BRUSSELS (Reuters) – Most of the world’s planned hydrogen projects and most of the related investments this decade are expected to be made in Europe, according to an industry report on Wednesday, as the continent rushes to scale low carbon fuel to suit climate goals.
The European Union has made hydrogen a key element in its goal to eliminate its greenhouse gas emissions by 2050, with plans to install 40 GW of electrolyzers this decade, equipment to produce emission-free hydrogen using water and renewable energy.
The EU currently has less than 0.1 GW of electrolyzers and is betting on a rapid expansion to decarbonize steel, heavy transport and chemicals, the latter of which already uses hydrogen produced from fossil fuels.
Of the 228 hydrogen projects announced globally, 55% of them (126 projects) are in Europe, said the Hydrogen Council business group in its first count of the global project portfolio, carried out with the consulting firm McKinsey.
Most will be launched this decade, focusing on renewable hydrogen or fossil fuel-based hydrogen using technology to capture the resulting emissions.
If all planned projects were carried out, the report said that global investments would exceed $ 300 billion this decade, about 1.4% of total energy sector investments, and that Europe would get about 45% of the total. Most of that funding has yet to be secured.
Hydrogen Council Executive Director Daryl Wilson attributed Europe’s leadership to early investments in hydrogen supply chains and projects such as hydrogen-fueled German trains, in addition to climate change policies.
“That environment of stable political engagement allows the industry to have the confidence to act,” he said.
Hydrogen Council members, including Royal Dutch Shell Plc, BMW, Microsoft Corp and Sinopec, plan to multiply hydrogen investments by 2025, from 2019 levels.
The report pointed to the huge challenges that lie ahead in increasing hydrogen production, building transportation and storage infrastructure, and massively expanding renewable energy capacity to produce the fuel.
If that happens, renewable hydrogen could reach cost parity with fossil fuel-based versions by 2028 in regions with abundant cheap renewable energy, such as the Middle East, according to estimates by members of the Hydrogen Council.
Reporting by Kate Abnett in Brussels; Edited by Matthew Lewis