H2 has a crucial role in decarbonizing the world’s energy system, but uptake will be too slow. Governments need to make urgent, significant policy interventions, according to a new report by DNV.
In H2 Forecast to 2050, DNV predicts the amount of H2 in the energy mix will be only 0.5% in 2030 and 5% in 2050. However, to meet the targets of the Paris Agreement, H2 uptake would need to triple to meet 15% of energy demand by mid-century.
“H2 is essential to decarbonize sectors that cannot be electrified, like aviation, maritime, and high-heat manufacturing and should therefore be prioritized for these sectors,” said Remi Eriksen, Group President and CEO of DNV. “Policies do not match H2’s importance. They will also need to support the scaling of renewable energy generation and carbon capture and storage as crucial elements in producing low-carbon H2.”
According to H2 Forecast to 2050, electricity-based green H2 – produced by splitting H2 from water using electrolyzers – will be the dominant form of production by the middle of the century, accounting for 72% of output. This will require a surplus of renewable energy, to power an electrolyzer capacity of 3,100 gigawatts. This is more than twice the total installed generation capacity of solar and wind today.
Blue H2 – produced from natural gas with emissions captured – has a greater role to play in the shorter term (around 30% of total production in 2030), but its competitiveness will reduce as renewable energy capacity increases and prices drop.
Global spend on producing H2 for energy purposes from now until 2050 will be $6.8 T, with an additional $180 B spent on H2 pipelines and $530 B on building and operating ammonia terminals, according to DNV’s forecasts.
Cost considerations will lead to more than 50% of H2 pipelines globally being repurposed from natural gas pipelines, as the cost to repurpose pipelines is expected to be just 10-35% of new construction costs. H2 will be transported by pipelines up to medium distances within and between countries, but not between continents. Global H2 trade will also be limited by the high cost of liquefying H2 for ship transport and the low energy density of H2. The H2 derivative ammonia, which is more stable and can be more readily transported by ship, will be traded globally.
Early uptake of H2 will be led by hard-to-abate, high-heat manufacturing processes such as iron and steel production, which use coal and natural gas. H2 derivatives, such as ammonia and methanol, are key to decarbonizing heavy transport like shipping and aviation, but these fuels won’t scale until the 2030s according to DNV’s forecasts.
H2 will not see uptake in passenger vehicles, and only limited uptake in power generation. H2 for heating of buildings will not scale globally but will see early uptake in some regions that already have extensive gas infrastructure.
“Scaling H2 value chains will require managing safety risk and public acceptance, as well as employing policies to make H2 projects competitive and bankable. We need to plan at the level of energy systems, enabling societies to embrace the urgent decarbonization opportunities presented by H2,” said Eriksen.
The uptake of H2 will differ significantly by region, heavily influenced by policy. Europe is the forerunner with H2 set to take 11% of the energy mix by 2050, as enabling policies both kickstart the scaling of H2 production and stimulate end-use. OECD Pacific (H2 8% of energy mix in 2050) and North America (7%) regions also have strategies, targets, and funding pushing the supply-side, but have lower carbon-prices and less concrete targets and policies. Greater China (6%) follows on, recently providing more clarity on funding and H2 prospects towards 2035, coupled with an expanding national emissions trading scheme. These four regions will together consume two-thirds of global H2 demand for energy purposes by 2050.
