The global green hydrogen market is anticipated to witness significant revenue growth over the upcoming years owing to the construction of huge green hydrogen power plants all over the globe and growing awareness about the urgency to reduce carbon emissions. According to the RationalStat analysis, the global green hydrogen market is estimated to register a CAGR of over 55% during 2021-2028. China is expected to lead the global hydrogen market space. China is the largest producer of methanol, ammonia, and steel, three subsectors in which low-carbon hydrogen use could play a significant role in the future. Beyond its traditional production and use in industry, low-carbon green hydrogen adoption is in the early stages in China, with the first steps for demonstrating new applications.
China is building the largest Green Hydrogen Plant in the World
China is constructing the world’s largest green hydrogen Plant as part of its efforts to reduce carbon emissions. The plant is being constructed in Xinjiang's northwest by Sinopec in China. When the plant's development is completed, it will produce 20,000 tons of green hydrogen a year while avoiding 485,000 tons of carbon dioxide emissions. The cost to build this plant, which would have solar panels spanning an area larger than 630 hectares (1,560 acres), or more than 900 soccer fields, would be about US$ 470.8 million. The 300 MW photovoltaic plant, the hydrogen production plant using water electrolysis, the hydrogen storage tanks, and the hydrogen pipeline will all provide energy for the Green Hydrogen facility, which is slated to debut in June 2023.
The chemical industry and refining account for the majority of China's annual hydrogen consumption. China produces about 25 million tons of hydrogen, accounting for nearly 25% of global production. Domestic requirement for hydrogen production is met by domestic fossil fuel production, of which coal accounts for 60% and natural gas for 25%. The remaining 15% comprises of hydrogen waste from petrochemical plants and refineries.
Hydrogen fuel will play a significant role in the transition to decarbonization. But for hydrogen to meet the goals of reducing carbon emissions, it must be generated from renewable energy, rather than polluting fossil fuels. Setting up solar panels to produce green hydrogen is a key parameter. Solar Panels help in photovoltaic-electrolysis which also lowers the cost of green hydrogen produced (currently which is 18 yuan or US$ 2.67 per kilogram). The Xinjiang region is rich in sunshine resources, making it an ideal location to investigate the production of green hydrogen. This applies to all of China's land, not just Xinjiang because it has a wealth of renewable energy resources that are frequently spread across broad, sparsely populated areas that are removed from dense industrial areas.
Other geographical areas: Momentum for green hydrogen is growing as more nations join
North America (Canada)
Air Liquide launched the largest PEM electrolysis facility in the world in Bécancour in January 2021. The project increased the site's capacity to produce hydrogen by double and includes a 20 MW electrolyzer that uses hydropower. Several electrolysis projects totaling up to 100 MW are now in various stages of development; if all of them are completed, the installed electrolysis capacity for dedicated hydrogen generation might be close to 120 MW. Electrolysis capacity in Canada reaches more than close to 4 GW by 2030, 40 times more than the capacity currently under development.
With four operative projects capturing and storing around 3 Mt CO2/yr, Canada is the second-largest producer of hydrogen from fossil fuels with CCUS (carbon capture, utilization, and storage). Another four projects are under development, aiming to capture an additional 5.0 Mt CO2/yr (1.8 Mt CO2/yr if early-stage projects are included). If all are realized, total hydrogen production from fossil fuels with CCUS could reach close to 1 Mt H2/yr in 2030 (0.2 Mt H2/yr with early-development projects) – around 70% higher than in the Announced Pledges Scenario.
Latin America (Chile)
In 2020, ENAEX and Engie announced the HyEx project to deploy up to 780 MW of electrolysis by 2030 to produce ammonia in Antofagasta, starting with a pilot of 50 MW of electrolyzer capacity to be implemented by 2024. ENAEX, a company that produces explosives for the mining sector, imports 350-kilo tons of fossil fuel-based ammonia annually, subject to high price volatility. The company, therefore, aims to secure and internalize its ammonia feedstock supply while also reducing its CO2 emissions.
Latin American countries consumed 3.5 million tons of H2 in 2020, of which 2.5 million tons of H2 was used in industry and the rest in refining. The vast majority of the production (90%) was based on natural gas, with by-product hydrogen from refineries making up the rest. A combination of factors has spurred an increased interest in hydrogen in the region. The major economies (Argentina, Brazil, Chile, Colombia, and Mexico) already produce large volumes of unabated fossil fuels for use in oil refineries and the chemical and iron and steel industries, and Trinidad and Tobago are among the world’s largest producers of ammonia and methanol. Latin America also has one of the world’s highest shares of renewables in electricity generation, with Costa Rica, Paraguay, and Uruguay producing practically all their electricity from renewables.
The government published its Green Hydrogen Strategy in November 2020 to become the top destination in Latin America for renewable hydrogen investment by 2025 and one of the world’s largest exporters of hydrogen-based fuels by 2030. The strategy also targets 25 GW of electrolysis operational or under development by 2030.
Western Europe (Germany)
Uniper, a subsidiary of Finnish utility Fortum, is developing an import terminal at Wilhelmshaven capable of converting green ammonia back into hydrogen, and also plans to build an electrolysis plant at the site to produce green H2 itself with a capacity of up to 1GW. In this project, Uniper will purchase 500,000 tons of Green Ammonia from EverWind Fuels Company and will convert it back into green hydrogen. Backed by the support from the German government, this partnership will prove successful in the forthcoming years.
The German hydrogen strategy aims for an electrolyzer capacity of 5 GW in 2030 and 10 GW in 2040, which by 2030 will produce approximately 14 TWh (terawatt per hour) of hydrogen. To achieve this, also as part of an economic stimulus package, funding of US$ 9 billion was announced to realize the hydrogen strategy. Of this, US$ 7 billion is intended for domestic spending, while US$ 2 billion is earmarked for international partnerships. To reduce operational costs and thereby electrolytic hydrogen costs, it is proposed to create an exemption from the Renewable Energy Act surcharge111 on electricity consumed by electrolyzer installations built in 2020- 2030, over 20 years.
Eastern Europe (Russia)
The global drive towards decarbonization is shifting Russian policy on renewable energy. For years, Russian policymakers claimed that decarbonization was a problem for later, with no long-term goals for expanding into renewable energy. Despite this, Russia has big ambitions for hydrogen production, seeing it as the lucrative clean energy of the future.
The country aims to have 20% of the green hydrogen market by 2030. It believes green hydrogen is the clean energy source that will replace the high carbon industry and wants to be a leader in the market. By 2035, the government expects to export 7 million tons of green hydrogen.
The global green hydrogen market players will likely be receptive to future partnerships with Russian businesses. For example, Enel – a large Italian manufacturer and distributor of electricity and gas – set up an office in Saint Petersburg in June 2021 intending to establish a green hydrogen project in Russia
As Europe – the largest importer of Russian oil and gas – switches to green hydrogen, Russia will adapt to maintain its position as the largest energy exporter to one of the world’s biggest markets.
Escalating hydrogen production will be a long-term ambition for Russia, with no immediate signs that it is slowing oil and gas production. The petrostate needs to align with the industry shift towards carbon reduction if it wants to compete with the world’s largest economies. It has the infrastructure and natural resources to tap into the escalating hydrogen market and mitigate the negative economic impact of decarbonization.
Middle East and Africa (Oman)
Oman is planning to build one of the largest green hydrogen plants in the world in a move to make the oil-producing nation a leader in renewable energy technology. Construction is scheduled to start in 2028 in Al Wusta governorate on the Arabian Sea. It will be built in stages, to be at full capacity by 2038, powered by 25 gigawatts of wind and solar energy.
The consortium of companies behind the US$ 30 Billion project includes the state-owned oil and gas company OQ, the Hong Kong-based renewable hydrogen developer InterContinental Energy and the Kuwait-based energy investor Enertech.
Oman currently relies heavily on fossil fuels, generating up to 85% of its GDP from oil and gas, but its fossil fuel reserves are dwindling and becoming increasingly costly to extract. In December 2020, the country published its Oman Vision 2040 strategy, a plan to diversify the economy away from fossil fuels and increase investment in renewables.
Oman’s proposed plant is just one in a slate of green hydrogen mega projects planned globally. Eastman said InterContinental Energy has several other plants in the works, including a 26GW wind and solar green hydrogen plant in the Pilbara, Western Australia. This US$ 36 Billion (£25.5bn) plant would be the world’s biggest energy project if constructed. The first phase is expected to be online by 2028.
Growth Opportunities Ahead
According to National Energy Administration, hydrogen fuel batteries have advantages when used in vehicles due to their high performance and long operating range. One kilogram of green hydrogen could produce the same amount of heat as 4 liters (1 gallon) of petrol and the cost is expected to fall as it becomes more widely used. Thanks to the increasing awareness, many countries are constructing green hydrogen plants that will soon replace “grey hydrogen” which uses fossil fuels instead of renewable ones.
Infrastructure growth will enable manufacturers to increase their capacity and reach, which will help them cut the cost of green hydrogen. Opportunities exist to further reduce costs by repurposing oil and gas assets, for instance by using platforms for electrolyzer installations or oil and gas pipelines for hydrogen transport.
Moreover, the involvement of the respective countries’ governments is very vital for developing an ecosystem that accepts green hydrogen as an alternative fuel. Governments throughout the world, are constructing public infrastructure and installing electric public transportation systems. Several demonstration projects for using hydrogen-based fuels in rail, shipping, and aviation are already under development and are expected to create hydrogen demand.
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