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A New Milestone for the Hydrogen Industry

The clean hydrogen sector stands at a pivotal juncture, having recently surpassed $110 billion in committed investments across more than 500 projects worldwide. This remarkable achievement not only underscores the growing importance of hydrogen in the global energy landscape but also showcases the industry's potential for future growth.

According to the inaugural Global Hydrogen Compass report, co-authored by the Hydrogen Council and McKinsey & Company, this increase of $35 billion compared to the previous year reflects an impressive annual growth rate of 50% in committed investments since 2020. The report highlights a trend where only the most robust projects are moving forward, as less viable projects have been withdrawn, demonstrating the perpetual maturation of the hydrogen sector.

The sheer scale of commitment is evident from the staggering statistic that since 2020, the number of announced hydrogen projects has surged by 7.5 times, reaching over 1,700 globally. While only about 3% of these projects have been publicly cancelled in the last 18 months, primarily from the renewable hydrogen segment, challenges persist. Notably, high-interest rates and policy implementation delays in certain regions are putting pressure on project viability.

Supply and Demand Dynamics

In terms of supply, the total capacity for committed hydrogen production currently exceeds 6 million tonnes per year (mtpa), with 1 mtpa already operational. Projected capacity for 2030 could range between 9 and 14 mtpa of clean hydrogen, contingent on demand maturation. To date, around 3.6 mtpa of binding consumption has been secured, hinting at the demand trajectory that could approach 8 mtpa as regulatory clarity improves in key markets such as the EU, U.S., Japan, and South Korea.

Leading the investment charge, China has committed approximately $33 billion, generating more than 50% of the world's renewable hydrogen capacity. Following China is North America, which has pledged $23 billion and accounts for 85% of the clean hydrogen production globally. Europe, while third in investment at around $19 billion, is forecasted to represent nearly two-thirds of the projected demand by 2030.

Future Outlook and Industry Perspectives

The Global Hydrogen Compass report provides a comprehensive view derived from a range of industry perspectives. Despite the complicated market environment, a significant 74% of the surveyed chief executives report a stable or growing investment appetite over the last two years. An overwhelming 97% believe hydrogen will play a critical role in decarbonizing hard-to-abate sectors, and 64% recognize its potential in transforming the economy at large.

Jaehoon Chang, Vice Chairman of Hyundai Motor Group and Co-Chair of the Hydrogen Council, states, "The report reflects our industry's transition from ambition to action. With over 500 projects overcoming the final investment decision checkpoint, we see tangible proof of progress. However, the importance of sustained political support and effective execution cannot be overstated in realizing hydrogen's full potential."

Echoing this sentiment, Sanjiv Lamba, CEO of Linde and another Co-Chair of the Hydrogen Council, emphasizes the need to prioritize market creation and binding purchasing agreements to ensure that current projects yield significant impact.

The report serves as a vital tool for businesses, investors, and policymakers as they navigate the next developmental phase, providing the clarity and confidence needed to advance the industry's trajectory.

Conclusion

In conclusion, the Global Hydrogen Compass represents a crucial insight into the ongoing evolution of the hydrogen sector, pointing to a period of growth driven by innovation and collaboration between business entities and governments. The future of clean hydrogen looks promising, signaling a vital step towards an energy landscape that is sustainable, resilient, and secure.