Posted on 29 Aug 2023
Despite the positive growth in the global hydrogen project pipeline, projects are maturing too slowly towards final investment decisions (FIDs) and operations, according to Wood Mackenzie.
The UK energy research and consultancy estimates the low-carbon hydrogen production pipeline stood at around 104 million tonnes/year in mid-August, with 11,000 projects announced worldwide. The pipeline is growing in scale and diversity, with the US leading in terms of announced capacity and advanced projects – most of which are for gas reforming or electrolytic hydrogen.
The North American country accounts for 18% of the total announced capacity by major markets. This share is expected to further increase with the “very generous” subsidies offered by the US government, WoodMac’s head of hydrogen research Murray Douglas says in a recent presentation monitored by Kallanish.
On the other hand, the UK holds a 9% share of the global pipeline and one of the best policy readiness in the world, Douglas suggests. The country has progressed “very well” on the policy front, setting out clear standards for hydrogen, including regarding its transportation and storage, he says. However, WoodMac believes the UK’s target to have 2 gigawatts of hydrogen production capacity operational by 2025 is “out of reach.”
Meanwhile, Europe remains the region with the largest share (20%) in the global pipeline, followed by Australia (14%), Africa (13%) and Latin America and the Caribbean (10%). The Middle East accounts for 5% of the announced capacity, mostly driven by the Neom project in Saudi Arabia; Russia and the Caspian account for 4% and Asia Pacific for 1%. Canada has 3% of the total announced projects so far, followed by India with 2% and China with 1%.
While there has been good growth, “the more sobering point is that we aren’t seeing these projects move towards a final investment decision nowhere near quickly enough,” warns Douglas. He notes that despite the overwhelming majority of announced projects being green hydrogen, it’s actually blue hydrogen projects that are heading towards FIDs and operation.
Woodmac believes 1m t/y of hydrogen production capacity could be approved by year-end, and up to 5m t/y by the end of 2024. At these levels, progress is “way behind” some of the targets set in different regions. “The hydrogen market is not moving quickly enough,” Douglas adds.
“There isn’t a shortage of opportunities for low-carbon hydrogen on offtakers, but what we keep seeing is that we’ll need to see more intervention to actually accelerate adoption … and that includes providing the midstream infrastructure to enable that adoption as well,” he concludes.
Source:Kallanish
