Hydrogen: the key element of the energy transition accelerates its deployment

Investments in hydrogen technologies are estimated to reach € 247 billion by 2030

Hydrogen is emerging as one of the alternatives that will facilitate the fulfillment of the commitments that companies and governments have acquired regarding decarbonization .

In early 2021 alone, more than 30 countries have published their hydrogen roadmap . Some of them have already committed $ 70 billion (about € 57.5 billion) of public funds for its start-up, according to a recent analysis published by McKinsey.

The same report reveals that 228 large-scale projects have already been announced, 85% located in Europe, Asia and Australia. If all materialize, by 2030  total investments will reach more than 300,000 million dollars  (247,000 million euros). An amount that includes 80,000 million that can be considered “mature”. In other words, those that are in the planning stage, have passed a final investment decision, are under construction or already in service or operational.

“We are witnessing a new level of maturity for the hydrogen industry , and this will only accelerate. An increase in investments six times greater than that made up to now is expected by 2025, and that will multiply by 16 until 2030 ”, said Daryl Wilson, director of the Hydrogen Council during the presentation of the report. “The plan is to direct most of this investment towards capital expenditures, while collaboration, consolidation and innovation will also be a key focus.”

The study, prepared in collaboration with the Hydrogen Council , confirms that, from a total cost of ownership (TCO) perspective, hydrogen can become the most competitive, low-carbon solution in more than 20 applications by 2030 , including trucking and shipping and steel.  

“A big step has been taken in the fight against climate change as both governments and investors now fully understand the role that hydrogen can play in the energy transition ,” said Benoît Potier, Chairman and CEO of Air Liquide. and co-chair of the Hydrogen Council. 

Drive to gain competitiveness

Two factors will be essential to achieve this result. On the one hand, it is essential that governments keep their commitments to decarbonisation, backed by financial support, clear strategies and objectives, and translate them into long-term regulatory frameworks. Second, implementation approaches must target key “unlocks”, such as reducing the cost of hydrogen production and distribution , which will have a significant impact on the rest of the industry.

Deployment across clusters will help providers share both investment and risk , while establishing positive reinforcement ties. In this sense, there are three types of conglomerates that the report includes that are already gaining ground. On the one hand, the industrial centers that support refining, power generation, and the production of fertilizers and steel; on the other, export centers in resource-rich countries; and, thirdly, port areas for fuel supply, logistics and transportation. 

According to McKinsey’s analysis, these clusters will facilitate global hydrogen trade . In this way, future demand centers, such as Japan, South Korea and the European Union, will have a connection path with low-cost hydrogen producing regions, such as the Middle East, North Africa, South America or Australia.

“To realize its full potential, governments, investors and industrial companies must work together to expand the hydrogen ecosystem around the world. Their collaboration in the coming months will allow many of the projects to become a reality and turn hydrogen into a carrier of new , clean, abundant and competitive energy ”, defended Potier.

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