Hydrogen will provide only 3.4pc of global energy in 2050 as its growth will be limited by production costs, the pace of investment and project construction, and competition from other low-carbon options such as electrification, according to new analysis by information provider S&P Global Commodity Insights.

S&P’s forecast for hydrogen’s share of global energy is very much at the lower end of current projections, most of which fall within a range of 5–20pc.  It describes the forecast as “conservative” compared with country and energy agency targets.

Hydrogen’s role will often be as the marginal source of low-carbon supply in industries still going through the energy transition. S&P forecasts global hydrogen demand in the period 2020–50 will grow by a factor of 3.3, from 72.2mn t/yr to 251mn t/yr. About 148mn t of hydrogen demand growth will come from “new” energy sectors such as mobility, power generation, industry and residential/commercial heat where hydrogen is not appreciably used today, it says.

251mn t/yr – Projected demand in 2050

“In these sectors, hydrogen will be a strategic resource for hard-to-decarbonise applications where other low-carbon solutions are too expensive or not able to meet key performance requirements,” S&P says.

It forecasts that in 2050, 83pc of all hydrogen production will qualify as “clean”, including 67pc (168mn t) from water electrolysis and 16pc (40mn t) from fossil production with CCS.

“In 2050, roughly two-thirds of hydrogen will be produced using water electrolysis. A niche technology today, the installed capacity of electrolysers will need to increase by over 1,000 times, from 0.5GW to over 1,000GW,” says Brian Murphy, senior analyst for hydrogen and low-carbon fuels at S&P.

“Supportive domestic policies in China, Australia, and the US will lead to these three countries collectively capturing 50pc of the green hydrogen market in 2050.”

Trade

S&P appears to play down the potential for hydrogen to become a globally traded commodity comparable with LNG. Only a fifth of clean hydrogen will be traded across international borders in 2050, mostly from countries with abundant cheap renewables in Oceania, North Africa, the Middle East and North America to resource-constrained countries in Europe and East Asia, it says.

“Total traded energy flows will be just 20pc of the 2022 LNG trade, but imported hydrogen is key to meeting long-term emissions targets because it can replace some of today’s highest-emitting fuels and processes.”

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Author: Stuart Penson