Annual government funding for hydrogen has reached $16 billion per year globally, up 40% from July 2021. This puts it two-thirds of the way to where it needs to be in order for clean hydrogen to play a strong decarbonizing role in the economy.
Electrolyzer sales have more than doubled to 458MW in 2021 and are set to grow 4-5x this year. Almost two-thirds of these sales will happen in China. Globally, BNEF's database now tracks 122GW of planned electrolyzer projects, up from 50GW in July 2021.
10 large industrial projects in China
Clean hydrogen demand is about to shoot up thanks to 10 industrial projects slated to come online in 2022. Two projects in China plan to use more than 40,000 metric tons of clean H2 this year - several times more than all of the world's hydrogen cars combined.
Proposals for policies that would help hydrogen demand grow further are becoming commonplace. They include industrial decarbonization policies, clean fuel mandates, heavy transport emission rules and standards certifying hydrogen emissions.
Still, stronger policies favoring decarbonization will be needed to keep the growth going. Crucially, these include higher carbon prices in sectors where hydrogen could play a strong role, such as ammonia, methanol, oil refining, iron and steel.
Decarbonize hard-to-abate industrial sectors
"Forget about hydrogen cars. Hydrogen has a much stronger future in decarbonizing hard-to-abate industrial sectors. This year, just two industrial projects in China will use several times more clean hydrogen than the world's entire passenger fuel cell vehicle fleet“, Martin Tengler, Lead Hydrogen Analyst, BloombergNEF said.
"The amount of government funding becoming available to hydrogen keeps growing rapidly. At this pace, we are likely to see more than enough public money committed in a year or two from now to get the sector on track for strong growth and cost reduction by 2030“, Tengler added.
Carbon prices are essential
"We need a clear, internationally accepted set of standards to measure greenhouse gas emissions related to hydrogen - from its production to its use and leakage - in order for users to quantify how much the hydrogen they use is contributing to decarbonization. Currently, most proposed or existing schemes fall short“, Tengler said.
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"Carbon prices are an essential tool to make clean hydrogen competitive against fossil fuels and to reach net zero. Unfortunately, most carbon pricing systems are lenient towards the sectors where hydrogen could play the largest role. This needs to change for clean hydrogen to reach its potential“, Tengler underlined. (hcn)
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