23rd October 2023: The number of operational clean hydrogen production projects worldwide is set to at least double in the next five years, according to research published today by international law firm Pillsbury, with 108 set to start producing the gas by the end of 2028. This will equate to an additional 48GW coming online in the next five years.
Pillsbury’s Hydrogen Map – the first interactive global tracker of hydrogen projects – has found that, alongside strong projected growth, the number of global zero and low-carbon hydrogen production projects has grown significantly, with 94 projects already producing hydrogen. Since 2021, when Pillsbury first published its hydrogen map, the number of tracked production projects at any stage of development has increased by almost 50%.
According to the research, Europe is leading the charge in the development of clean hydrogen, with Germany home to 25 of the total already operational projects (equal to 27%); the U.S. home to 7 (7%); the UK home to 7 (7%); and Japan home to 7 (7%).
Key findings include:
- Globally, 326 clean hydrogen production projects have been announced and are at various stages of development. This includes 310 green hydrogen projects and 16 blue hydrogen projects
- Of the 108 projects set to start producing hydrogen in the next 5 years, Europe is leading the charge with 64 new projects set to come online; Asia 18; Australasia 14; and North America 10; with 1 project for each South America and Africa
- In terms of GW electricity produced from hydrogen energy in the next 5 years, Australia is front of the pack with almost 28GW due to come online. The Netherlands comes in second with nearly 7GW; Ireland nearly 4GW; and China and Spain with 2GW each
The recent growth in hydrogen projects follows significant efforts by governments across the world to promote the hydrogen industry. The EU led the charge globally with its strategy on hydrogen being adopted in 2020. The U.S. followed suit through the introduction of a clean hydrogen production tax credit through the Inflation Reduction Act and a hydrogen hubs program through the Infrastructure Investment and Jobs Act (IIJA) whilst also introducing its National Clean Hydrogen Strategy and Roadmap. Meanwhile, the UK launched its hydrogen strategy in 2021. Separately, data from Pitchbook reveals that, in 2022, private equity firms spent $3.1 billion on hydrogen-related companies across 37 deals, while venture firms invested $2.6 billion in 192 startups.
Pillsbury’s Hydrogen Map divides clean hydrogen production projects into two categories on the basis of production method: blue denoting steam reforming of natural gas with carbon capture; and green denoting hydrogen produced via electrolysis of zero-carbon energy sources, such as renewables and nuclear.
Elina Teplinsky, Pillsbury’s Global Energy Industry Leader, commented:
“The EU was the first to roll out measures to support the development of hydrogen, so we’re ultimately seeing the market reap what it sowed. The U.S. has thrown its full weight behind catching up with the EU, so it’s not surprising we’ve seen strong recent growth, something that will likely continue in the years ahead. The hydrogen hubs program will be a significant moment in the hydrogen race.
“Hydrogen is multifaceted in applications and ability to decarbonize many sectors, but some hurdles still need to be cleared before we have a viable global clean hydrogen market. One of which is the elementary question of how hydrogen will be transported in a cost-effective manner – whether via pipelines, conversion into ammonia or using new liquefaction technologies. Continued innovation and investment will see this hurdle cleared in time.
“Given the magnitude of the clean hydrogen needed to meet decarbonization goals, the signs are pointing to a significant growth in nuclear hydrogen in the years ahead. There’s already been some promising movement in procuring hydrogen from high baseload-level nuclear in existing plants in both France and the U.S.”
“At present, North America and the UK are certainly playing catch-up to Europe, given Europe had started well ahead of the pack with policies supporting the creation of a hydrogen economy. Thoughtful implementation of existing hydrogen incentives, however, could see the gap closed quickly. For example, the U.S. Department of Energy’s announcement this past Friday of the selection of seven hydrogen hubs for its $7B H2Hubs program, will likely see more projects announced in the coming months. However, this is largely predicated on the implementation of the 45V hydrogen production tax credit provided by the IRA, which is awaiting the issuance of rules by the U.S. Department of Treasury, expected by the end of this year; without eligibility for this credit, many projects may not proceed.
“Similarly, the Canadian government has proposed a hydrogen investment tax credit in its 2023 Budget Proposal, but the details of that credit remain confirmed. The UK government is also in the process of selecting projects for grant funding and finalising both production and demand-side incentives. All of this creates a potentially very exciting landscape for hydrogen development on a global scale, and while the EU may have been fastest out of the gate, North America and the UK has certainly set its sights on closing the distance.”
Gavin Watson, Partner in Pillsbury’s London office, commented:
“It’s two years since the UK unveiled its hydrogen strategy, but we still lack a coherent regulatory framework to give the sector much needed certainty. In its recent report to the UK Parliament, the Climate Change Committee noted that the UK has lost its global leadership position on climate action. It has been slow to react to the U.S.’ Inflation Reduction Act as well as the EU’s proposed Green Deal Industrial Plan. Both these initiatives will continue to pull investment away from hydrogen in the UK.
“Despite being replete with eloquent assurance of great ambition, good intention, and commitment to work with industry and consult stakeholders, the “Hydrogen Strategy Update” issued by the Dept for Energy Security & Net Zero this month does little to suggest the UK will be a front-runner in the global pursuit of a hydrogen economy. In March, it was announced that 15 applicants would share £37.9m under the UK’s first hydrogen funding support. The announcement is embarrassingly unambitious especially after Germany announced it would spend over $20bn to develop its hydrogen industry between 2024 to 2027 – with over $4bn allocated for next year alone.
“Unless things change, which doesn’t look likely in the immediate term given the divided political landscape, the UK will continue dropping down the pecking order, and possibly quite quickly.”
