Despite increases in the value of FIDs from $2bn to $22bn in the latter half of 2021, the new report concluded it is significantly slower than growth announcements which total 680 large-scale projects at a cost of $240bn in direct investment.
The report has compounded a need for more work to be done from both policymakers and industry players to ramp up FIDs to close an investment gap, which the report estimated to be around 85% to the $200bn in spending through to 2030.
Here we take a deeper dive into the key policy and industry priority actions for 2022 to 2023 from the report’s executive summary.
Enable demand visibility and regulatory certainty by adopting legally binding measures
Create demand visibility through measures such as targets or quotas for hydrogen consumption across end-use sectors, alongside public procurement measures or competitive bidding for carbon contracts for difference.
This will bridge the gap to cost competitiveness, boost investor confidence and have a ripple effect throughout the value chain, enabling investments in hydrogen supply, equipment manufacturing, and infrastructure.
Fast-track access to public funding for hydrogen projects
Introduce measures such as grants, loans, tax credits, as well as funding support schemes based on competitive bidding. Policymakers across geographies have put forward plans to roll out the relevant instruments designed to stimulate hydrogen uptake.
It is crucial to move from vision to action, and proceed with the implementation of these instruments. Rapid rollout of support schemes for hydrogen will lift mature projects off the ground and accelerate hydrogen deployment to support global climate goals within this decade, while bringing the costs further down.
Ensure international coordination and support credible common standards and robust tradeable certification systems
A common standard methodology for assessing all hydrogen production pathways is essential to allow the hydrogen with the lowest carbon footprint to reveal its climate benefits. Robust certification systems are instrumental in building consumer trust and paving the way for global hydrogen trade, which in turn will support scale-up and minimise hydrogen cost.
Advance project proposals to FiD by committing to funding and resource deployment
As regulatory certainty is being strengthened and funding support starts rolling out, industry should commit to deploying resources to mature projects towards FID by conducting feasibility and FEED studies to realise the $240bn project proposals.
Furthermore, new projects must continue to be developed to bridge the $460m investment gap to Net Zero toward the end of this decade. Project developers should focus on building long-term relationships between hydrogen suppliers and offtakers, and actively mitigate the perceived risk of investing in hydrogen projects by staging projects and by working with established partners with strong track records.
Scale up hydrogen supply chain and capacity
As government targets translate into regulatory action and confidence in a sustained demand outlook, commit to increasing supply chain capability and capacity. The industry should start ramping up capacity to enable deployment at scale.
Alignment and synchronisation between the policy, infrastructure, and end-use applications is essential. The industry needs to ensure the project proposals and equipment such as electrolysers, are available as the industry scales. Supply chains must be readied, and only industry can do it. Increasing renewable power capacity at scale remains vital to scale up renewable hydrogen deployment.
Build infrastructure for cross-border trade
Global trade unlocks the full benefits of hydrogen as transportable, clean energy. But project proposals to develop hydrogen infrastructure are lacking, and industry should concentrate its efforts toward establishing infrastructure to enable cross-border trade, through building out terminals, large-scale storage, and hydrogen conversion technologies.
As international cooperation between governments advances, the industry should actively help to prioritise actions to enable international trade flows match supply and demand in an efficient manner.