Green Hydrogen: The Future of Decarbonizing Industries
Key Ideas
- Green hydrogen is becoming essential for decarbonizing hard-to-abate industries.
- ABI Research predicts that global production costs for green hydrogen will become cost-competitive by 2030 and undercut polluting alternatives by 2040.
- Efficiencies in electrolyzer technology and economies of scale are expected to significantly reduce production costs, with forecasts showing a drop from US$6-7/kg to approximately US$2.5/kg by 2030 and US$1.80/kg by 2040.
- By 2050, green LCOHs are projected to reach around US$1/kg as the market matures, driven by declining prices for renewable energy.
Green hydrogen is gaining prominence as a crucial element in the decarbonization efforts of hard-to-abate industries. Despite the high production costs associated with green hydrogen, known as the Levelized Cost of Hydrogen (LCOH), ABI Research anticipates a significant shift in the market dynamics. By 2030, global LCOHs are projected to become cost-competitive and surpass traditional polluting alternatives by 2040. This transformation is attributed to advancements in electrolyzer efficiencies and economies of scale, leading to a substantial drop in production costs from an average of US$6-7/kg to about US$2.5/kg by 2030 and further down to US$1.80/kg by 2040. Daniel Burge, a Research Analyst at ABI Research, highlights the role of falling renewable energy prices in driving the decline in LCOHs, with a forecast of reaching US$1/kg by 2050 as the green hydrogen market matures. These predictions indicate a promising future for the industrial adoption of green hydrogen, marking a significant step towards achieving sustainable and environmentally friendly production practices.