Clean hydrogen forecast to overtake LNG in race for $2.1 trillion market opportunity

The Australian government and a growing number of local clean hydrogen project developers have been buoyed by a new paper that has identified a $2.1 trillion global market opportunity.

On the back of the country’s unique commodity riches, Australia has been an early mover in the global hydrogen sector, with billions invested by federal, state and territory governments to support local firms and their aims to develop a local hydrogen hub.

The 2023 global green hydrogen outlook produced by Deloitte Centre for Sustainable Progress (DCSP) has forecast that the clean hydrogen industry can overtake the global LNG business by 2030 and reach $2.1 trillion per year by 2050.

The report also identified that with the support of strong international climate action, green hydrogen can be competitive in less than 10 years and could support around 2 million jobs globally per year between 2030 and 2050.

It forecasts that clean hydrogen can create up to 85 gigatons in reductions to cumulative CO2 emissions by 2050, more than twice global CO2 emissions in 2021.

“This analysis reveals a compelling opportunity for private and public leaders to accelerate the green energy transition,” said Joe Ucuzoglu, Deloitte Global chief executive officer.

“While wind, solar, and other more traditional forms of renewable power are essential to a net-zero future, Deloitte’s research demonstrates how clean hydrogen can help tackle decarbonisation of some of the world’s most emissions intensive and hardest-to-abate sectors, further mitigating the effects of climate change while fuelling economic growth, particularly in developing countries.”

Policy support needed to meet demand requirements

Deloitte says clean hydrogen supply can track approximately 600Mt H2eq in 2050.

“However, based on current clean hydrogen project announcements, the global community could only provide a collective production capacity to meet one quarter of the projected demand in 2030.”

Deloitte says policymakers need to focus their attention on three key components to meet projected demand.

Firstly they must create a market foundation. This will include laying out national and regional strategies to lend credibility to the market, develop a robust and shared certification process for clean hydrogen to help ensure transparency, and coordinate internationally to help mitigate political friction and promote a level playing field.

Secondly, to spur action, policy makers must establish clear targets and/or markets for clean hydrogen-based products and provide fiscal incentives and subsidies to support their development.

Diversify value chains to create a sustainable market by helping overcome costly bottlenecks during the transition to clean hydrogen, with a particular focus specifically on improving infrastructure design to more effectively transport (pipelines and marine roads) and store (strategic reserves) clean hydrogen commodities.

Australian government providing a $2 billion headstart

The Australian government recently announced a new $2 billion Hydrogen Headstart investment to support for large-scale renewable hydrogen projects through competitive hydrogen production contracts.

Launched on July, the Australian Renewable Energy Agency (ARENA) and Department of Climate Change, Energy, the Environment and Water (DCCEEW) have commenced consultation for the design of the flagship hydrogen program.

According to ARENA, Hydrogen Headstart will deliver a step change in Australia’s renewable hydrogen production by underwriting some of the largest electrolyser deployments in the world.

ARENA chief executive officer, Darren Miller, said the consultation campaign would reveal the best pathway to a thriving renewable hydrogen industry.

“ARENA was pleased to see the Australian Government recognise our expertise in renewable hydrogen by calling on us to co-develop the Hydrogen Headstart program,” Mr Miller said.

“The consultation paper we’ve launched today will kick off discussions about how Hydrogen Headstart can best deliver for the Australian public.

Mr Miller says Australia has all the ingredients to be a global leader in renewable hydrogen.

Following the consultation period, ARENA and DCCEEW will develop the final program design.

ASX players growing

A number of ASX-listed companies have made a focus on clean/green hydrogen plans.

These include Pure Hydrogen (ASX: PH2) which is strategically developing a hydrogen economy covering all aspects of the market from production to end-use.

Pure Hydrogen’s portfolio of projects range from production facilities to hydrogen trucks, buses, and generators.

As part of its strategy to deliver holistic hydrogen solutions, the company recently signed a new funding deal to help accelerate the development of its turquoise hydrogen technology.

The company says the new funding deal with Turquoise Group is an important milestone in its turquoise hydrogen plans, which will see a pilot plant commissioned in late 2023.

Pure Hydrogen is working in collaboration with French plasma technology company, Plenesys to develop the unique turquoise hydrogen technology. Pure Hydrogen also expects emerald and green hydrogen production to begin in 2024 at its Moreton Bay Hydrogen Hub in South East Queensland.

Additionally, H2X Global, partly owned by Pure Hydrogen, has received a $34 million order from Swedish waste management company Renova AB for hydrogen fuel cell trucks to be used as garbage trucks in Gothenburg.

Pure Hydrogen is set to start a trial of Australia’s first hydrogen-fuelled garbage truck on the Gold Coast with waste collection operator JJ’s Waste.

Furthermore, the company is showcasing the commercial viability of fuel cell vehicles through a trial with PepsiCo Australia later this year, who has the option to lease or buy the hydrogen-powered truck used in the trial along with additional vehicles.

Frontier Energy (ASX: FHE) is developing the Bristol Springs Green Hydrogen Project 120km from Perth in the South West of Western Australia.

The company, which completed a positive definitive feasibility study (DFS) earlier this year, says the project is on track to become one of the first, low cost green hydrogen projects in Australia.

The DFS estimated that Stage One utilising a 114MW solar farm would produce approximately 4.9 million kilograms of green hydrogen per annum.

Provaris Energy (ASX: PV1) recently signed a collaboration agreement with Norwegian company Gen2 Energy AS.

The joint initiative aims to conduct a comprehensive prefeasibility study to determine the technical and economic viability of producing and supplying compressed green hydrogen from the hydrogen project in Åfjord to European ports using Provaris’ marine storage and shipping solution.

The Åfjord option provides access to low-cost renewable energy and industrial infrastructure is an ideal site for large scale production of green hydrogen and seaborn supply of hydrogen to key European ports.