The global total of low-carbon hydrogen production capacity has grown significantly over the past few years, but the sector remains constrained because of uncertain demand and limited investment. So highlighted international intelligence platform GlobalData in its latest report, ‘Hydrogen in Oil and Gas‘.
In 2020, there were 104 low-carbon hydrogen projects in operation. As of last month, there were more than 460, with a total production capacity of 2.2-million tons a year.
“Despite an impressive increase in [the] count of active low-carbon hydrogen projects, capacity additions remain far below the levels needed to meet the near-term targets set by the [International Energy Agency] Net Zero Emissions scenario,” cautioned GlobalData oil and gas analyst Ravindra Puranik.
There were a large number of such projects at various stages of development. If completed, these could take total global low-carbon hydrogen production to 82.3-million tonnes a year by 2030. But, of these projects, 57% were still in the feasibility stage, while 26% were in an advanced stage of development. Only some 2% of this future capacity would be provided by the projects that were currently operational.
Moreover, very few of the projects now under development were large-scale. Of the total of 2 335 projects being developed, only ten were larger than one-million tonnes a year. A “handful” were bigger than 0.5- million tonnes a year, but less than one-million tonnes a year.
Of the large projects, nine were for green hydrogen, and the tenth was for blue hydrogen. (Green hydrogen is produced using renewable-energy powered hydrolysis. Blue hydrogen comes from natural gas, paired with carbon capture and storage.)
“Despite accounting for the bulk of project numbers, the cumulative capacity of green hydrogen initiatives remains relatively modest,” he pointed out. “Thus, their output is not large enough to displace established energy sources, such as natural gas or utility-scale renewables. Developers face significant challenges in scaling up, including overcoming infrastructure constraints, securing long-term offtake agreements, and ensuring financial viability. Until more large-scale [projects] progress through the development pipeline, hydrogen’s share in the global energy mix will likely remain constrained.”
Among the global major oil and gas groups, bp is the leader in green hydrogen, with a total active and upcoming capacity of almost three-million tonnes a year, with projects in Australia, Europe and Mauritania. Other leaders are TotalEnergies, Air Liquide and Air Products. Regarding blue hydrogen, the capacity leaders by 2030 are expected to be Shell and Equinor.
“Looking ahead to 2030, global low-carbon hydrogen capacity is expected to expand once demand picks up, backed by increased private investment and supportive policy frameworks, as it is a critical energy source to achieve corporate net-zero commitments,” he reported. “Nevertheless, achieving these ambitions will require overcoming persistent financial, regulatory, and infrastructure barriers in the near term to ensure that project announcements translate into operational capacity by the end of the decade.”