$75 Billion Committed to Global Clean Hydrogen Projects

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The global clean hydrogen (H2) market is growing fast with US$75 billion in committed capital, but project delays will reduce its impact on energy transition targets.

There has been a seven-fold increase in committed capital for clean H2 projects reaching final investment decision (FID) in the past four years according to figures from the Hydrogen Council, which comprises the leading players in the sector. Clean hydrogen encompasses both renewable and low-carbon projects. Assessing more than 1,500 projects, the Hydrogen Insights 2024 report co-authored with McKinsey & Company, found that projects reaching FID grew from approximately US$10 billion across 102 projects in 2020 to some US$75 billion across 434 projects in 2024. There has also been growing maturity in the sector, the report noted, with a larger portion of projects shifting from announcements to more advanced stages. In the last four years, investments made in front end engineering design (FEED)-stage projects increased by a factor of 20. Natural attrition drives industry maturation by phasing out less viable projects and prioritizing those with the highest potential, the report stated, comparing the sector's trends to the early days of the wind and solar industries. It expects similar success rates of project funnels at about 10% to 20% from initial development to commissioning.

Jaehoon Chang, president and chief executive officer of Hyundai Motor Company (Seoul, South Korea) and co-chair of the Hydrogen Council, said: "The seven-fold increase in committed capital for hydrogen projects reaching FID over the past four years demonstrates the industry's progress. We are pleased to see the industry walking the talk at this critical transitional moment, as evidenced in the latest Insights report. Moreover, further action is needed to ensure an accessible and affordable hydrogen supply, enabling the widespread adoption of hydrogen."

Project delays continue to hamper the rollout of many projects, with the sector facing "macroeconomic headwinds including rising inflation and interest rates, as well as geopolitical tensions affecting energy markets." Issues that are specific to the clean hydrogen sector included regulatory uncertainty and increasing costs for renewable power and electrolysers which is severely hampering renewable hydrogen projects. "The pace and scale of deployment has not been sufficient to remain on track with climate commitments," the report highlighted. "To accelerate the global energy system decarbonisation, an 8-fold increase of investments in hydrogen is required until 2030, compared to the current investment of US$75 billion past FID. Addressing this challenge calls for a joint effort by decision-makers in government and industry. Government incentives and enabling legislative frameworks play a critical role in mobilizing private capital and advancing mature projects within this decade. In the next two years, ensuring greater regulatory clarity and certainty and support for demand drivers will be critical for tackling project delays observed today alongside the development of the enabling midstream infrastructure."

Ivana Jemelkova, chief executive officer of the Hydrogen Council, said: "This report sends a clear message: hydrogen is happening. Now that hydrogen is a reality in the energy transition, it's time to drive significantly more investment by 2030 to meet our mid-century targets. Equipped with concrete lessons learned from the past four years, we must urgently address challenges in key markets and create a more favorable environment for project execution."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).