Low-carbon hydrogen production will require at least $600bn in investment by 2050, according to research firm Wood Mackenzie. Global demand for low-carbon hydrogen is currently under 1mn t/yr, but is expected to rise to 223mn t/yr by 2050.

“Substantial investments are required to accommodate the anticipated growth for the global low-carbon hydrogen market up to 2050,” says Flor Lucia De la Cruz, senior research analyst at Wood Mackenzie.

“Developers will need to invest at least $600bn by 2050, and consumers will be required to commit to offtake hydrogen not yet contracted. The opportunity is huge.”

223mn t/yr – Global demand for hydrogen by 2050

The pipeline for low-carbon hydrogen projects has reached 50mn t/yr in capacity to date and is expected to reach 80mn t/yr by the end of this year.

Initially, the low-carbon hydrogen market will be driven by demand for its use in ammonia up to 2025, representing 48pc of total demand.

However, the power sector is expected to be the primary demand sector by 2050 with 31pc of total demand, overtaking ammonia demand by 2036.

The power sector’s demand for low-carbon hydrogen will reach up to 9mn t/yr by 2030 and 63mn t/yr by 2050, Wood Mackenzie predicts. The power sector will primarily use hydrogen co-fired as ammonia in coal plants up to 2030, with co-firing hydrogen with natural gas expected to take off in Europe after that year.

Green light for hydrogen

Electrolyser capex costs will decrease by 35-65pc over the next decade and enable the cost of producing green hydrogen to fall below $2/kg in many markets by 2040, says Wood Mackenzie.

Australia is expected to lead the global market initially, supplying 47pc of green hydrogen up to 2029.

“Post-2030, we expect to see supply quickly ramp up worldwide, and China becomes the largest supplier in the late 2040s,” says Bridget van Dorsten, research analyst at Wood Mackenzie.

The Middle East, North Africa, Canada, Chile and Brazil are also expected to emerge as hydrogen exporters given their access to cheap renewables.

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Author: Polly Martin