With all the hype in electric mobility and with a growing awareness of decarbonization in recent times, there has been a lot of traction regarding green hydrogen as a potential green fuel. The market will witness significant growth due to various factors such as climate change, geopolitical tension, technological advancement, and an alternative to the legacy source of energy which is fossil fuels. The growth potential in the next 7 years is over 50% as per RationalStat analysis for the green hydrogen market.
Green Hydrogen: The Fuel for Tomorrow
Hydrogen fuel in its current form isn’t carbon neutral. In simple words, the means used to procure hydrogen are not clean. There is a lot of energy burnt in legacy fuels to have hydrogen for end consumption. There will be a certain change by using abundant renewable energy to generate more hydrogen for industrial purposes moving forward. The other restraining factor is the cost of production using clean energy. As per the International Energy Agency (IEA), the cost of green hydrogen is quite high as per present technology and standards. The estimates as per the aforementioned agency mentions that the cost per kilo of green hydrogen is around US$ 3.0 to US$ 7.5. This is compared to the legacy way of Steam Methane Reforming (SMR) is around US$ 1.0 to US$ 4.0. This is quite a steep increase in change when factoring in the magnitude of large-scale industrial manufacturing. The profit proportion from a business perspective is negative. This is a major factor that doesn’t allow it for its massive investments.
“South Africa is recreating itself as a green hydrogen export hub”
Electrolyzer to Make Way for Newer Technologies
In the legacy form of manufacturing hydrogen, the natural gas is heated to get the carbon monoxide and hydrogen which can be used as a fuel cell. What raises an environmental concern here is, that this method uses an enormous amount of fossil fuel generating carbon as a by-product. Thus, in order to address this challenge, electrolyzers can be used in the medium to long run, which if executed well, may reduce the cost of generating hydrogen by half by 2040. The magnitude to achieve the same is required by a bulk of industrial applications that can substantiate the demand for the electrolyzers as per the IEA. Electrolyzers are machines that separate hydrogen atoms from oxygen and store them for further applications. The manufacturing of electrolyzers that are of the scale to be used in industrial applications is a short-term problem that requires urgent attention. This machine is an integral part of reducing the per kilo cost of green hydrogen moving forward.
Green Hydrogen - Backed by Major Economies and Major Global Energy Companies
The perception around green hydrogen in recent times is changing on a positive note. Major economies across the globe have pledged to further boost its research & development. Each of the major countries has its separate reasons to pledge on this forthcoming technology. Various large oil and gas manufacturing companies with technology startups are exploring the green hydrogen market and are aiming to grab a significant market share in the global market. One such company named ITM Power is betting huge on the future of green hydrogen fuel and may turn out to become a unicorn startup. The market is turning out to grow at a significant rate in the forthcoming decade and will change the energy consumption scenario across the globe by 2040.
Challenges Faced by Green Hydrogen in the Short-Medium Term
For green hydrogen to be relevant in the long-term goals to decarbonize the global economies, this sector needs to have a lot of huge investments. The major economies must work together to expand their synergies in order to meet the target to reduce carbon emissions, roughly by around 2040-2050.
The growth possibility is massive and holds the potential to disrupt the entire oil and gas industry and may change consumer behavior toward transportation, mobility, and manufacturing. Green hydrogen fuel may help unlock multiple verticals mankind has not fathomed.
To know more about the current market scenario for the Green Hydrogen Market, request a sample.
Co-founder and Director at RationalStat
Divyanshu is an experienced market research consultant. He helps growth-driven organizations and entrepreneurs understand market entry prospects, industry assessment, and grow their revenue strategically.