A Perspective on Hydrogen Investment, Deployment

and Cost Competitiveness

17 February 2021

Deployment and investments in hydrogen have accelerated rapidly in

response to government commitments to deep decarbonisation, establishing
hydrogen as a key component in the energy transition.

Deployment and investments:

 There are over 30 countries with hydrogen roadmaps, and 228
large-scale hydrogen projects announced across the value chain,
with 85% located in Europe, Asia, and Australia. If all projects
come to fruition, total investments will reach more than $300
billion in spending through 2030, including $80 billion which can
be considered “mature” – meaning that these projects are in the
planning stage, have passed a final investment decision (FID), or
are under construction, already commissioned, or operational.
Governments worldwide have committed more than US $70
billion in public funding.
 On a company level, members in the Hydrogen Council are
planning a sixfold increase in their total hydrogen investments
through 2025 and a 16-fold increase through 2030. They plan to
direct most of this investment toward capital expenditures
(capex), followed by spending on merger and acquisition (M&A)
and R&D activities.
Supply:
 Renewable hydrogen production cost could fall faster than
estimated, if scaled up with the right long-term regulatory
framework and public support, continued decline in renewable
costs, and a rapid scale-up of value chains for electrolysis and
carbon management. Projections show that by 2030 the costs of
renewable hydrogen production could be in the range of $2.3 per
kilogram and $1.4 per kilogram (the range results from
differences between optimal and average regions).
 Low-carbon hydrogen can break even with grey hydrogen
between 2028 to 2034 at a cost of about $35-50 per ton of carbon
dioxide equivalent.
Distribution:
 To unlock hydrogen applications, a cost-efficient transmission
and distribution will be required. Long-term, a network of pipelines
offers the most cost-efficient means of distribution, while in the
short- to medium-term, the most competitive setup involves co-
locating hydrogen production on- or near-site that connects
 resource-rich regions to demand centers via trucks, trains,
refueling stations, and smaller industrial users.
 Longer distances can be covered by shipping, where hydrogen
needs to be converted to increase its density. While several
potential hydrogen carrier approaches exist, three carbon-neutral
carriers – liquid hydrogen (LH2), liquid-organic compounds
(LOHC) and ammonia (NH3) – are gaining most traction. The end
use of hydrogen needs to be considered to determine the most
cost-optimal solution.
End applications:
 With increased scale of hydrogen deployment and subsequent
falling costs of hydrogen and various technologies, from a total
cost of ownership (TCO) hydrogen could be the most competitive
low-carbon solution in more than 20 applications by 2030,
including long haul trucking, shipping, and steel.
 However, pure TCO is not the only driver of hydrogen application
adoption. Customers and investors’ decisions will be influenced
by future environmental regulations, ESG-compliant investments,
and the associated “green premiums”. Hydrogen application is
also advancing in aviation. Other end-applications such as
buildings and power will require a higher carbon cost to become
cost competitive.
Implementation:
 It is expected that hydrogen clusters will emerge with large-scale
hydrogen off-takers at their core. Three cluster types are already
gaining traction:
 Industrial centres that support refining, power
generation, and fertiliser and steel production;
 Export hubs in resource-rich countries; and
 Port areas for fuel bunkering, port logistics, and
transportation.