) would need to be significantly scaled up, while seaborne hydrogen transportation costs would need to be substantial lowered.
“GOVERNMENTS WILL ALSO NEED TO GET BEHIND THESE NEW PROJECTS and work hand-in-hand with industry as the world transitions away from fossil fuels into cleaner renewable energies,” says Por.
“Green hydrogen could well prove a key technology enabler for integrating ever cheaper but intermittent renewables.”
Although dabbling in minor green hydrogen projects, China, Japan and South Korea’s strategies are primarily focussed on blue hydrogen (produced from fossil fuels with carbon capture) or grey hydrogen (which relies on fossil gas and coal-based feedstocks with zero carbon abatement), rather than the renewable rich green hydrogen.
POR FOUND THE EUROPEAN UNION’S JULY 2020 HYDROGEN PLAN TO BE THE MOST AMBITIOUS, being the only plan with a key focus on the long game, i.e. green hydrogen.
And while Saudi Arabia is pioneering a world-scale green ammonia project located by the Red Sea, putting it in a prime position for transport to Europe, Australia has the most ambitious hydrogen export plans that are well supported by government agencies.
“Governments need to urgently back this industry by developing policy settings encouraging private industry to invest the much needed capital, given the industry must ‘learn by doing’,” says Por.
“UNTIL THEN, WE ARE LIKELY TO SEE PROJECT DELAYS as proponents struggle with still absent project viability, evidenced by only 14 of the 50 new projects having started construction with 34 at a study or memorandum of understanding stage.
“There remains ample room for more hydrogen projects to meet global demand and further policy support will be necessary to grow this nascent industry.
“This is the next global technology race.”
Media Contact: Kate Finlayson firstname.lastname@example.org +61 418 254 237
Author Contact: Yong Por, Guest Contributor, email@example.com
About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.