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March 30, 2020
Hydrogen Economy Outlook
March 30, 2020
Contents
Key messages 1
About us 11
Table of figures
Figure 1: Summary of the economics of a hydrogen economy ......................... 1
Figure 2: The many uses of hydrogen .............................................................. 2
Figure 3: Forecast global range of levelized cost of hydrogen production from
large projects .................................................................................................... 3
Figure 4: H2 transport costs based on distance and volume, $/kg, 2019............ 4
Figure 5: Estimated delivered hydrogen costs to large-scale industrial users,
2030 .................................................................................................................. 5
Figure 6: Estimated delivered hydrogen costs to large industrial users, 2050 .... 5
Figure 7: Marginal abatement cost curve from using $1/kg hydrogen for
emission reductions, by sector in 2050 .............................................................. 6
Figure 8: Levelized cost of steel: hydrogen versus coal..................................... 7
Figure 9: Total cost of ownership of SUVs in the U.S., 2030 ............................. 7
Figure 10: Levelized cost of electricity of hydrogen-fuelled turbine power
plants ................................................................................................................ 7
Figure 11: Potential demand for hydrogen in different scenarios, 2050 ............. 8
Figure 12: Indicative estimate of the ability for major countries to generate 50%
of electricity and 100% of hydrogen from wind and PV in a 1.5 degree
scenario ............................................................................................................ 9
Table of tables
Table 1: Hydrogen storage options.................................................................... 3
Table 2: Seven signposts of scale-up toward a hydrogen economy ................ 10
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Hydrogen Economy Outlook
March 30, 2020
Key messages
Hydrogen is a clean-burning molecule that could become a zero-carbon
substitute for fossil fuels in hard-to-abate sectors of the economy. The cost of
producing hydrogen from renewables is primed to fall, but demand needs to be
created to drive down costs, and a wide range of delivery infrastructure needs
to be built. That won’t happen without new government targets and subsidies.
These are the key messages of BNEF’s Hydrogen Economy Outlook, which
provides a global, independent analysis and outlook for a hydrogen economy.
A full copy of the Hydrogen Economy Outlook is available for BNEF clients (web | terminal). It
draws together analysis and key findings from 12 studies published in 2019 and 2020 from
BNEF’s Hydrogen Special Project. The full suite of BNEF research on hydrogen is also
available for clients on the hydrogen theme page (web | terminal).
Source: BloombergNEF. Note: Clean hydrogen refers to both renewable and low-carbon hydrogen (from fossil-fuels with CCS).
Abatement cost with hydrogen at $1/kg (7.5/MMBtu). Currency is US dollars.
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Hydrogen Economy Outlook
March 30, 2020
Source: BloombergNEF
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Hydrogen Economy Outlook
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Figure 3: Forecast global range of levelized cost of hydrogen production from large
projects
2019$/kg $/MMBtu
5.0 37.2
4.5 33.5
Renewable H2
4.0 29.8
Low Carbon H2
3.5 26.0
(Coal with CCS)
3.0 22.3
2.5 18.6
2.0 14.9
1.5 11.2
Low Carbon H2
1.0 7.4
(Natural gas with CCS)
0.5 3.7
0.0 0.0
1 2019
2 3 2030
4 5 2050
6
Source: BloombergNEF. Note renewable hydrogen costs based on large projects with optimistic
projections for capex. Natural gas prices range from $1.1-10.3/MMBtu, coal from $40-116/t.
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Hydrogen Economy Outlook
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Low density also makes hydrogen expensive to transport via road or ship. However, hydrogen
flows nearly three times faster than methane through pipes, making this a cost-effective option for
large-scale transport (Figure 4). But for hydrogen to become as ubiquitous as natural gas, a huge,
coordinated program of infrastructure upgrades and construction would be needed, as hydrogen
is often incompatible with existing pipes and systems.
Mid NH3
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Figure 5: Estimated delivered hydrogen costs to large-scale Figure 6: Estimated delivered hydrogen costs to large
industrial users, 2030 industrial users, 2050
Policy is critical
Reaching a delivered hydrogen cost of $1/kg will require massive scale-up in demand as well as
cost declines in transport and storage technologies. And while hydrogen is a hot topic right now,
there is little government policy currently in place to help this happen. Policy measures are
generally focused on expensive road transport applications, and programs are poorly funded. The
more promising use cases in industry are only funded with one-off grants for demonstration
projects. For the industry to scale up, demand needs to be supported with comprehensive policy
coordinated across government, and the roll-out of around $150 billion of cumulative subsidies to
2030.
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Figure 7: Marginal abatement cost curve from using $1/kg hydrogen for emission reductions, by sector in 2050
Source: BloobmergNEF. Note: sectoral emissions based on 2018 figures, abatement costs for renewable hydrogen delivered at
$1/kg to large users, $4/kg to road vehicles. Aluminum emissions for alumina production and aluminum recycling only. Cement
emissions for process heat only. Refinery emissions from hydrogen production only. Road transport and heating demand emissions
are for the segment that is unlikely to be met by electrification only, assumed to be 50% of space and water heating, 25% of light-
duty vehicles, 50% of medium-duty trucks, 30% of buses and 75% of heavy-duty trucks.
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Hydrogen Economy Outlook
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Figure 8: Levelized cost of steel: hydrogen versus coal Figure 9: Total cost of ownership of SUVs in the U.S., 2030
Source: BloombergNEF Note: ‘N. Gas’ is natural gas. Natural gas LCOEs vary with fuel price: $2
(low) to $7 (mid) and $12/MMBtu (high) and do not include a carbon price.
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Power Peaking
439MMT power
Cement
Steel
99EJ
Glass
Aluminum 696MMT
Industry
Oil refining 53MMT
515MMT
Methanol
Ammonia 219MMT
Cars
Buses
Light trucks 123MMT
Transport 27EJ
524MMT Heavy 187MMT
trucks 21MMT
301MMT
6MMT
37MMT
Ships 123MMT
Theoretical max Strong Policy Weak Policy
Source: BloombergNEF. Note: Aluminum demand is for alumina production and aluminum recycling only. Cement demand is for
process heat only. Oil refining demand is for hydrogen use only. Road transport and heating demand that is unlikely to be met by
electrification only: assumed to be 50% of space and water heating, 25% of light-duty vehicles, 50% of medium-duty trucks, 30% of
buses and 75% of heavy-duty trucks.
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Hydrogen Economy Outlook
March 30, 2020
generation excluding hydro would need to top 60,000TWh, compared to under 3,000TWh today.
China, much of Europe, Japan, Korea and South East Asia may not have enough suitable land to
generate the renewable power required (Figure 12). As a result, trade in hydrogen would be
necessary. Although more expensive, hydrogen production from fossil fuels with CCS may still
need to play a significant role, particularly in countries like China and Germany that could be short
on land for renewables but are well-endowed with gas and coal.
Figure 12: Indicative estimate of the ability for major countries to generate 50% of electricity and 100% of hydrogen from
wind and PV in a 1.5 degree scenario
Sufficient resource
Insufficient resource
Source: BloombergNEF, Baruch-Mordo et. al, 2019. Note: Green = Country has sufficient solar and wind resources to generate
50% of electricity and 100% of hydrogen by 2050. Red = Country has insufficient solar and wind resources to generate 50% of
electricity and 100% of hydrogen by 2050.
The signs of scale-up are not yet there, but investors should keep watch
for seven signposts
Hydrogen has experienced a hype cycle before, and right now, there is still insufficient policy to
support investment and to scale up a clean hydrogen industry. But with a growing number of
countries getting serious about decarbonization, this could change. Investors should watch out for
the following key events to help determine whether a hydrogen economy is emerging: 1) net-zero
climate targets are legislated, 2) standards governing hydrogen use are harmonized and
regulatory barriers removed, 3) targets with investment mechanisms are introduced, 4) stringent
heavy transport emission standards are set, 5) mandates and markets for low-emission products
are formed, 6) industrial decarbonization policies and incentives are put in place and 7) hydrogen-
ready equipment becomes commonplace (Table 2).
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Hydrogen Economy Outlook
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Event Effect
1) Net-zero climate targets are legislated Makes it clear that the hard-to-abate sectors will need to decarbonize
2) Standards governing hydrogen use are Clears or minimizes obstructions to hydrogen projects
harmonized and regulatory barriers removed
3) Targets with investment mechanisms are Provides a revenue stream for producers, increases competition, builds capacity
introduced and experience, and gives equipment manufacturers confidence to invest in plant
4) Stringent heavy transport emissions Provides an incentive for manufactures to produce, and users to buy, fuel cell
standards are set trucks and ammonia-powered ships
5) Mandates and markets for low-emission Provides an incentive for manufacturers to produce low-emission goods (e.g.
products are formed steel, cement, fertilizers, plastics) that will often require the use of hydrogen
6) Industrial decarbonization policies and Helps to coordinate infrastructure investment and scale efficient use of hydrogen.
incentives are put in place Provides incentives for hydrogen use
7) Hydrogen-ready equipment becomes Enables and reduces the cost of fuel switching to hydrogen
commonplace
Source: BloombergNEF
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