Unlocking Hydrogen Demand: Opportunities and Challenges Ahead
Key Ideas
- A new report by the Hydrogen Council, in collaboration with McKinsey & Co, identifies the potential for significant hydrogen demand growth by 2030 across the EU, US, and East Asia.
- Existing policies, if effectively implemented, could support the uptake of approximately 8 Mt p.a. of clean hydrogen in key markets, driving the transition towards cleaner energy sources.
- Incremental infrastructure enhancements, cost reductions, and supportive frameworks are crucial in unlocking further hydrogen demand across various sectors like refining, ammonia, trucking, maritime, and aviation.
- Industry leaders emphasize the importance of policy certainty, cross-sector collaboration, and business-enabling measures to accelerate the scale-up of hydrogen and its derivatives for sustainable growth and energy security.
A recent analysis by the Hydrogen Council, conducted in partnership with McKinsey & Co, projects a promising future for hydrogen demand across key regions. The report highlights the potential to unlock around 8 Mt p.a. of clean hydrogen by 2030 in the EU, US, and East Asia through the effective implementation of existing policies. Policies such as the EU Renewable Energy Directive (REDIII), Japan’s Contracts for Difference mechanism (CfD), South Korea’s Clean Hydrogen Portfolio Standard (CHPS), and sections of the US Inflation Reduction Act (IRA) play a vital role in reducing production costs and incentivizing the use of clean hydrogen.
The report outlines different scenarios for hydrogen uptake, ranging from established use cases like refining and ammonia to emerging sectors like trucking, maritime, and aviation. While established sectors could see significant demand growth with infrastructure improvements and cost declines, new end uses face challenges related to costs and infrastructure requirements. The analysis suggests that 75% of the potential hydrogen demand comes from established sectors, emphasizing the need for targeted strategies to foster growth.
Industry leaders from companies like Linde and Hyundai Motor Group stress the importance of multiple solutions, including hydrogen, in achieving a successful energy transition. They highlight the business opportunities arising from hydrogen adoption in various sectors, underscoring the need for supportive frameworks and cross-sector collaboration. The Hydrogen Council calls for policy certainty, simplicity, and infrastructure development to drive the scaling up of hydrogen and advance sustainability goals, energy security, and competitiveness.
Topics
Production
Clean Energy
Sustainability
Energy Transition
Industry Growth
Decarbonization
Business Opportunities
Policy Implementation
Infrastructure Enhancement
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