Accelerating Low-Emissions Hydrogen Deployment: Urgent Policies Needed for Demand Boost
Key Ideas
- The IEA's report emphasizes the need for urgent policies to stimulate demand in heavy industry, refining, and long-distance transportation to accelerate low-emissions hydrogen deployment.
- The global low-emissions hydrogen sector is experiencing sustained momentum with a doubling of projects achieving final investment decisions, potentially quintupling production by 2030.
- China's dominance in electrolyser production is notable, accounting for over 40% of final investment decisions and 60% of global electrolyser production capacity, signaling its expertise in clean energy technologies.
- However, there is a disparity between government production and demand targets, with production goals reaching 43 million tonnes per year by 2030 while demand projections fall short at 11 million tonnes, calling for alignment in policies and strategies.
A recent report from the International Energy Agency (IEA) underscores the increasing investments in low-emissions hydrogen but highlights the urgent need for policies to boost demand in critical sectors like heavy industry, refining, and long-distance transportation. Despite challenges such as regulatory uncertainties and cost pressures, the low-emissions hydrogen sector shows sustained momentum, with a doubling of projects achieving final investment decisions over the past year, potentially leading to a fivefold increase in global production by 2030.
The report also points out China's significant role in electrolyser production, with over 40% of final investment decisions and 60% of global electrolyser production capacity attributed to the country. The IEA projects that if all announced projects materialize, global low-emissions hydrogen production could reach nearly 50 million tonnes annually by the end of the decade. This ambitious growth, however, necessitates an extraordinary compound annual growth rate of over 90%, surpassing even the most rapid growth rates seen in solar PV.
While there is strong investor interest in low-emissions hydrogen production, the report stresses the importance of finding buyers to ensure the success of these initiatives. Disparities between government production and demand targets highlight the need for aligning policies to encourage demand for low-emissions hydrogen and hydrogen-based fuels. Policymakers and developers are urged to focus on reducing costs, fostering demand, and establishing clear regulations to support further investment in the sector.
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