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The Surge of Clean Hydrogen Investments

In a landmark achievement for the clean hydrogen sector, over USD 110 billion has been invested in more than 500 projects worldwide that have advanced past their final investment decisions (FID) and are either in the construction phase or operational. This impressive surge of USD 35 billion compared to the previous year signals a robust growth trend in the hydrogen industry, showcasing a commitment to sustainable energy solutions.

Since 2020, the hydrogen industry has experienced an astonishing average growth rate of 50% year-on-year in committed investments, according to insights from the Hydrogen Council's inaugural Global Hydrogen Compass report, a collaboration with McKinsey & Company. As the industry matures, various projects showcasing strong business cases are moving forward, while less viable ventures have been dropped from the roster. This is a clear indicator of the industry's progress and evolution.

Over 1,700 hydrogen projects have been proposed globally in the last few years, representing an impressive 7.5-fold increase. However, around 50 projects have been publicly canceled in the last 18 months, accounting for about 3% of the total pipeline. Most of these cancellations were early-stage renewable hydrogen initiatives. The industry faces structural challenges as well, with high interest rates and delays in policy implementations in certain regions pressuring the selection process for projects.

Capacity Growth and Future Prospects

On the supply side, the total committed capacity has surpassed 6 million tonnes per year (mtpa), with 1 mtpa currently in operation. Despite facing delays and potential project withdrawals, the existing pipeline could realistically support a clean hydrogen capacity between 9-14 mtpa by 2030. But achieving this ambitious goal will depend critically on the demand for hydrogen. Currently, around 3.6 mtpa of binding offtake agreements have been secured, and as policy frameworks become clearer in key markets like the EU, US, Japan, and Korea, there is a hopeful projection that an additional 8 mtpa of demand could materialize by 2030.

China is at the forefront of global hydrogen investments, leading with commitments of USD 33 billion and accounting for over 50% of the world's renewable hydrogen capacity. Following China is North America with USD 23 billion, which hosts 85% of global low-carbon hydrogen production. Meanwhile, Europe has committed USD 19 billion, playing a critical role as it navigates close to two-thirds of the projected global demand for hydrogen by 2030.

Navigating Future Challenges

The Global Hydrogen Compass offers an insightful look into the industry's landscape. By blending extensive industry data with first-hand insights from global CEOs and key learnings from substantial hydrogen projects, the report provides both clarity and confidence in the sector's trajectory. Despite the ongoing challenges, a majority of surveyed CEOs—74%—reported a stable or increased appetite for investment over the last two years. Furthermore, 97% of these leaders acknowledge that hydrogen will play an essential role in decarbonizing hard-to-abate sectors across the economy.

Jaehoon Chang, Vice-Chair of Hyundai Motor Group and Co-Chair of the Hydrogen Council, emphasized, "The Global Hydrogen Compass sends a strong message our industry has entered the next chapter of build-out, transitioning from ambition to delivery. The increase in committed investments to USD 110 billion shows tangible proof of our progress, yet it serves as a reminder of the work that lies ahead." Chang highlighted the necessity for consistent policy support and effective execution to harness hydrogen's full potential for a cleaner and more secure energy future.

Sanjiv Lamba, CEO of Linde and also Co-Chair of the Hydrogen Council, echoed this sentiment, stating that the industry has made incredible advancements, but now, the focus must shift to securing market creation and binding offtake agreements to ensure that ongoing projects produce significant impact. He called for stronger collaboration between businesses and governments to create the frameworks necessary for progress, asserting that aligning efforts is key to unlocking hydrogen's potential in addressing forthcoming challenges.

Ivana Jemelkova, CEO of the Hydrogen Council, added that the combination of robust industry data, direct insights from global leaders, and successful project lessons in the inaugural Global Hydrogen Compass report showcases the industry’s steady growth over the last five years. It provides the clarity and confidence required for businesses, investors, and policymakers as they embark on the next phase of expansion in the hydrogen sector.

Conclusion

As the Global Hydrogen Compass highlights, the hydrogen industry stands at a pivotal moment, with substantial investments and projects paving the way for a cleaner future. The call for robust policy frameworks, collaborative initiatives, and market demand remains crucial in securing the trajectory of hydrogen as a cornerstone in the global energy transition. The journey toward sustainable hydrogen solutions appears promising, buoyed by the collective momentum of industry stakeholders committed to seeing it through.

Visit Global Hydrogen Compass for a more interactive experience, highlighted insights, dynamic dashboards, and valuable global maps related to this groundbreaking sector.