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Clean H2 to hit 12mn-18mn t/yr by 2030, goals in doubt

  • Market: Hydrogen
  • 17/09/24

Global supply of clean hydrogen could reach 12mn-18mn t/yr by 2030, up from less than 1mn t/yr currently online, according to industry body the Hydrogen Council. This is well short of global government targets and suggests supply will remain far below estimates of what is needed to combat climate change.

Announced projects could provide 48mn t/yr of capacity by 2030, of which around 75pc would be renewable hydrogen and the remainder 'low-carbon' output from natural gas with carbon capture and storage, the association said in its Hydrogen Insights 2024 report published today.

But only 4.6mn t/yr of this has moved to a final investment decision (FID) or beyond and "natural attrition" — prioritising the most viable projects — means many of the announced ventures will not materialise as planned, the Hydrogen Council said. A "probability adjustment", based on completion rates for other renewables projects, suggests only around 30pc of the announced capacity will be operational by 2030, the group predicts, although the 12mn-18mn t/yr estimate does not factor in potential future announcements.

If these forecasts materialise, governments around the world are bound to spectacularly miss production targets set for 2030. The EU and the US are targeting 10mn t/yr of domestic production each, India 5mn t/yr, while Egypt, Saudi Arabia, Oman and the UAE have goals for at least 6.5mn t/yr between them. Scores of other countries have ambitious goals.

The forecast would also fall far short of climate change imperatives. Paris-based energy watchdog the IEA estimated last year that 69mn t/yr of clean hydrogen would be needed by 2030 to put the world on track for net-zero emissions by 2050. The Hydrogen Council puts this at 75mn t/yr.

The Hydrogen Council has pointed to global macroeconomic headwinds as a key reason for slow progress, along with uncertain regulation within the sector. A slew of recent project cancellations have counteracted the optimism arising from an increased number of FIDs.

Growing up

Still, the industry has shown some encouraging signs of maturity, even if it is not on track to meet the heady targets set by many governments and companies, the Hydrogen Council said.

Committed funds for hydrogen projects past FID, being built, or in operation was $75bn across 434 projects as of May 2024, compared with $10bn across 102 projects in 2020, it said.

The $75bn is nearly double the $39bn in this category as of October 2023. There was only a 15pc increase in the combined value of projects in the 'announced' category, to $303bn from $259bn, over the same period, signalling the pace towards realisation of projects is picking up.

The near double growth in 'committed' funds was driven 60pc by investments in end-use, 40pc in infrastructure, and only 15pc by investments in hydrogen production. Investment decisions for end-use applications grew several times over between October 2023 and May 2024. This may satisfy market participants' repeated calls for a government focus on stimulating demand recently.

But planned investments in end-use and infrastructure projects are lagging far behind what will be needed in a net-zero scenario, the Hydrogen Council said. Announced investments in end-use projects is $145bn below what is required by 2030, and midstream infrastructure is trailing by $190bn. But announced investments in production projects this year for the first time surpassed what will be necessary, with a $15bn surplus — although much of this could fall by the wayside.

"With the current announced investments and the growth observed since last publication, investments are behind the required net-zero pathways with net-zero targets unlikely to be met," the Hydrogen Council said.

Assumptions for probability adjustments%
Project stageAssumed success rate
In operation100
Under construction100
Post-FID99
Front end engineering design40-80
Feasibility study5-40
Announced0-20
Global announced electrolyser capacity through 2030GW
As of Announced capacity
Dec-2055
Dec-21115
May-22175
Jan-23230
Oct-23305
May-24375
* based on the Hydrogen Council's probability adjustment, globally installed electrolysis capacity could reach 90GW by 2030

Investments until 2030 by project stage $bn

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08/11/24

Coalition collapse worries German hydrogen sector

Coalition collapse worries German hydrogen sector

Hamburg, 8 November (Argus) — Germany's hydrogen industry is concerned that the collapse of the country's coalition government this week could further delay the sector's progress. Germany's ambitious plans for a clean hydrogen economy were already progressing more slowly than many had expected, and the collapse of the governing coalition comes at a time when the hydrogen sector is desperate for more clarity on key legislation. Chancellor Olaf Scholz's Social Democratic Party and the Green Party plan to rule as a minority government for the time being, after the third partner, the pro-business Free Democratic Party, exited the coalition on the back of disputes over how to finance the 2025 budget and how to tackle Germany's economic downturn. Scholz intends to ask for a confidence vote on 15 January, which in turn could lead to elections in March 2025, six months ahead of schedule. This prospect of an early election has raised concerns about progress on key legislation, including on energy policy and more specifically hydrogen. The coalition's end "has come at an inopportune time and is creating considerable uncertainty", German hydrogen industry association DWV said. "Political stagnation is looming" and delayed progress on key policies could "jeopardise the ramp-up of a hydrogen economy and potentially set its start back by months or years," it said. Scholz said he will seek votes on urgent laws before Christmas "but failed to make a clear commitment to key projects for the hydrogen economy", DWV said. The industry body listed several legislative initiatives planned or underway that need addressing. These include the so-called hydrogen acceleration act — which is designed to streamline permitting procedures for electrolysis plants, import terminals, storage facilities and other infrastructure — and the power plant strategy which involves the development of hydrogen-ready gas-fired power plants and for which first tenders are planned for the first half of 2025. The industry is still waiting for a dedicated storage strategy which is long overdue and was most recently promised for "this autumn". And while Germany has until 21 May next year to transpose key rules from the EU's revised Renewable Energy Directive (RED III) into national law, industry participants have called for this to be done as soon as possible to provide certainty, especially around mandates for renewable hydrogen use in industry . DWV also reiterated calls for the implementation of a certification system for renewable hydrogen and derivatives, having previously said that this will be critical to unlock support for producers through greenhouse gas emissions certificates. Turn the page Persistent uncertainty over future budgets raises questions over subsidy mechanisms that are long overdue and which Berlin is counting on to reach its 10GW electrolyser capacity target for 2030. This includes tenders for 3GW of so-called "system-serving electrolysis capacity", intended to provide flexibility in the wider electricity system. These were due to be launched last year and run steadily until 2029 for 500 MW/yr of capacity. The economy and climate protection ministry told Argus in late August that it was planning to consult on the tender framework this autumn, but it has yet to do so. The DWV acknowledged that "the coalition, despite all the criticism, has also done a lot of good for the hydrogen ramp-up". Progress on the planned pipeline network, the carbon-contracts-for-difference scheme and the power plant plans has been made this year. But despite progress in some areas, Germany's 10GW electrolysis capacity is "far out of reach", according to David Hanel, head of public affairs in Germany for French hydrogen project developer Lhyfe. The "current political crisis" offers opportunities for a reset, especially a "reality check" on the effectiveness of support measures that have been drawn up for the sector, including the European hydrogen bank, Hanel said. A change in government following the election is highly likely. Polls show the conservative opposition sister parties CDU and CSU firmly in the lead, although with a projected 30-33pc share of votes they too would need coalition partners. A change in power is unlikely to lead to a major shift in Germany's course on hydrogen. But it could be good news for proponents of "blue" hydrogen made from natural gas with carbon capture and utilisation or storage (CCUS) or "turquoise" gas-based hydrogen made via pyrolysis. In a "discussion paper" on energy published earlier this week, the CDU/CSU called for a "fast, multi-coloured and broad" approach to hydrogen. In order to advance plans, barriers for domestic gas-based hydrogen production with abated emissions have to be removed, the parties said. The incumbent coalition had stressed openness to imports and use of hydrogen from different sources , including gas-based pathways, but limited funding support for domestic production of renewable hydrogen. A change in government could also mean that the recently-approved hydrogen network will be revised. The CDU/CSU has called for extensions to "cover all main economic regions," focusing specifically on the southern states of Baden-Wurttemberg and Bavaria . By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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German government collapse could delay energy policies


07/11/24
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07/11/24

German government collapse could delay energy policies

London, 7 November (Argus) — The collapse of the German coalition government may delay critical energy security policies currently under discussion, with industry and power associations expressing concerns about potential political standstill on such issues in the coming months. Asked in Berlin on Thursday, energy minister Robert Habeck said he does not expect a general agreement between the remaining red-green government and the conservative Union, which would ensure all further projects in this parliamentary period. And "it remains to be seen" if some decisions could be made together with the opposition on a case-by-case basis where the interests of government and CDU align, Habeck said, although energy security could be one topic where bills could be passed during the minority government phase before the end of this year. CDU politicians including on the state level had "constantly" written him letters to ask when some laws would "finally" be passed, he said, highlighting that while he does not expect "a great deal of helpfulness" he hopes the opposition will work with the government on the basis of how beneficial planning security would be for Germany as a whole. Among the energy security laws waiting to be passed is the draft law that abolishes the German gas storage levy on cross-border interconnection points , while the government has not yet passed its power plant strategy nor submitted the second of its two planned "solar packages". Chancellor Olaf Scholz on Wednesday said that among the legislative projects he was trying to pass before the end of the year were "immediate measures for our industry" on which he was currently deliberating with "companies, unions and associations". He said he would quickly try to begin speaking to opposition leader Friedrich Merz around the questions of defence and economic stability, since the economic stabilisation "cannot wait until elections have taken place". The coalition government collapsed after Scholz sacked finance minister Christian Linder , leading the latter to withdraw his party from the ruling coalition. An election looks likely in early 2025. Industry and renewables associations in particular voiced concerns about the timing of the collapse and potential political stagnation, with general leader of chemicals association VCI calling for elections at "the earliest possible time" to avoid "stalemate and political standstill", while the federation of German industries BDI said the country needs a "new, effective government" with a parliamentary majority "as quickly as possible". VCI stressed that Germany needs low energy prices, faster permitting and less bureaucracy, while BDI highlighted that existing market uncertainty is likely to rise with the arrival of the new US administration at the beginning of 2025, when Scholz plans to hold a vote of confidence. And wind association BWE stated that the country "cannot afford to stand still", while solar power association BSW appealed to members of the Bundestag to "make decisions and compromise" on important energy policy issues across party lines. Renewables association BEE called for laws and budget funds already in process for the continuity of energy measures to be adopted by December, stating that "even in a political crisis" the country "cannot afford" stagnation and stalemates. Conservative opposition sister parties CDU and CSU have been polling well ahead across 2024 at around 30-33pc of the vote. While the parties agree with the ruling coalition on several aspects of energy policy — including supporting hydrogen-fired and climate-neutral gas-fired generation — they notably diverge on the topic of nuclear generation. Germany completed its long-awaited nuclear phase-out in April 2023, but the CDU/CSU this week announced it would conduct an investigation into whether the last plants to be decommissioned could feasibly be reactivated. The CDU/CSU also reiterated its support for the development of fourth and fifth-generation nuclear reactors. Nuclear plants are notorious for lengthy construction times, meaning a single parliamentary term may not be enough to see projects through without cross-party support, and the ruling Greens and SPD remain anti-nuclear. The country has also not yet decided on a final storage location for its existing nuclear waste, which will need to be stored there for "one million years", according to the final report from the commission for the storage of highly radioactive waste. But the CDU and SPD have both voiced support for the introduction of a national green gas sales quota , with the CDU/CSU this week highlighting green gas quotas in the gas grid as a way to leverage the market to reach climate goals. By Till Stehr and Helen Senior Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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EU expected to approve climate, energy commissioners


06/11/24
News
06/11/24

EU expected to approve climate, energy commissioners

Brussels, 6 November (Argus) — Former Danish climate minister Dan Jorgensen is expected to be confirmed late this month as EU energy and housing commissioner, having received clear support after his hearing in front of EU parliament members. Similarly, centre-right political support is expected to ensure a vote for reconfirmation of Wopke Hoekstra as climate commissioner. Jorgensen has received approval from the joint hearing committee, after his hearing yesterday. During the hearing, he promised a plan for affordable energy, a roadmap to end Russian energy imports, a clean energy investment plan and an electrification action plan. He focused on cost, noting the need to work towards lower energy prices in Europe and recognised nuclear energy as "part of the solution". But Jorgensen avoided giving detail on contentious issues, adding no precise date for an end to Russian energy imports. Although he backed a 2040 renewables target, he gave no approximate percentage share, or range, for renewables in final energy consumption by that date. German member Christian Ehler said his centre-right EPP group would "in the end" support Jorgensen following "reasonable" performance. Ehler wants the future commissioner's statements on hydrogen and related delegated acts, especially on low-carbon hydrogen, to be "concretised quickly". Industry group SolarPower Europe welcomed Jorgensen's clarity around not seeking fundamental changes to electricity market rules, but their proper implementation. A power industry source, though, pointed to his "other ideas" on specifics, notably on how to increase market liquidity . Documents prepared for the 7 November hearing of current climate commissioner Wopke Hoekstra give little concrete detail on revision of the bloc's emissions trading system (ETS). Hoekstra is expected to take a similarly cautious approach as that of designated EU agriculture commissioner Christophe Hansen on ETS integration to cut agriculture's 11pc share of EU greenhouse gas (GHG) emissions. But Hoekstra is expected to be more open about using the 2026 ETS review to lower thresholds for EU ETS inclusion from 2031, including for maritime shipping, bioenergy with carbon capture and storage (Beccs) and direct air capture with carbon storage (Daccs). The European Parliament is expected to vote on the new commissioners during its 25-28 November plenary in Strasbourg. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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UK parliament approves SAF mandate from 2025


06/11/24
News
06/11/24

UK parliament approves SAF mandate from 2025

London, 6 November (Argus) — The UK parliament has approved the proposed sustainable aviation fuel (SAF) mandate that will come into effect on 1 January, 2025. Obligated suppliers will have to deliver a 2pc share of SAF in 2025, increasing to 10pc in 2030, 15pc in 2035 and 22pc in 2040. The obligation will remain at 22pc from 2040 "until there is greater certainty regarding SAF supply". The obligation arises at the point at which a supplier's jet fuel can be supplied only to UK aviation. Hydrotreated esters and fatty acids (HEFA) SAF can be used to meet 100pc of SAF demand in 2025 and 2026, but will be capped at 71pc in 2030 and 35pc in 2040. An obligation for Power-to-Liquid (PtL) SAF will be introduced from 2028 at 0.2pc of total jet fuel demand, rising to 0.5pc in 2030 and 3.5pc in 2040. Buy-out mechanisms will be set at the equivalent of £4.70/l ($6.10/l) and £5.00/l ($6.50/l) for the main and PtL obligations, respectively. "It is projected that, between 2025 and 2040, the SAF mandate could deliver up to 25mn t of SAF, securing a saving of up to 54mn t of carbon dioxide", said transport minister John Hendy. The UK confirmed on 17 July it will introduce the Sustainable Aviation Fuel (Revenue Support Mechanism) bill to support SAF production. The government previously said it aims to introduce the mechanism, which will be industry funded, by the end of 2026 . "Together with the SAF mandate, [the mechanism] will give the investment community confidence to invest in these novel and innovative technologies", Hendy said. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Trump unlikely to fully end US clean energy policies


04/11/24
News
04/11/24

Trump unlikely to fully end US clean energy policies

Houston, 4 November (Argus) — Although former US president Donald Trump has promised to end climate policies enacted during the administration of President Joe Biden, the political complications of reversing course make a full change of direction unlikely should Trump return to the White House. Trump has frequently criticized Inflation Reduction Act (IRA), promising to terminate the " Green New Scam " and rescind all unspent funds in the Biden administration's climate policy suite, if he is elected to a second term. But fulfilling that pledge may be difficult for many reasons, not least of which is whether Republicans have control of both chambers of Congress after Tuesday's election, including the unlikely outcome of a 60-seat majority needed to bypass a Senate filibuster. Beyond the math, Republican districts are benefiting from IRA funding, with some lawmakers from Trump's party already opposing the turmoil that could arise from an about-face on tax policy. "There's no way they're going to be able to replace and repeal the IRA, in large part because so many of the dollars are flowing to [Republican] states," said David Shepheard, a partner at consultant Baringa who specializes in energy and resources. "I think the pieces of the IRA that are most at risk are the [electric vehicle] tax credits, potentially some of the stimulative pieces around offshore wind." The IRA established a host of federal incentives to support clean electricity growth and the associated domestic supply chain. Those include technology-agnostic production and investment tax credits for electricity generators based on their emissions intensities. But the law went well beyond the power sector and also established credits for hydrogen production, electric vehicles and the manufacture of components needed by clean electricity systems. Project developers are counting on a policy trajectory that does not match Trump's rhetoric, which would allow some incentives to stay on the books. Companies expect market forces, such as corporate demand, and state mandates to continue to drive growth for solar and onshore wind and energy storage, rather than national politics. But there is more trepidation around offshore wind, a less mature sector for which the federal government is effectively the landlord for project sites. "There is no doubt that the trajectory of the US offshore wind industry will be impacted by the November election," Liz Burdock, chief executive of offshore wind industry group Oceantic Network, said. "Its outcome will influence how we maintain our momentum." Uncertainty around the US presidential election has dampened private investment in the sector this year, according to Oceantic. At the same time, companies say the industry has come a long way since 2016, with a handful of projects now operating, while recent macroeconomic challenges are subsiding. Furthermore, demand for offshore wind would continue at the state level, and these factors could make the industry more resilient to headwinds. Executive decisions Trump still could use the executive branch to "stonewall" sectors helped by the IRA in the absence of a repeal, including by influence the timing or distribution of IRA funds, according to Shepheard. He could shift regulators' priorities to new oil and gas development, which, along with other actions, could make resources such as combined-cycle natural gas plants more attractive than renewables. "The extent that renewables and other cleaner energy assets are competing with gas, that'll be the big change from a Trump administration," Shepheard said. At the same time, funding for onshore wind and solar is "relatively safe", and tax credits for hydrogen and carbon capture are on comparably firm ground because of support from the oil and gas industry, Shepheard said. Some companies have expressed cautious optimism that some elements of the IRA, such as the advanced manufacturing tax credit, will survive. The incentive is not only important for the solar supply chain but also offshore wind, as state-level solicitations often require developers to invest in local manufacturing. Republican states in the US southeast have already benefited from new factories springing up on the back of the credits. For example, Enel chose Oklahoma for a new new module plant , First Solar located a factory in Alabama and Qcells has expanded production in Georgia. Moreover, removing that carrot could leave the US solar industry reliant on Chinese companies, which could run afoul of Trump's protectionist trade instincts. Trump's campaign did not respond to multiple requests to elaborate on his policy plans. By Patrick Zemanek Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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