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Building a Hydrogen Economy

Accelerating the transition to net-zero

Demand for hydrogen could increase seven-fold to 800 Mt per annum by 2050. This is because low-carbon hydrogen can play a critical role in decarbonising hard-to-abate sectors like steel production, chemicals and long-distance shipping. Hydrogen can also play a role in energy storage, which will be increasingly important as the share of variable renewables in the global power system grows. For these reasons, low-carbon hydrogen derived from renewable energy (‘green’) or natural gas reforming with carbon capture storage (‘blue’) is expected to reach ~20 per cent of final energy demand by mid-century, compared to ~5 per cent today.

Developing a hydrogen economy will require deploying up to USD800 billion per annum in investment between now and 2050, according to the Energy Transitions Commission (ETC). The bulk of this investment will likely go towards renewable electricity generation to support green hydrogen production, which the ETC forecasts could make up nearly 85 per cent of future hydrogen supply. Key drivers supporting green hydrogen scale up include a continued reduction in renewables power prices and targeting locations with concentrated captive demand, e.g. industrial clusters. Blue hydrogen may play an important role in the transition as well, especially in markets with low natural gas prices.

This report by the Energy Transitions Commission outlines critical activity areas to prioritise within the 2020s in order to be on track to achieving net-zero by 2050. It also evaluates various policy mechanisms to support low-carbon hydrogen uptake, such as setting quantitative targets, incentivising deployment within industrial clusters, carbon pricing to encourage corporate behaviour, and regulation that supports transition across sectors like heavy industry.

'Making the Hydrogen Economy Possible: Accelerating Clean Hydrogen in an Electrified Economy' report

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