Carbon neutrality to fuel double-digit growth in the green hydrogen generation markets by 2030

With over 70 countries setting net-zero targets and almost all nations worldwide pledging to significantly reduce carbon emissions in the next three decades, the demand for green hydrogen as a fuel is set to witness double-digit growth in the next five years, and moderate thereafter for the next three years, until 2030, according to a study conducted by Pune-headquartered research firm MarketsandMarkets Research Pvt Ltd.

The study titled ‘Future of Hydrogen Economy’ predicts that the green hydrogen generation market will grow by a compounded annual growth rate (CAGR) of 10.5 percent, reaching a size of US$264 billion by 2027 from the base of US$159.5 billion reported in 2022. By 2030, the green hydrogen generation market is expected to expand further to US$334 billion, witnessing a CAGR of 9.7 percent.

Once considered a distant dream, hydrogen has the potential to play an important cross-cutting role in a future of a low carbon economy, with applications across the industrial, transport, and power sectors. There has been a growing apprehension that full electrification of the current energy system could be expensive and technologically challenging, considering the storage, flexibility, and chemical and heating attributes of current fossil fuels. To that end, lower-carbon hydrogen could replicate these attributes without the associated emissions, providing significant value across sectors.

Grey hydrogen, currently the most widely produced form due to its cost-effectiveness, is expected to be joined by blue and green hydrogen, which are low to zero-carbon emitting. By 2035, blue and green hydrogen are projected to account for approximately 22 percent of total hydrogen production, indicating a significant shift toward sustainability. Currently, Asia Pacific dominates the grey hydrogen market, led by countries such as China and India, which have substantial capacity in ammonia production and refinery throughput. Driven by rising environmental awareness and emission reduction targets, Europe is becoming a prominent market for blue and green hydrogen, with the Netherlands and Germany leading from the front.

Upstream opportunity
Around 88 percent of the hydrogen produced in 2022 (by value) was grey hydrogen, which shows a global dependence on carbon dioxide (CO2)-emitting hydrogen (H2). Blue hydrogen could develop as a short-term infill; however, only green hydrogen is truly a sustainable offering. The factors driving the growth of the hydrogen generation market are increasing its increasing consumption in the industrial sector and rising demand for hydrogen as a fuel for transportation and power generation applications.

According to the study, low-carbon hydrogen production is expected to generate a US$70 billion opportunity in the hydrogen economy by 2030. Blue hydrogen production technologies, such as steam reforming, coal gasification, gas heat reforming, and biomass gasification with a technology readiness level (TRL) level of less than seven will play a critical role in the hydrogen economy by 2030.

Factors that further propel the demand for green hydrogen are low variable electricity costs, technological advancements, global plans for net-zero emissions by 2050, and high demand for fuel cell electric vehicles (FCEVs) and the power industry. Within green hydrogen, the production from alkaline electrolysis is expected to grow to US$4 billion by 2027, driven by the initiatives such as European Gas Deal, which aims to reduce greenhouse gas emissions and prepare Europe’s industry for a climate-neutral economy.

Midstream and downstream prospects
Ammonia is considered an economically viable mode for liquid hydrogen transportation over long distances due to its higher volumetric energy density compared to liquid hydrogen, and providing ease of transportation. Repurposed existing pipeline infrastructure is the most viable mode for hydrogen transportation over long distances.

The global hydrogen fuelling station market is projected to reach US$1.13 billion by 2030 from an estimated US$380 million in 2023, at a CAGR of 16.8 percent. The key factors such as the growing demand for zero-emission vehicles and strong government support, have led to many top original equipment manufacturers (OEMs) investing in FCECs' research and development. Due to increasing demand for the FCEVs, there is a need for hydrogen fuelling station infrastructure.

Furthermore, the on-site hydrogen fuelling station market is expected to be the fastest-growing market until 2030. Various countries are taking initiatives to shift toward clean and green fuels, which is possible through the on-site production of hydrogen through electrolysis. The on-site segment’s growth is attributed to rising investments in green hydrogen projects and an inclination toward zero-carbon fuel to power fuel cell vehicles.

Electrolysers potential
An electrolyzer is an apparatus that produces hydrogen through a chemical process (electrolysis) capable of separating the hydrogen and oxygen molecules of which water is composed using electricity. Green hydrogen produced in this way, i.e. without emitting carbon dioxide into the atmosphere, can be the basis for a decarbonized economy. As a consequence, electrolyzers form an inseparable component in the production of green hydrogen.

The electrolyzers market has a promising growth potential due to the rising deployment of this equipment for green hydrogen production. The study forecasts that the global electrolyzers market is estimated to be valued at US$1.2 billion in 2023, and is projected to reach US$23.6 billion by 2028, growing at a CAGR of 80.3 percent.

Along with electrolyzers, the hydrogen storage market is also growing due to rising demand for fuel cells across various industries and stringent government regulations globally. Consequently, the global hydrogen storage market is projected to reach US$7.7 billion by 2027, at a CAGR of 21.5 percent between 2023 and 2030. The physical hydrogen storage market size is projected to grow from US$1.5 billion in 2023 to US$6.3 billion by 2030, at a CAGR of over 21 percent.

Green vs fossil-fuel based hydrogen
Hydrogen and its derivatives have the potential to play a critical role in decarbonizing sectors such as heavy industry, shipping, aviation, and heavy-duty transport, where reducing emissions is challenging due to limited alternative options. According to the International Renewable Energy Agency (IRENA), hydrogen and its derivatives have the potential to meet up to 12 percent of the global energy demand and contribute to a 10 percent reduction in carbon emissions.

Achieving this target requires substantial progress in the hydrogen industry. Notably, electrolyzer manufacturing capacity has nearly doubled since last year, reaching over 8 gigawatts (GW). Furthermore, completing ongoing projects is expected to result in an installed electrolyzer capacity of 134-240 GW by 2030, more than double last year’s forecasts.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com