While the number of announced large-scale hydrogen projects grows globally, only about 10% have reached the final investment decision, according to The Hydrogen Council’s Hydrogen Insights 2022 report, published in September.
Between January 2021 and May 2022, 680 hydrogen projects were announced globally, including 61 gigaprojects, the report details. Of these, some 534 announced projects aimed to fully or partially be deployed through 2030, representing total investment commitments of $240bn.
However, the actual deployment of these hydrogen projects is lacking. The report notes that only about $22bn have reached a final investment decision, or are under construction or operational, 189 out of the announced 680 projects.
“The final investment decision step is contingent on a lack of clarity about government policy and funding,” Daryl Wilson, executive director at the Hydrogen Council tells fDi, adding that these projects need more clarity in policy support and incentives to proceed with new energy projects.
Europe shows the most activity in hydrogen projects announcements, accounting for more than 30% of global announced projects, worth about $76bn with 314 project proposals in total, as of May 8 2022. Of this, only $6bn are being deployed, showing the largest gap between the value of announced projects and the value of the projects under development.
Murray Douglas, head of hydrogen research at energy consultancy Wood Mackenzie, tells fDi that the European governments, especially the EU, have set out aggressive targets. And yet, the details behind how to achieve the targets are lacking.
Indeed, in its Repower EU plan, the EU announced the target to produce 10 million tonnes of hydrogen in the bloc, importing an extra 10 million tonnes by 2030. The UK hydrogen strategy, published in 2021, also outlined its production capacity ambition to grow to 10 gigawatts by 2030.
North America and Latin America showed the fastest growth rate of project announcements since 2021, with about 20% of announced projects each. The report said project proposals are worth about $47bn in North America and $43bn in Latin America. Of this, the value of projects that have reached final investment decisions totalled around $8bn in North America, which reached a higher value than in Europe. The project proposals announced in Latin America barely reached the final investment decision, less than $1bn.
Carbon capture utilisation and storage
The Hydrogen Council reported that the vast majority of projects with committed capital reaching final investment decision is low-carbon hydrogen projects, including blue and green hydrogen, driven by operational low-carbon hydrogen projects in North America.
The International Energy Agency argues that more than 80% of hydrogen is produced from fossil fuels, which are highly carbon intensive, and the production of low-carbon hydrogen will mostly be from fossil fuels with carbon capture in the near term.
The US has seen a major influx of carbon-capture projects this year. With CarbonCapture’s recent Wyoming project, four projects worth around $849m were announced in the country between January and July 2022, according to the foreign investment tracker fDi Markets.
“Gas-fired power generation can co-exist by locating a gas power plant with a carbon capture facility in the US” Takajiro Ishikawa, the CEO of Mitsubishi Heavy Industries told fDi, adding that North America has the most suitable geological condition for storage of carbon dioxide.