PARIS, 2nd October, 2024 (WAM) -- A new report by the International Energy Agency (IEA) highlights that investment and projects in low-emissions hydrogen are growing, but policies to stimulate demand in key sectors such as heavy industry, refining and long-distance transport are needed to speed up deployment.
It further states that a wave of new projects shows the continued momentum for low-emissions hydrogen despite challenges due to regulatory uncertainties, persistent cost pressures and a lack of incentives to accelerate demand from potential consumers.
The IEA’s annual Global Hydrogen Review 2024shows that the number of projects that have reached final investment decision has doubled in the past 12 months, which would increase today’s global production of low-emissions hydrogen fivefold by 2030. The total electrolyser capacity that has reached final investment decision now stands at 20 gigawatts (GW) globally.
“If all announced projects are realised worldwide, total production could reach almost 50 million tonnes a year by the end of this decade,” IEA said. However, this would require the hydrogen sector to grow at an unprecedented compound annual growth rate of over 90 percent between now and 2030, well above the growth experienced by solar PV during its fastest expansion phases.
The report states that, of the more than 6 GW of electrolyser capacity to reach final investment decision in the past year, China accounts for more than 40 percent. The country’s expertise in mass manufacturing of clean energy technologies, including electrolysers, means it is home to 60 percent of global electrolyser manufacturing capacity, which, at 25 GW per year, is well above the average deployment rate globally.
“The growth in new projects suggests strong investor interest in developing low-emissions hydrogen production, which could play a critical role in reducing emissions from industrial sectors such as steel, refining and chemicals,” said IEA Executive Director Fatih Birol. “But for these projects to be a success, low-emissions hydrogen producers need buyers. Policymakers and developers must look carefully at the tools for supporting demand creation while also reducing costs and ensuring clear regulations are in place that will support further investment in the sector.”
The report highlights a gap between government goals for production and demand. Production targets set by governments worldwide add up to as much as 43 million tonnes per year by 2030, but demand targets only total just over a quarter of this, at 11 million tonnes by 2030. Some government policies are already in place to stimulate demand for low-emissions hydrogen and hydrogen-based fuels.