More than $110 billion happens to be invested in over 500 renewable hydrogen projects across the world, as per a new report that pushes back against the rising skepticism pertaining to the future of the fuel after a string of high-profile cancellations that have taken place. The study, which happens to be commissioned by the Hydrogen Council, went on to find out that $35bn of new projects had already reached their final investment decision in 2024 and that pledged investment has been accelerating at more than 50% per year since 2020. Chief executive of the lobby group, Ivana said that the pendulum has been swinging between very high enthusiasm or hype as well as doom and gloom. Jemelkova added that hydrogen is dead, and she could as well share 500-plus examples that it is not.
It is well to be noted that the promise of hydrogen, being an alternative to oil and gas which goes on to produce just water vapor when it burns, went on to peak in 2022, when the EU had forecast that renewable hydrogen projects would happen to cover one-tenth of the energy needs of the bloc by 2050, thereby turning its industry as well as the transport system green.
The gas happens to be broadly used across refineries in terms of making fertilizer and can at the same time also power steel furnaces, heavy machinery, and vehicles. However, its production, storage, and transportation still remain expensive and also technically difficult. It is worth noting that the demand has been limited at the present prices, which happen to be per individual project.
And while there is a minimum of 50 projects which have been abandoned in the last 18 months by groups like ArcelorMittal, BP, and Shell, as well as Iberdrola, Jemelkova opines that this does not reflect a wider slowdown. According to her, the industry happens to be growing through this process of natural attrition, and it’s normal. It happened to be the same in solar too, she said. Apparently, China and the US comprise over half of the $110bn which has been invested so far. Beijing has gone ahead and prioritized green hydrogen, which makes use of renewable electricity so as to split water molecules, while Washington stresses blue hydrogen, which is derived from gas with carbon emissions that are captured and then stored. In totality, there is now 1 million tonnes of hydrogen capacity, which is at present in operation, and another 5 million tonnes under construction – all of which is equivalent to almost 50% of the current US consumption. According to the chief executive of Linde, which is an industrial gas group and also the Hydrogen Council co-chair, Sanjiv Lamba, it is far lower than what the people had anticipated, but it did show projects at scale, which are very much there so as to meet demand and can be pretty competitive.
Interestingly, much of the new investment that happened in 2024 cropped up from a few mega projects, which includes the likes of four large Chinese plants that were under construction, Blue Point in the US, and that getting developed by Hygenco of India and Switzerland’s Ameropa.
According to the head of asset manager Hy24, which has already invested $2bn in clean hydrogen, Pierre-Etienne Franc, they are witnessing projects that are a bit more serious, are bigger, and are also supported by the strongest of technologies. He added that the developers have disappeared, and some massive projects have disappeared as well; however, if one really looks at the figures, they happen to be much better as compared to what people were saying in the market.
Franc went on to say that the growth as well as the focus of his investment was pretty much growing in Asia, the Middle East, and the US, while Europe was very much lagging behind. He said that if Europe defers getting its act together, then it is going to be closed, thereby echoing the widespread criticism pertaining to the regulatory approach of the EU.
Lamba opines that Europe is being held back due to a lack of pragmatism and its refusal to go ahead and consider blue hydrogen as being one of the sources of lower-cost transitional options. The ExxonMobil plant at Baytown in Texas, which is one of the largest proposed blue hydrogen projects, is yet to take a final investment decision. Its chief, Darren Wood, told analysts on August 25 that he is concerned about the development pertaining to the broader market, and if they aren’t able to see an eventual path to a market-driven business, then they won’t go ahead with the project.
