• Hydrogen
  • Hydrogen Economy
  • Decarbonization

Hydrogen Momentum Continues

May 14, 2019

Utilities Sector 3

In yet another move indicating the advance of the hydrogen economy, Korea Gas Corp. (KOGAS), a major gas supplier in South Korea, stated earlier this week that it plans to spend upward of $4 billion to build hydrogen producing facilities by 2030. Such an investment would lead to 25 new hydrogen facilities and pipelines extending 700 km, resulting in roughly 1.7 million tons of annual hydrogen production. These additions alone would equal about 17% of all US hydrogen production.

This announcement follows a growing level of commitment that producers are making toward the hydrogen economy. The hydrogen economy was coined by chemist John Bockris in the 1970s to describe the potential end-use applications of hydrogen. While the hydrogen economy didn’t manifest 50 years ago as expected, it has seen significant developments to date. Today, hydrogen is a key resource in several industrial applications including oil processing, ammonia production, and steel refining. 

Activity in the Hydrogen Economy

The KOGAS announcement is just one development in a string of government and private-sector initiatives advancing the hydrogen economy. Other activities in major economies around the world include:

  • France announced in 2018 that it wanted to be the world’s leader in hydrogen production. Former French Minister of Environment, Nicolas Hulot, stated that the country will invest more than $100 million in this endeavor. 
  • The Fuel Cells and Hydrogen Joint Undertaking of the EU has allocated €12 million ($13.5 million) in funding from the EU Horizon 2020 program for the H2FUTURE project in Linz, Austria. 
  • Germany launched its National Innovation Program Hydrogen and Fuel Cell technology initiative back in 2006 and has set fuel cell vehicle (FCV) targets through 2030. 
  • California published a plan to have 1 million FCVs on the road by 2030.
  • Australia’s Renewable Energy Agency funding in New South Wales, a project to integrate renewables for a 0.5 MW electrolyzer for hydrogen storage purposes.
  • National hydrogen associations have launched in Chile and Ukraine over the past 2 years. 
  • South Korea is planning to invest €2 billion ($2.25 billion) into its hydrogen economy over the next 5 years. 
  • Multiple Fortune 100 companies, including major energy and transport companies, created the Hydrogen Council at the World Economic Forum in 2017.
  • Numerous double-digit, and even triple-digit megawatt electrolyzer pilot projects are underway. This includes the 250 MW Port of Rotterdam project.

My enthusiasm about the significant promise of the hydrogen economy has tempered as the industry has gone through cycles of hype before. Nonetheless, these recent market developments and commitments appear to have real potential.

Green Hydrogen

Green hydrogen should be noted as a significant part of the larger hydrogen trend. Typically, hydrogen is made in a process called steam methane reformation, a carbon emitting process. However, as decarbonization is increasingly seen as a desirable goal, the utilization of green hydrogen—produced from electrolysis using electricity from renewables—is gaining traction.

Electrolyzers are a key technology in the use of green hydrogen, but they have faced prohibitive deployment costs until recently. Now, ever lower renewable costs, increased wind and solar capacity, and decreasing CAPEX of electrolyzers themselves are driving reductions in the overall cost of these systems. Guidehouse Insights’ recent report, Electrolyzers, delves into greater depth on the drivers and barriers of greater electrolyzer adoption. 

Estimates vary, but green hydrogen still makes up only 1%-4% of all hydrogen production. This signifies both the long way the technology has to go but also the potential for significant growth. The results of large-scale pilot electrolyzer projects, R&D funding, and an emphasis on decarbonization will be defining factors for the market over the next several years.