Green hydrogen is the future of hydrogen energy development. Deloitte's analysis shows that the hydrogen energy market will increase from US$642 billion in 2030 to US$1.4 trillion in 2050, of which green hydrogen will account for as high as 85%, and 20% of green hydrogen will be traded globally. This fully demonstrates the importance of green hydrogen trading to the low-cost decarbonization of the world economy. In addition, green hydrogen production and exports will adjust to developing and emerging economies in Africa, Latin America and the Pacific, developed countries such as Australia and the United States, and A sustainable pace of development in Gulf countries to stimulate economic development by supporting local industry activity, improving trade balances and contributing to the global energy transition. The analysis also suggests that a clean hydrogen economy could create 1 million new jobs per year by 2030, adding many more new jobs at a doubling rate over the next 20 years.

The global green hydrogen market will reach maturity in 2050

The Deloitte report shows that if carbon neutrality is achieved in 2050, the global green hydrogen market size can increase to 170 million tons of hydrogen equivalent in 2030, and to 600 million tons of hydrogen equivalent in 2050. Demand for green hydrogen will initially come from existing industrial hydrogen use (95 million tonnes of hydrogen equivalent), such as fertilizer production. Subsequently, the net-zero transition will underpin the rapid growth in demand for green hydrogen, cementing hydrogen’s position as a universal solution for decarbonisation. By 2050, demand for green hydrogen will account for 42% and 36% of total demand for green hydrogen in industries that are hardest to decarbonize, such as steel, chemicals, cement, and high-temperature heating, and transportation (aviation, shipping, and heavy road transport). Overall, green hydrogen is critical to carbon reduction. By decarbonizing existing hydrogen-use terminals and developing new hydrogen-use pathways, by 2050, cumulative emission reductions of 85 gigatons of carbon equivalent can be achieved, which is more than twice the global carbon emissions in 2021.

In addition to the rapid increase in demand for green hydrogen in developed countries, developing countries will also gain sustainable growth opportunities from the development of green hydrogen, and eventually gradually build a real global green hydrogen market. But to build a new important industry in less than 30 years will be an unprecedented challenge to the green hydrogen value chain, which is still in its infancy.

Green hydrogen projects initially need to rely on the support of public policies to achieve balance of payments. The "Inflation Reduction Act" issued by the United States, Australia's Clean Energy Finance Corporation, the EU's "55% reduction in greenhouse gas emissions" package plan and European common interests Important projects (IPCEI) funding plan, Japan's demand-side research and development support plan, etc., all belong to the green hydrogen project support plan of the government or inter-national organizations. Conventional carbon-intensive hydrogen is inexpensive to produce, but it does nothing to reduce carbon emissions and combat climate change. With the help of government support, economies of scale and carbon emissions trading, the cost of green hydrogen production is expected to eventually fall within an acceptable range. Breakeven production of ammonia is expected to be achieved by 2030, gaseous hydrogen production by 2035, methanol production by 2045 and sustainable aviation fuel (SAF) production by 2050. Over time, green hydrogen production will eventually take hold. By 2050, with the large-scale improvement of hydrogen supply capacity and the realization of hydrogen utilization in industry and transportation, the global hydrogen market will reach maturity. The growth of the market will form a price mechanism dominated by the spot market, with greater flexibility, which will help guide investment to more competitive regions.

The results of Deloitte's model show that green hydrogen can dominate the supply structure from the beginning and reach an 85% market share by 2050 (more than 500 million tons of hydrogen equivalent). Blue hydrogen can help establish hydrogen demand in the early stage and promote the formation of hydrogen economy in regions and countries with rich natural gas reserves such as the Middle East, North Africa, North America and Australia. By 2040, blue hydrogen production will reach its peak at about 125 million tons of hydrogen equivalent (accounting for 30% of the total hydrogen energy supply); thereafter, as restrictions on methane and carbon emissions become stricter, blue hydrogen will be gradually replaced by competitive green hydrogen.

The global hydrogen energy trade urgently needs to open up the "two veins of Ren Du"

A Deloitte report shows that in 2050, hydrogen energy trade between major regions in the world may account for nearly one-fifth of the total global trade volume, about 110 million tons of hydrogen equivalent. Commodities most commonly traded include ammonia, methanol, and sustainable aviation fuel, hydrogen carriers that are easy to transport over long distances. Ammonia, as one of the media for transporting hydrogen energy, requires related processes and facilities for conversion and re-conversion. By 2050, the hydrogen production and trade volume of four regions and countries including North Africa, Australia, North America, and the Middle East will account for 45% and 90% of the global total production and total trade volume respectively. Among them, the domestic hydrogen demand in North Africa and Australia Not high, so it has the greatest potential in terms of hydrogen exports (44 million tons of hydrogen equivalent and 16 million tons of hydrogen equivalent respectively); North America and the Middle East have hydrogen exports of 24 million tons of hydrogen equivalent and 13 million tons of hydrogen equivalent respectively. South America and sub-Saharan Africa also have the potential to participate in the market, perhaps accounting for 10% of the total trade volume. In terms of imports, Japan and South Korea will rely heavily on global hydrogen trade due to lack of resources and limited land use. From 2030 to 2050, 90% of the hydrogen demand of the two countries will rely on imports. Europe and India could produce large amounts of their own hydrogen, but could also rely on imports throughout the transition.

In 2050, hydrogen energy trade between major regions and countries in the world can generate more than US$280 billion in export revenue per year, including US$110 billion in North Africa, US$63 billion in North America, US$39 billion in Australia, and US$20 billion in the Middle East. Freedom and diversification of hydrogen energy trade can significantly reduce costs, improve energy security, and promote economic development in developing countries and emerging markets. Export revenues from clean hydrogen could help fossil fuel exporters offset declining oil, gas and coal export revenues.

Interregional trade in hydrogen energy can help reduce the geographic mismatch between hydrogen energy demand and low-cost hydrogen energy supply. Demanding countries such as European countries, Japan and South Korea may not be able to produce enough low-cost hydrogen themselves; meanwhile, parts of Australia, Africa and Latin America have relatively abundant renewable resources and sufficient available land to produce hydrogen with Green hydrogen that is cost competitive and exceeds its needs. This difference naturally leads to trading opportunities. Countries such as Australia, Chile, Germany and Japan can position themselves as future importers or exporters of hydrogen energy according to their own circumstances. Several memorandums of understanding have been signed between the countries, which will facilitate the diversification potential of renewable energy sources in southern countries. To realize this vision of global trade, transport infrastructure will be key.

Overview of major green hydrogen importing and exporting countries

The diversity of renewable energy endowments and land availability among countries around the world will create large differences in the cost and scale of green hydrogen production. A country's hydrogen energy consumption depends on population size, industrial structure and economic development, while international hydrogen energy trade is affected by differences in consumption and production potential. Countries with insufficient hydrogen energy supply can purchase all or part of hydrogen energy from the international market to reduce costs; while countries with low-cost hydrogen energy production potential can maximize revenue through hydrogen energy export.

From the perspective of resource endowment and production potential, Chile, Morocco, Saudi Arabia, Spain, the United Kingdom, Japan, China and the United States all have their own characteristics.

Northern Chile in South America has the strongest solar radiation in the world and has the potential to export renewable energy; Morocco in North Africa has abundant solar and wind energy and is close to the EU market; Saudi Arabia will benefit from strong solar radiation and vast land. According to a Deloitte report, by 2050, Saudi Arabia will produce 39 million tons of low-cost green hydrogen, four times its domestic demand, and will become an important exporter of green hydrogen. At present, the country has participated in several international trade agreements for green hydrogen exports, and regards it as one of the cornerstones of its strategy to diversify its economy away from oil exports.

Spain is also extremely rich in solar energy and is one of the best candidate countries for green hydrogen production in Europe. Spain could be close to becoming self-sufficient in hydrogen energy by 2050. Spain has a superior geographical location. It can import a large amount of North African green hydrogen through the pipeline with Morocco, and then transport it to the demand side of Europe (especially Germany) through the pan-European transportation infrastructure. The Barcelona-Marseille hydrogen pipeline project (valued at 2.6 billion US dollars) will greatly reduce the cost of transporting hydrogen energy in Spain.

The UK is rich in wind energy and can fully exploit its potential to produce about 7.5 million tons of green hydrogen per year. However, the demand for green hydrogen in the UK is not small. The latest hydrogen energy strategy in the UK shows that the demand for hydrogen energy will grow strongly after 2030 (Deloitte predicts that the UK may need 12 million tons of green hydrogen by 2050), so it may become a green hydrogen industry. One of the hydrogen importing countries.

Due to limited renewable energy and over-dense coastal population, Japan is unable to produce green hydrogen, but its high economic industrialization will push up the demand for green hydrogen, so it will be one of the main hydrogen energy importers.

Although the United States and China are rich in renewable energy, the production of green hydrogen will also be limited. For example, the land (desert) suitable for green hydrogen production is far away from the consumption center or export center, which may lead to high transportation costs and prevent it from being provided at a reasonable price. Competitive green hydrogen.

The transition from fossil fuels to clean hydrogen will require substantial capital

Deloitte predicts that by 2050, achieving the goal of net zero emissions will require a cumulative investment of more than US$9 trillion in the global hydrogen supply chain, of which developing countries will need to invest US$3.1 trillion. These numbers may sound daunting, but when averaged over a 25-year time horizon, the average annual investment is actually no higher than the $417 billion spent on oil and gas production in 2022. If governments and companies can direct the money spent on oil and gas to clean hydrogen, the goal of net zero emissions is promising. Deloitte suggested that the main hydrogen energy consumption and production areas, namely China, Europe and North America (hydrogen production capacity will account for more than half of the global total production capacity), should invest US$2 trillion, US$1.2 trillion and US$1 trillion respectively in the field of hydrogen energy US dollars, and should also raise substantial funds from developing and emerging countries, of which about US$900 billion in North Africa, about US$400 billion in South America, and US$300 billion each in Sub-Saharan Africa and Central America. Deloitte believes that the development of green hydrogen economy in these countries or regions can effectively attract foreign investment.

The current policy determines the future

Deloitte believes that countries should decisively adopt policies to support green hydrogen, which will help expand the development scale of the clean hydrogen economy and ensure that green hydrogen will play a key role on the road to carbon neutrality. To date, more than 140 countries (combinedly accounting for 88% of global carbon emissions) have set net-zero emissions targets. However, according to the announced clean hydrogen project data, by 2030, the world will only have a clean hydrogen production capacity of 44 million tons of hydrogen equivalent, which is only 1/4 of the global clean hydrogen demand. Therefore, it is crucial to adopt targeted support policies for the production of clean hydrogen, to ensure the smooth development of early projects (such as pilot projects and series projects), so that it has a relatively level playing field and can enter the market to achieve economies of scale. Deloitte suggests that policy formulation should focus on three aspects.

First, a climate-oriented market foundation should be established. Policymakers can develop national and regional strategies to increase the credibility of hydrogen prospects. Establish a stable shared clean hydrogen certification process to ensure transparency and avoid technology blockade. Scale up international cooperation, ease political friction and ensure fair competition.

The second is to create a viable business case. Narrow the gap between clean hydrogen and fossil fuel technologies using targeted strategies such as mandatory mandates, direct subsidies, carbon contracts for difference, fiscal incentives, public guarantees, and setting targets or creating markets for hydrogen products. cost gap. It is also possible to establish a long-term offtake mechanism, such as the H2Global project in Germany. Because of the offtake method, the project risk is greatly reduced, the gap between the price and the willingness to pay is bridged, and the price is more stable.

The third is to maintain the long-term resilience of hydrogen energy development. National strategies should focus on diversifying the entire clean hydrogen value chain from trading partners to equipment and raw material suppliers, avoiding costly bottlenecks in growth while increasing market resilience. Public policy support should also focus on infrastructure design for transport (pipelines and sea roads) and storage (strategic stockpiles) of clean hydrogen products. Governments should also commit to international cooperation to strengthen synergies between energy, climate and development policies, including promoting strong regional integration.

The emergence of the clean hydrogen market means that every stage of the clean hydrogen value chain will be full of opportunities and challenges. Achieving carbon neutrality requires not only the decarbonization of unclean hydrogen, but also the need to scale up hydrogen production by more than six times to meet the demands arising from the energy transition. Achieving this goal will require breakthroughs in carbon-reducing technologies in the production of fuel cells and aviation fuel; manufacturing technologies such as electrolyzers, solar panels and wind turbines; and infrastructure technologies such as hydrogen production, transportation and storage, At the same time, new supply chains must be established and hydrogen traded on a global scale.

The development path of the global hydrogen energy value chain depends on a series of choices. There are great uncertainties in suitable supply technologies, government preferences, hydrogen energy production and consumption locations, and corresponding energy trade routes. Any choice would mean potential conflicts among hydrogen economy stakeholders, including national governments, energy suppliers and utilities, equipment manufacturers, consumers and the transport industry (shipping, etc.) company and port facility managers, etc.).

Nevertheless, before 2050, achieving carbon neutrality is still an unchanging mission for mankind. The forecasts of the Deloitte report are based on the assumption that by the middle of the 21st century, the global economy will reach carbon neutrality, and governments and companies will actively deal with financial and geopolitical issues, allowing clean hydrogen trade to freely develop in a diversified way, and in this In the process, countries with hydrogen energy resources will play an indispensable role. This assumption may not be realistic, but such "ambition" is necessary, it can motivate human beings to seize the time to deal with global warming, create fair development opportunities, improve global energy security and reduce supply chain pressure through a diversified hydrogen value chain. Disruption risk.

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