Looking Through ‘Green-Colored’ Glasses: Hydrogen in the Energy Transition

Transitioning the world towards cleaner and greener energy is proving to be more challenging than we once all hoped. There are real concerns about what impact the slower speed of uptake is having on our collective ability to control climate change impacts, though the effort continues pushing forward. Indeed, we now have our first operating trains and trucks that run on hydrogen, we are close to very large investment decisions on mega hydrogen projects, and the technical feasibility is well underway.

Yet, the initial hype and positive conversations around hydrogen have given way to the harder steps of planning where funds need to be spent for successful implementations at an effective scale. Over the last few years, the hydrogen market obstacles have been clearly identified, giving industries, governments, and communities a more realistic path forward. Overall, hydrogen ambition and momentum remain strong, and while we aren’t hitting home runs just yet, we are now, together, slowly making our way around the bases.

There are compelling lessons and trends that can be learned from the development of the first clean hydrogen projects in North America and globally. Looking at the required actions in those implementations will help overcome challenges quicker, making clean hydrogen a more-likely reality in our energy mix.

Progress Across Policies, Production, and Public Awareness

Even with potential obstacles, the demand for hydrogen isn’t slowing down. The global hydrogen market was valued at $242.7 billion in 2023 and is estimated to reach $410.6 billion by 2030. Clean hydrogen demand is expected to increase to between 125 million and 585 million tons per annum (Mtpa) by 2050. Low-emission hydrogen production is expanding, with sizeable and impactful projects moving beyond the business case stages into deployment mode.

While equipment and financial costs are increasing and putting projects at risk, government policies across multiple jurisdictions are supporting industry growth with funding and tax incentives on hydrogen production projects. However, some support schemes are actually delaying investment decisions as they may be too stringent (such as including additionality of electricity supply) in these early days. More players are also entering the industry with additional orders being placed for hydrogen electrolyzers in more than 350 projects currently in development, which will considerably increase production capacity.

There is growing community awareness of hydrogen as a renewable energy source. Recently, Canada published a progress update to its hydrogen strategy report that signaled interest in low-carbon hydrogen is booming across the country. A 2021 national survey in Australia found 65% of the population supports using hydrogen as a fuel, with that figure increasing once respondents were given more facts and understanding. While the statistics are supportive and point to a global acceptance of this fuel, more work needs to be done to further the positive perception and acceptance of introducing hydrogen into the energy transition mix.

Progress is compounded by 2024 being a record year for elections, with more than half of the global population heading to the polls in countries that account for more than 40% of the world’s greenhouse gases. Typically, during these periods, steps forward on climate-related initiatives and energy infrastructure spending slows down, with the hydrogen conversation also dependent on the outcome of political cycles.

Pushing Through Barriers with Better Collaboration and Communication

Stronger multi-stakeholder collaboration is needed on analysis, policies, programs, and projects to keep advancing and commercially scaling clean hydrogen. Bringing the right players together to have tough conversations to smooth the transition will overcome the current barriers. This includes gatherings with all levels of government, industry, utilities, academia, non-governmental groups, and standards development organizations.

Improving the coordination of cross-industry efforts, exchange of best practices, and long-term planning for hydrogen deployment is critical. More effort around shared learnings and lessons for developing policy frameworks, collective targets, and knowledge will move the industry forward, but it doesn’t end there. Industry must also play an active role in contributing to what policy developments, funding, and incentives should look like to drive adoption. Questions need to be answered including: Could public and private partnerships be formed to better share risks and costs of projects? How could the government work better with industry on research and development to ensure the latest technologies and innovations are brought into the fold?

Additional effort is needed to drive community and general public understanding of the potential that hydrogen offers to both decarbonize and grow economies. Spending time to consult and engage with our communities is essential to building confidence in the safety and climate change mitigation opportunity of hydrogen. Social acceptance can also be driven by more broadly sharing results of market data, studies, and analysis.

As hydrogen continues to carve out its place in the energy mix to solve climate and transition challenges, more work must be done to bring industry players together to overcome the obstacles around costs, infrastructure, policy support, and innovation. While individual companies are still thinking in terms of speed and profits, coming together with other stakeholders to collaborate on priorities, targets, and paths forward will enable the emergent hydrogen economy to go much further, and the road will be smoother.

—Ben Saffron is executive advisor for North America with GHD Advisory.