Government funding pledged to the hydrogen sector has risen by 40pc globally since July last year and now stands at two-thirds of the level needed to allow the clean fuel to play a strong role in decarbonising economies, says research firm BloombergNEF (BNEF).

Funding pledges exceed $100bn through 2030—or $16bn/yr—and are potentially on track by the end of this year to hit the $150bn level identified by BNEF as required to support the scale-up of clean hydrogen.

“I would not be surprised if, by the end of this year, $150bn has been promised,” Martin Tengler, lead hydrogen analyst at BNEF, tells Hydrogen Economist. The US offers the most funding of any country thanks to the passage of its Infrastructure Bill, BNEF says.

The report also observed that 13 countries released a national hydrogen strategy in 2021 and up to 22 could do so in 2022. India and the US are being watched especially closely.

1.8-2.5GW – Forecast electrolyser sales in 2022

Demand for clean hydrogen is set to “skyrocket” this year, especially in industry, BNEF says in a new report, 1H 22 Hydrogen Market Outlook. Its database tracks 114 planned projects, up from 91 in July 2021, with ten coming online in 2022.

Electrolyser sales reached 458MW in 2021, up from 200MW in 2020, and should rise to 1.8-2.5GW this year, BNEF says.

Almost two-thirds of these sales will happen in China, the firm adds. Tengler notes that about half of the world’s electrolysers will be built by four or five companies in China.

The report notes that two Chinese projects plan to use more than 40,000t of clean hydrogen in 2022—several times more than all of the world's hydrogen cars combined.

“Forget about hydrogen cars,” says Tengler. “Hydrogen has a much stronger future in decarbonising hard-to-abate industrial sectors. This year, just two industrial projects in China will use several times more clean hydrogen than the world's entire passenger fuel-cell vehicle fleet.” 

In fact, China will account for 1.1-1.6GW of the 1.3-1.8GW of electrolyser capacity BNEF expects to be installed in the Asia-Pacific region this year.

Of the reason for the rapid growth in China, Tengler says state-controlled companies such as Petrochina and Sinopec are especially keen to show compliance with national decarbonisation goals, as are state-owned electricity companies such as Three Gorges and China Haudian.

Another example is privately owned Baofeng, which plans to build 150-200MW of electrolysers in 2022. The company needs a permit for a new coal-chemical plant and is therefore keen to show the potential for green hydrogen to decarbonise. 

Globally, BNEF's database now tracks 122GW of planned electrolyser projects, up from 50GW in July 2021.

“Forget about hydrogen cars, hydrogen has a much stronger future in decarbonising hard-to-abate industrial sectors” Tengler, BNEF

Proposals for policies that would help hydrogen demand grow further are becoming commonplace, says BNEF. They include industrial decarbonisation policies, clean fuel mandates, heavy transport emission rules and standards certifying emissions from hydrogen production.

Still, stronger policies favouring decarbonisation will be needed to keep the growth going. Crucially, these include higher carbon prices in sectors where hydrogen could play a strong role, such as ammonia, methanol, oil refining, iron and steel, says BNEF.

Standard approach

Globally, most organisations are taking the wrong approach to hydrogen standards, he says. "We need a clear, internationally accepted set of standards to measure greenhouse gas emissions related to hydrogen—from its production to its use and leakage—in order for users to quantify how much the hydrogen they use is contributing to decarbonisation. Currently, most proposed or existing schemes fall short."

Standards should govern interoperability of hydrogen equipment and quality, and help minimise barriers to international project development. For example, two countries that share a standard on hydrogen pipelines or trucks would find it easier to trade hydrogen, notes the report.

Standards should also define how to measure emissions across the whole hydrogen value chain to facilitate emissions accounting so that net zero can be reached.

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Author: Ros Davidson