Cheaper renewable energy and carbon capture, utilisation and storage (CCUS) will make a big difference, but dedicated projects are also needed to improve low‐emissions hydrogen and ammonia production technologies and to reduce efficiency losses across the value chain, it states.
It notes there has been recent progress. The largest power generation company in Japan, JERA, issued a tender in 2022 for up to 0.5 Mt of low‐emissions ammonia (around 5 thousand barrels of oil equivalent per day [kboe/d]) to replace 20% of the coal at a large power plant unit from 2027.
Maersk has commissioned 19 methanol‐fuelled container ships and it is studying how to ensure that the methanol they use is produced from sustainable biomass. In Germany, a 350 tonne per year plant for the production of synthetic kerosene opened in 2022 next to an existing synthetic methane plant and a source of CO2 from biogas upgrading.
Taking into account the cost of CO2, the cost of producing low‐emissions hydrogen‐based fuels in the NZE Scenario is lower than the price of maritime fuel in the 2030s in a number of regions, and lower than the price of aviation fuel in the 2040s.
Nearly 6 mboe/d of low‐emissions hydrogen‐based liquid fuels are consumed in 2050, roughly evenly split between aviation, power generation and shipping. This rests on the production of 120 million tonnes of low‐emissions hydrogen fed by 1.2 TW of renewable power capacity (equivalent to 70% of today’s global installed solar and wind capacity) as well as 0.5 Gt CO2 per year of CCUS capacity.
Ukraine conflict gives ‘massive boost’ to hydrogen
Momentum behind the global low‐emissions hydrogen sector has been given a major boost by Russia’s invasion of Ukraine, the IEA states later in the 522-page report.
By 2021 the sector was already converting more of its bulging project pipeline into investment decisions, and hydrogen‐focussed companies were raising more money than ever before.
Last year the European Commission proposed that by 2030 the industrial and transport sectors in the European Union should use approximately 11Mt hydrogen a year made from the electrolysis of water by renewable electricity. In May, it proposed nearly doubling this to 20Mt across all end‐use and transformation sectors.
“With EU member states now aiming to reduce natural gas and oil demand by increasing low‐emissions hydrogen use, and higher formal targets in the United Kingdom and elsewhere, it seems likely that major projects around the world will start construction in the near term,” it states.
Two of the world’s largest electrolysers started operations in 2022. In China, the capacity of a captive electrolyser supplying a methanol and chemical plant was expanded fivefold to 150 MW, and in Spain, a solar‐powered 20 MW electrolyser was commissioned at an existing fertiliser plant.
Two large electrolyser projects received final investment decisions. First is a 260 MW electrolyser that aims to start supplying a refinery in China from 2023. Second is a 200 MW plant operating on wind power in the Netherlands, which is due to start in 2025, and is coupled with an existing refinery with high hydrogen demand.
Overall, capital spending in 2021 on hydrogen electrolyser projects starting operation or under construction was around $1.5bn, more than three‐times as much as in 2020, and the 33 “pure play” hydrogen companies tracked by the IEA have increased their capitalisation by around US$20bn.
The IEA forecasts global low‐emissions hydrogen production reaches 30Mt of hydrogen per year in 2030 in the Announced Pledges Scenario (APS), including hydrogen produced onsite in industry and refineries as well as that used to produce hydrogen‐based liquid fuels.