Full Title: Hydrogen Market Pathways
Author(s): Mason Hamilton, Allyson Cutright, Anne-Sophie Corbeau
Publisher(s): International Energy Forum (IEF)
Publication Date: June 2, 2022
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Interest and momentum surrounding hydrogen has grown in recent years, but the idea of using hydrogen as an energy carrier is not new – it has come in and out of fashion since the 1970s. Yet, despite decades of interest and research, there are still many obstacles to overcome for the hydrogen market to scale–up.
Currently, hydrogen accounts for only ~1% of the energy mix, is predominately produced using unabated fossil fuels, and is mainly used on–site where it is produced. For hydrogen to play a role in the energy transition, it must be available in sufficient volumes, at a
competitive cost, and with low carbon intensity associated with its supply chain. The entire supply chain must be developed and scaled–up. Different demand forecast scenarios show hydrogen consumption growing by as much as six–fold by 2050 (with low–carbon hydrogen growing by 500–600–fold).
Such growth makes it increasingly plausible that hydrogen could become an internationally traded commodity in the coming decades. Understanding the likely pathways and drivers of maturation is essential for reducing risk and attracting investor and government buy–in.
For hydrogen to achieve its potential, decisive policy action will be needed, as well as significant infrastructure investment, to drive scale. Developing hydrogen will require a significant development of renewable capacity beyond what will be used to decarbonize the power sector. Large–scale hydrogen networks will be necessary to connect production and storage resources to end–users. Scaling–up the supply chain can lower supply costs, increase security, enable competitive markets, and facilitate international trade.
This report first looks at the current hydrogen market and supply chain and then examines what will shape and determine market and business model development under the assumption that economics and technology evolve favorably. Next, the study examines what external contractual and regulatory support can help guide a successful scale–up.