07 Dec 2021

IEA: 'The Relative Lack of Demand for Green Hydrogen Makes Sector's Progress Uncertain'

07 Dec 2021  by   

More than 260GW of green hydrogen projects may have been announced, but the relative lack of demand for the clean fuel makes it “uncertain how many of these projects will actually be commissioned on time and on budget”, according to an analysis by the International Energy Agency (IEA).

“Globally, almost $30bn of government subsidies for green hydrogen have already been announced as part of stimulus packages,” the analysis on the IEA website explains. “Despite this, financing challenges concerning the profitability of green hydrogen projects remain; in many parts of the world the cost of producing hydrogen from renewable electricity remains higher than fossil fuel alternatives.”

The analysis adds that electrolyser capacity expansion is necessary to achieve the economies of scale needed to make green hydrogen cost-competitive with “fossil-fuel alternatives”, but “the mismatch between currently planned projects and the demand for green hydrogen output remains a key uncertainty for future electrolyser expansion”.

It continues: “Government policies are currently more focused on decarbonising hydrogen production than developing demand for new applications, and current country ambitions to stimulate hydrogen use in new applications are not sufficient to meet their net zero pledges.”

The analysis, entitled Could the green hydrogen boom lead to additional renewable capacity by 2026? also states that the 260GW-plus of renewable H2 projects, if built, could add 475GW of wind and solar capacity — equivalent to one third of all variable renewables installed today.


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