Low-Carbon Hydrogen Investment Trends: Wood Mackenzie

The global low-carbon hydrogen market will require at least $600 billion in investment and policy support by 2050, according to Wood Mackenzie.

Flor Lucia De la Cruz, senior research analyst at Wood Mackenzie, said: “Substantial investments are needed to meet the expected growth of the global low-carbon hydrogen market through 2050.

As electrolyser capital expenditure drops 35-65% over the next decade, green hydrogen below $2/kg is achievable in most source markets by 2040, according to the latest Wood Mackenzie Hydrogen Strategic Planning Outlook Report.

Hydrogen demand will also grow exponentially, with global demand for low-carbon hydrogen expected to increase from less than 1 million tonnes (Mt) today to 223 Mt by 2050. Global hydrogen will driven by ammonia with 48% of demand by 2025, but by 2036 electricity demand will exceed, making electricity the main demand sector until 2050, with 31% of demand total.

Co-fuel hydrogen in the form of ammonia in coal-fired power plants powered by traditional fossil fuels is expected to drive electricity demand up to 9 Mt by 2030. After 2030, Wood Mackenzie expects to see the hydrogen co-fuel with natural gas will increase in Europe, bringing the total electricity demand to 63 Mt by 2050.

The developers have announced hydrogen capacity of 50 million tonnes per annum (Mpta) to date and the total pipeline is expected to reach around 80 Mtpa this year, according to the Wood Mackenzie report.

“Green hydrogen is expected to dominate the pipeline, with Australia leading the supply of green hydrogen, holding 47% of supply by 2029. After 2030, we expect a rapid increase in supply in the world and China will become the largest supplier by the end of the 2040s,” said Bridget van Dorsten, research analyst at Wood Mackenzie.

Australia is the leading supplier of green hydrogen until the mid-2040s. The Middle East, North Africa, Canada, Chile and Brazil are expected to become hydrogen exporters leveraging the access to cheap renewable energy.

Using Wood Mackenzie’s proprietary Midstream model, the report considers hydrogen losses from domestic hydrogen trade to be around 4%, as well as exports, which could be around 34%.

Wood Mackenzie will bring together industry leaders at its inaugural Low Carbon Hydrogen Conference on April 27-28.