Unlocking the Potential of Hydrogen: Global Investments and Challenges Ahead
Key Ideas
  • ACES Delta project in Utah, developed by Mitsubishi Power and Chevron, aims to convert renewable energy into hydrogen for long-duration energy storage, setting a blueprint for future projects worldwide.
  • Global investments in hydrogen projects have surpassed $570 billion, but only a quarter of projects with known commissioning dates have passed the final investment decision stage, highlighting sluggish investment decisions.
  • Challenges remain in hydrogen adoption, including high costs compared to fossil fuels, the need for policy support, market uncertainty, and the requirement for substantial investment and effort to develop infrastructure.
  • Despite challenges, efforts like the U.S. Bipartisan Infrastructure Law and clean hydrogen production tax credits aim to incentivize hydrogen development, with projects like Exxon Mobil's Baytown project leading the way towards low-carbon hydrogen production.
The Advanced Clean Energy Storage project (ACES Delta) in Utah, a collaboration between Mitsubishi Power and Chevron, is making strides in the hydrogen industry. It aims to convert over 220 MW of renewable energy into 100 metric tonnes per day of hydrogen for storage in massive salt caverns, with operations set to begin in 2025. The project is seen as a model for future ventures globally. Similarly, a $8.4 billion hydrogen plant in Saudi Arabia, backed by various financial institutions, is set to produce up to 600 tonnes per day of green ammonia by 2026. The hydrogen sector faces challenges despite significant investments. While over 1,400 projects globally represent billions of dollars and millions of tons of clean hydrogen, only a fraction have passed the final investment decision stage. High costs, policy uncertainties, and market demand are hurdles to overcome. Initiatives like the U.S. Bipartisan Infrastructure Law and clean hydrogen tax credits aim to spur hydrogen growth. Exxon Mobil's Baytown project is a notable endeavor, aiming to produce 1 Bcf/d of hydrogen while capturing and storing over 98% of associated CO2. The project, expected to start in 2027 or 2028 pending final investment decision, aligns with the Biden administration's clean hydrogen goals. Overall, the hydrogen industry shows promise but requires collaborative efforts, policy support, and substantial investments to realize its full potential.
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