Global investments in Green Hydrogen

Hydrogen is a crucial technology in the energy transition, offering a solution to hard-to-abate sectors where electrification is not feasible. Despite receiving only a fraction of total energy transition investments, hydrogen technology is gaining momentum across the world. In this blog, we outline five key takeaways from hydrogen investments in 2022.

1. Hydrogen’s Role in Decarbonisation Hydrogen plays a crucial role in decarbonisation by offering a solution to hard-to-abate sectors such as heavy industrial processes, aviation, shipping, and heavy-duty trucks. Hydrogen can also be used for storing energy and providing grid flexibility. Green hydrogen is expected to become significantly cheaper than alternative methods, reaching production costs as low as USD 1/kilogramme by 2050.
2. Global Investment in Hydrogen Technology Investment in hydrogen technology is gaining momentum across the world. In 2022, the Americas led investment with the United States accounting for 44% of the global total. Asia and the Pacific (mainly China) accounted for 33%, while Europe and the Middle East made up the remainder of investments. As of October 2022, more than 60 countries had developed or were preparing hydrogen strategies.
3. Electrolyser Capacity Expansion It is expected that 115 gigawatts of electrolyser capacity will be added by 2030, with 73% of it in Europe. Despite China commissioning 2.5 times more electrolyser capacity than the Americas, electrolysers sold in China are more than 70% cheaper than elsewhere. This highlights the importance of technology development to achieve cost-effective long-distance transport of large volumes of hydrogen.
4. Strong Inflows of Early-Stage Capital While current investment in hydrogen technology is significantly less than for mature renewable energy technologies such as wind and solar, hydrogen technology has seen strong inflows of early-stage capital and high levels of national funding in recent years. In 2021, hydrogen start-ups in Europe received more investment than their US counterparts. Governments worldwide are also committing substantial funding to develop the hydrogen ecosystem.
5. Challenges and Uncertainties Hydrogen technology faces challenges and uncertainties. Projects in Europe and the Middle East struggled to reach financial close due to uncertainties over hydrogen standards and subsidies. The cost-effective long-distance transport of large volumes of hydrogen remains a challenge being addressed by major technology developers.

In conclusion, hydrogen technology is gaining momentum across the world and offers a solution to hard-to-abate sectors in the energy transition. While investment in hydrogen technology is currently less than for mature renewable energy technologies, strong inflows of early-stage capital and high levels of national funding are driving progress. However, challenges and uncertainties remain, highlighting the need for continued technology development and supportive policies to achieve the full potential of hydrogen technology in decarbonisation.