The global quest for net zero emissions and the climate commitments have accelerated the shift towards clean energy alternatives worldwide. While solar and wind energy continue to take the lead, emerging technologies such as green hydrogen are now coming at the forefront of national clean energy strategies and policies. Green hydrogen may be a game changer for the future of renewable energy, especially due to its potential to be produced competitively in various locations and capacities. Tapping hydrogen as a clean energy source may not only have a positive impact on the environment, but may also determine the trajectory of future geopolitical and economic trends across the globe. Green hydrogen can also transform the global industry landscape by enabling large industries such as steel to substitute clean fuel for diesel and coal.
The Covid pandemic and the recent Russia-Ukraine conflict have further raised energy security concerns, shifting the policy focus towards energy independence in several countries worldwide. As per the Hydrogen Council, as of November 2021, global investments amounting to $160 billion have been announced for hydrogen projects up to 2030. Roughly half of the said investment has been earmarked for electrolysis and hydrogen projects based on clean energy sources. Several countries are leading the way in the deployment and promotion of green hydrogen. As per the International Renewable Energy Agency (IRENA), Africa, the Americas, the Middle East and Oceania have the highest technical potential for green hydrogen production. However, various factors such as existing infrastructure, overall deployment of renewables, investment, cost of capital, regulatory environment, workforce and technical capabilities will determine which countries would emerge as leaders in green hydrogen in the coming years.
REGlobal identifies the present front runners in the green hydrogen race, their progress and outlook…
Japan was the first mover in the hydrogen space, having adopted a national hydrogen strategy in 2017. The country invested $670 million in the hydrogen and fuel cell industry in 2020. To become a hydrogen society, Japan has set a target to produce 0.8 million fuel cell electric vehicle (FCEV) units and 900 hydrogen fuelling stations by 2030. The country has an edge in technology, especially for small but crucial components such as flow meters.
Recently, Astamuse, a research company based in Japan, released a ranking of various countries in terms of their competitiveness in the hydrogen market, the number of patents cited and the competitiveness of a country’s hydrogen technologies between 2011 and 2020. The data suggests that Japan is leading the way given its clear advantage in terms of fuel cell patents, which are a key enabler for harnessing hydrogen in the transport sector and other key industries. In 2014, Japan’s Toyota Motor became the first automaker to commercialise FCEVs. However, the ranking also suggests that China is overtaking Japan in manufacturing, storage, safety controls and transportation. How well Japan can keep up with the competition will determine its position in the green hydrogen race in the coming years.
In March 2022, China released its first national plan to develop its hydrogen industry for a period up to 2035. The country’s focus on hydrogen is also evident in its 14th Five-Year Plan (2021– 2025), which identifies hydrogen as a frontier area for focused advancement. At present, it is the largest consumer of hydrogen in the world, with an annual consumption of more than 24 million tonnes. Data from IRENA suggests that hydrogen is estimated to account for 10-12 per-cent of China’s total energy consumption by 2050. The country is also the largest producer of hydrogen and is becoming a pioneer in developing fuel cell buses and trucks with a target to establish a fleet of 50,000 hydrogen-fuelled vehicles by 2025. The country aims to produce up to 200,000 tonnes of green hydrogen annually by 2025.
China has a huge advantage in terms of electrolyser manufacturing capacity. It will pose stiff competition to other potential countries seeking to become green hydrogen exporter hubs. As per the International Energy Agency (IEA), China accounts for 35 per cent of global electrolyser manufacturing capacity in 2021, while Europe accounts for 60 per cent. The country also has a number of green hydrogen projects in the pipeline at present. Producing green hydrogen domestically will reduce China’s dependence on coal imports for its large manufacturing industries. Given the large investments in research and development (R&D) by the Chinese government and a greater political push to develop hydrogen and affiliated industries, China may soon establish itself as a key exporter of green hydrogen.
After China, the US is the largest consumer and producer of hydrogen in the world. As per IRENA, it accounts for 13 per cent of the global demand for hydrogen. As per the US Department of Energy (DOE), the country had 17 MW of electrolysers in operation for dedicated green hydrogen production and an additional 1.4 GW of projects in the pipeline as of June 2021. The department further estimates that 13.5 GW of electrolysis projects for green hydrogen production will be operational in the country by 2030.
The country has launched various programmes to establish and accelerate its green hydrogen economy. The Hydrogen EarthShot programme was launched with an ambitious “111” goal, which seeks to reduce the cost of clean hydrogen to $1 per kg over the next decade. In November 2021, the country pledged $9.5 billion towards green hydrogen technologies as it passed the Infrastructure Investment and Jobs Act. Recently, the US DOE also released a notice of intent to fund the Bipartisan Infrastructure Law’s $8 billion programme to develop regional clean hydrogen hubs across the country. The project aims to create a nexus between developers, consumers and other stakeholders to promote the consumption of hydrogen as a clean energy carrier.
Moreover, some key projects have been announced in the US in recent months. For instance, the US government pledged to lend $504.4 million to the ACES hydrogen hub in the town of Delta in central Utah in April 2022. The project, termed as the largest green hydrogen project in the country, is a collaboration with Mitsubishi Power, which will procure 220 MW of electrolysers with a target of producing up to 100 metric tonnes of hydrogen per day using clean energy. GKN Hydrogen, SoCalGas (the country’s largest gas distribution utility) and the US DOE’s National Renewable Energy Laboratory are also collaborating on a new green hydrogen storage project, which is expected to come online by the end of 2022. The project entails an investment of $1.7 million by the DOE and $0.4 million by SoCalGas and aims to store roughly 500 kg of hydrogen on-site.
However, the current targets may not be enough to meet the country’s climate commitments. The IEA suggests that the country would require 44 GW of electrolyser capacity by 2030 to meet its net zero targets. Thus, greater investments and political support in the sector would be crucial.
The European Union
The European Union (EU) finalised the European Green Deal in 2020, following which it issued its hydrogen strategy. The strategy emphasises the production of hydrogen through clean energy sources and aims to install 40 GW of green hydrogen electrolysers in the EU by 2030. To further strengthen this initiative, the Clean Hydrogen Alliance was established. Recently, amid the Russia-Ukraine war, the European Commission launched REPowerEU to make Europe independent from Russian fossil fuels before 2030.
To boost production and enhance their export potential, EU countries such as Germany, Spain and the UK have committed large investments in green hydrogen projects in recent months. In December 2021, the German Federal Ministry of Economic Affairs and Climate Protection approved Euro 900 million for H2Global, a funding mechanism based on a competitive double-auction model in which hydrogen or hydrogen derivatives are purchased in non-EU nations at the lowest feasible price with 10-year contracts. At present, Germany is leading the investments in hydrogen among European countries. Iberdrola, a Spanish energy company, has also committed to invest Euro 3 billion in green hydrogen as an initiative under the European Green Deal. A key development in July 2022 was Shell’s initiation of building Europe’s largest green hydrogen project. The 200 MW electrolyser will be constructed on the Tweede Maasvlakte in the port of Rotterdam and will produce up to 60,000 kg of renewable hydrogen per day.
Green hydrogen is not only crucial for the EU from a production point of view, but also from a consumption point of view as many European countries seek to import large amounts of green hydrogen to meet their energy requirements. Research by RMI suggests that green hydrogen imports amounting to 15 million tonnes per annum (mtpa) can cover 35 per cent of the supply gap in the EU’s target to eliminate the import of Russian fossil fuels by 2030. Thus, as the EU moves forward in meeting its climate commitments while moving away from its dependence on Russian imports, investments in green hydrogen will continue to rise in the region.
India has set a target to produce 5 mtpa of green hydrogen per annum by 2030. Following the launch of its National Hydrogen Mission in August 2021, the country notified the first phase of its Green Hydrogen Policy in early 2022. The policy lays down several provisions to transform India into a green hydrogen hub. These include waiver of interstate transmission system charges, renewable purchase obligation benefits for developers, ease in grant of grid connectivity and open access, facilitation of land at ports and provisions for storage of green ammonia. The government also plans to issue mandates for various industries such as refineries and fertilisers to utilise a certain proportion of green hydrogen.
The sector is attracting significant foreign investments in India. For instance, John Cockerill recently entered into an agreement with the Greenko Group to build a hydrogen electrolyser gigafactory with a capacity of 2 GW. The facility is expected to come up on India’s east coast with a planned $500 million investment. Firms such as ACME, Reliance, Hero Future Energies and public sector units such as NTPC and IOCL have launched various projects in the green hydrogen segment, while several more tenders have been announced in recent months. Moving ahead, green hydrogen will not only play a crucial role in meeting India’s renewable energy targets, but also in meeting its overall energy demand. Being a leading importer of ammonia, India can reduce its foreign exchange through domestic production of green ammonia.
The Republic of Korea is on its path to becoming a global leader in hydrogen, given its ambitious target to source one-third of its energy from hydrogen by 2050. The country aims to lead the global FCEV market as it holds the highest number of FCEVs deployed in any country at present. As per its hydrogen economy roadmap, Korea is also set to increase its hydrogen consumption to almost 5.3 mt by 2040.
Australia also has a large renewable energy capacity base with its extensive solar and wind energy facilities. The country is a net exporter of fossil fuels and seeks to utilise this advantage by tapping the clean hydrogen market. CWP Global, a renewable energy developer, is establishing a 26 GW wind-solar-to-hydrogen Asian renewable energy hub. In December 2021, Stanwell Corporation and Acciona Energia signed an MoU for hydrogen production and export through a 3 GW green hydrogen facility, planned in Queensland, Australia, which will be powered by solar PV.
Fossil fuel exporters in the Middle East are also witnessing an active shift towards green hydrogen aimed at diversifying their energy portfolio. Oman has announced its plans to establish itself as a hydrogen-centric society by 2040. The country is set to launch its national hydrogen strategy and aims to become a net exporter of green hydrogen and green ammonia. Recently, Oman’s Ministry of Energy and Minerals signed an agreement with British energy company BP to construct a multi-gigawatt renewable energy and green hydrogen project by 2030. In August 2021, ACME also signed an agreement to advance a 3.5 GW green hydrogen and green ammonia facility in Oman. The UAE announced its hydrogen roadmap in November 2021, with the aim to promote export of green and blue hydrogen. The UAE has set a target to capture 25 per cent of the global clean hydrogen market by 2030. In April 2022, Masdar, an Abu Dhabi-based renewable energy company, and Hassan Allam Utilities, a Cairo-based partner, secured Egypt’s support for the development of green hydrogen hubs on the Red Sea and Mediterranean coasts of the country, with the aim of expanding up to 4 GW of electrolysers by 2030.
As per the Africa Solar Industry Association, the planned green hydrogen generation capacity in Namibia and Botswana has quadrupled from 1 GW to 5 GW. Namibia also announced its plans to develop a 4 GW green hydrogen production facility in partnership with Germany in 2021. The abundance of natural wind and solar resources in Namibia makes it a potential green hydrogen market to watch out for in the coming years.
The green hydrogen industry is still at a nascent stage, providing significant scope for countries to step in and take the lead. However, the present energy exporters such as Australia, the US and Middle Eastern countries like Saudi Arabia are likely to hold a key advantage in the green hydrogen race. The EU can develop clear standards for the market that may be adopted worldwide. Going forward, the role of countries such as China and India would be vital given the size of their industries as well as population.
Five key factors, namely, investment (public and private), financial incentives, R&D, policy framework and the overall renewable generation capacity, will be the key determinants of the green hydrogen growth trajectory in these countries. Moreover, green hydrogen cannot be viewed in isolation in the overall energy transition discourse. Even though the countries are individual competitors in this race, international cooperation, technology sharing and knowledge transfer will play a significant role in meeting the ultimate agenda of net zero emissions.