Government inaction stalling green H2

The green hydrogen industry needs more government backing to reach demand goals.

So says a report by the Institute for Energy Economics and Financial Analysis (IEEFA).

It points out that 50 new green hydrogen projects show Australia, Asia and Europe are lead players but US$75 billion in costs and government inaction risk delays.

IEEFA finds the pace is not fast enough to meet global energy demand, with massive capital shortfalls and government inaction stalling start-ups.

Report author Yong Por says that based on his analysis of the 50 new projects, the supply of global green hydrogen is likely to be only 3 million tonnes annually. Yet demand for green hydrogen has been forecast at 8.7 million tonnes annually by 2030, showing an incredible supply shortfall.

“Asia, Europe and Australia are backing the majority of new green hydrogen projects,” says Por.

“The European Union (EU) is also a heavy lifter in the new global technology race, with green hydrogen projects backed by improving economics, falling renewable costs, the option to produce hydrogen on-site economically, and existing gas pipelines which can be used for transport to meet local demand.

“However, many of the 50 newly announced green hydrogen projects could face delays due to uncertain financing, cumbersome joint venture structures, and unfavourable seaborne trade economics.”

Por says more public-private efforts are necessary for green hydrogen supply to overcome apparent obstacles.

He finds that for new projects to be successful, the manufacture of electrolysers, fuel cells and associated equipment (hydrogen compressors, boilers, drive trains, storage tanks, bunkering facilities, pipelines, sensors, measuring equipment and liquefaction plants) will need to be significantly scaled up, while seaborne hydrogen transportation costs need to be substantially lowered.

“Governments will also need to get behind these new projects and work hand-in-hand with industry as the world transitions away from fossil fuels into cleaner renewable energies,” says Por.

“Green hydrogen could well prove a key technology enabler for integrating ever cheaper but intermittent renewables.”

Although dabbling in minor green hydrogen projects, China, Japan and South Korea’s strategies are primarily focussed on blue hydrogen (produced from fossil fuels with carbon capture) or grey hydrogen (relying on fossil gas and coal-based feedstocks with zero carbon abatement), rather than the renewable rich green hydrogen.

Por sees the EU’s July 2020 hydrogen plan to be the most ambitious, being the only plan with a key focus on the long game, green hydrogen.

Australia has the most ambitious hydrogen export plans that are well supported by government agencies, he says.

And Saudi Arabia is pioneering a world-scale green ammonia project by the Red Sea, putting it in a prime position for transport to Europe.

“Governments need to urgently back this industry by developing policy settings encouraging private industry to invest the much-needed capital, given the industry must ‘learn by doing’,” says Por.

“Until then, we are likely to see project delays as proponents struggle with still absent project viability, evidenced by only 14 of the 50 new projects having started construction with 34 at a study or memorandum of understanding stage.”

Por describes it as “the next global technology race”.