Total investment in hydrogen projects is forecasted to top $680bn this year, an eight-fold increase on 2020, according to the latest Hydrogen Insights report from the Hydrogen Council and McKinsey & Company.
The global project pipeline has risen from 228 four years ago to 1,572 today.
Clean hydrogen projects that reached FID have seen a seven-fold increase in committed investment, growing from approximately $10bn across 102 projects in 2020 to $75bn across 434 projects in 2024.
However while the pace of FID globally has accelerated in the last four years, it has not been sufficient to remain on track with climate commitments, the report states, adding that another eight-fold increase of investments in hydrogen is required until 2030.
“Addressing this challenge calls for a joint effort by decision-makers in government and industry,” the report notes.
“Government incentives and enabling legislative frameworks play a critical role in mobilising private capital and advancing mature projects within this decade. In the next two years, ensuring greater regulatory clarity and certainty and support for demand drivers will be critical for tackling project delays observed today alongside the development of the enabling midstream infrastructure.”
Source: Hydrogen Insights 2024
Between 2020-2024, clean hydrogen supply capacity planned through 2030 has grown from about 7 Mtpa to 48 Mtpa, driven by the prevalence of large-scale low-carbon projects.
Europe’s share of projects within the global project pipeline has reduced to 40% – although the number of projects has grown from 125 to more than 600 – and the second-largest region is now North America (20%) followed by China and Latin America (10% each).
Notably, North America has the largest relative increase in projects in a committed stage, with close to 100 projects past FID today (up from less than 10 in 2020). This entails an increased proportion of projects past FID is in North America, at more than 20% of total projects in FID, up from less than 10% in 2020. The region also has the most mature clean hydrogen pipeline with 2.4 Mtpa supply committed.
Jaehoon Chang, President and CEO of Hyundai Motor Company and Co-Chair of the Hydrogen Council, said, “We are pleased to see the industry walking the talk at this critical transitional moment, as evidenced in the latest Insights report. Moreover, further action is needed to ensure an accessible and affordable hydrogen supply, enabling the widespread adoption of hydrogen.”
Despite progress, the hydrogen sector, like other clean energy industries currently, faces macroeconomic headwinds including rising inflation and interest rates, and geopolitical tensions affecting energy markets.
Sector-specific issues such as regulatory uncertainty and increasing costs for renewable power and electrolysers have led to project delays, particularly for renewable hydrogen projects. Around 375 gigawatts (GW) of electrolysis capacity has been announced to 2030, up from 305 GW previously, with Europe leading the capacity charge.
Source: Hydrogen Insights 2024
Hydrogen refuelling infrastructure deployment is another disjointed area, accelerating in markets such as China and South Korea but seemingly stagnating in Europe and North America.
Overall the report sends a clear message: hydrogen is happening, according to Ivana Jemelkova, CEO of the Hydrogen Council.
“Now that hydrogen is a reality in the energy transition, it’s time to drive significantly more investment by 2030 to meet our mid-century targets,” she said. “Equipped with concrete lessons learned from the past four years, we must urgently address challenges in key markets and create a more favourable environment for project execution.”
Sanjiv Lamba, CEO of Linde and Co-Chair of the Hydrogen Council, said realising hydrogen’s full climate and socio-economic potential requires a united effort from governments and industry.
“With a supportive regulatory framework and targeted incentives, investors will have the certainty they need to move projects to FID – ultimately contributing to achieving global climate targets,” he said.
