Deloitte identifies clean hydrogen as crucial for APAC region to meet net zero targets

A report by multinational professional services network Deloitte suggests that early wins in Asia Pacific (APAC) hydrogen can deliver crucial momentum for net zero.

The new “Clean Hydrogen in Asia Pacific: Fuel for Thought” study states that switching to clean hydrogen is vital for decarbonising and achieving net zero emissions in the APAC region.

Deloitte added that, with net zero deadlines fast approaching, this year will be make-or-break for Asia Pacific’s clean hydrogen aspirations.

Widening gulf

The report’s authors believe clean hydrogen is the key to decarbonising hard-to-abate sectors across the zone’s economies and unlocking new economic opportunities.

However, there are concerns that investment flows are governed by risk appetite and the predictability of cash flows.

“To date, bankable demand has been limited, resulting in few projects proceeding to financial close,” the report noted.

“The gulf between net zero-aligned announcements and policy targets and committed market activity is widening at an alarming rate.”

That is despite findings that APAC’s potential low-carbon market, driven by clean hydrogen, could be worth around $950 billion by 2050.

Heavy industries

Deloitte says the sectors set to benefit most from the transition are heavy industries such as aviation, chemical manufacturing, shipping, steelmaking and power.

“But limited progress is cause for concern—lack of change and delay are synonymous with rising physical and transition costs and are a recipe for a disorderly transition.”

Hydrogen demand in Asia is expected to be dominated by China and India, given their economic heft and industrial make-up.

Deloitte estimates these two economies could comprise almost 80% of demand in the Asia Pacific region, with much of this met by domestic supply.

“In these two countries, the scale of demand to meet industrial needs in a limited timeframe could mean resorting to supplementary imports, despite a large potential for cost-competitive domestic supply.”

“By contrast, while Japan and South Korea make up an average of 10% of demand, the vast majority of this is expected to be serviced by imports.”

Narrow window

The report believes the window in which to take action is a narrow one.

“Action must be taken now in the APAC region to achieve zero emissions by 2050,” Deloitte declared.

“Urgent, coordinated efforts are essential to set up the necessary technological, financial and regulatory frameworks for thriving clean hydrogen markets.”

“Challenges consist of establishing viable pricing structures, risk allocation models and robust carbon certification.”

“Stakeholder collaboration is crucial to capitalise on the opportunities within the hydrogen economy and ensure successful hydrogen implementation.”