The worldwide green hydrogen sector, derived from water electrolysis using renewable electricity, introduces a unique paradigm distinct from gray and blue hydrogen. Its potential lies in addressing challenges related to directly substituting fossil fuels, particularly in industries requiring high heat for processes such as steel, cement, glass, and chemicals. Hydrogen assumes a pivotal role in decarbonizing sectors like steelmaking, complementing technologies like electric arc furnaces (EAF).
In industrial applications, green hydrogen demonstrates versatility and eco-friendliness, especially in steelmaking. Industries stand to benefit by employing green hydrogen as a cleaner feedstock in essential chemical manufacturing, encompassing ammonia and organic substances. Furthermore, green hydrogen shows promise in sectors like shipping, aviation, and heavy goods vehicles, offering viable solutions for decarbonization through synthetic fuels like ammonia and methanol, alongside fuel cell technology. However, competition from alternative fuels, particularly battery electric vehicles, presents a challenge in light-duty vehicles such as passenger cars.
Europe leads the way in implementing commercial green hydrogen plants, positioning itself as a global frontrunner. Meanwhile, regions like Latin America, the Middle East, and the Asia Pacific strategically evolve into future export hubs. The Middle East & Africa region, abundant in renewable energy sources, aims to cost-effectively produce green hydrogen, challenging established players in Asia Pacific and Europe.
The global green hydrogen market encounters a dynamic landscape with diverse budget allocations and varying implementation rates. Despite many countries allocating substantial funds for green hydrogen initiatives, project execution faces delays and challenges, reflecting the evolving complexity of this market. The transition from pilot to commercialization, export-oriented strategies, and regional dynamics in renewable resource availability collectively shape the market trajectory on a global scale.
India aspires to become a leading green hydrogen exporter, targeting a production goal of 5 million tons annually by 2030. Despite challenges from oil refiners, the government initiates 48 projects capable of production. India anticipates demand from the fertilizer industry and supports the hydrogen sector with guidelines, subsidies, and collaborations. However, the transition from gray to green hydrogen for domestic users may encounter challenges without demand-side incentives, even as global demand, led by the International Energy Agency (IEA), grows.
Australia is strategically positioned as a major low-carbon hydrogen exporter to Japan and South Korea, leveraging abundant renewable resources and a robust project development pipeline. The government actively supports the hydrogen industry, with efforts underway to establish a Guarantee of Origin certification scheme, fostering the export of Australian hydrogen products. While Australia excels in the emerging low-carbon hydrogen market, sustained leadership requires enhancing pipeline projects, government support programs, and global competitiveness.
Electrolysis, particularly alkaline electrolyzer technology, dominates green hydrogen production, contributing to the highest market share in 2023. Despite being in its early stages and relatively expensive, electrolyzer technology is pivotal, and cost-effective advancements are crucial for widespread adoption. As technology progresses, the efficiency of electrolysis processes is expected to improve, boosting production yields and contributing to cost-effectiveness. Global electrolyzer manufacturing capacity growth, driven by national policies, underscores the collective commitment to advancing green hydrogen technology, rendering hydrogen production more competitive.
Technological advancements, coupled with supportive policies and global collaborations, play a pivotal role in propelling the growth of the green hydrogen market. The transition to cost parity with fossil fuels is anticipated to span a decade, during which ongoing advancements and policies will gradually reduce production costs. This transition offers economic opportunities for countries embracing green hydrogen, contributing to environmental sustainability and presenting a promising future for the energy sector.
Alkaline electrolyzer technology leads the market in 2023, with PEM electrolyzers as the second most preferred. Emerging technologies like Solid Oxide Electrolysis Cells (SOEC) and Anion Exchange Membranes (AEM) exhibit growth potential. Alkaline electrolyzers excel in cost-effectiveness, while PEM electrolyzers offer an extended lifespan and superior efficiency, each with distinct advantages.
Wind energy dominates as the primary source, with onshore wind claiming the largest share. Solar energy is rapidly gaining ground, indicating potential for decentralized production and integration with existing grids. Other sources include geothermal, hydropower, and hybrids, registering the highest Compound Annual Growth Rate (CAGR).
The refining sector commands the highest market share among end-users, adopting green hydrogen as a sustainable alternative to traditional hydrogen production methods. As demand for cleaner energy surges, green hydrogen becomes the preferred choice for refineries aiming to enhance environmental performance and comply with stringent regulatory standards. The ammonia production sector emerges as another significant consumer of green hydrogen.
Europe leads the global green hydrogen market with comprehensive plans to increase hydrogen’s share in its energy mix from 2% to potentially 14% by 2050. Australia, the U.S., and Spain are expected to lead the market by the end of the decade, with Australia making a strong entry due to the Australia Renewable Energy Hub. North America’s green hydrogen market gains momentum, driven by decarbonization efforts and increasing interest in clean energy. Various countries, including the U.S. and Canada, express interest in promoting hydrogen in their clean energy strategies.
The global green hydrogen market features a diverse competitive landscape with players contributing to development, including traditional hydrogen production companies and green hydrogen technology providers.
