Crèdit Agricole - Hydrogen: a key part of the energy transition

Hydrogen-related market is already significant, but it is forecasted to play an even more crucial role in our economies in the future by fulfilling c.a. 18% of the world’s final energy demand by 2050. As a matter of fact, as reported by the Hydrogen Insights published by the Hydrogen Council in July 2021, it is estimated that “the total associated investment through 2030 will amount to USD 500 billion”, including USD 130 billion investments associated to already announced projects, USD 120 billion as additional direct investments needed to reach government targets and USD 250 billion as implied investments from OEMs and suppliers to support publicly announced projects and government targets.

There are many advantages connected to hydrogen. It can help tackle several energy challenges, by offering ways to decarbonize a wide spectrum of sectors, from transports to steel and chemicals; moreover, hydrogen is deemed as versatile, since such an element can be the result of a wide variety of fuels, including renewables, nuclear, natural gas, coal and oil; it can also be transported as a gas by pipelines or in liquid form by ships and it can be transformed into electricity and methane to power homes and factories and into fuels for cars, trucks, ships and planes.

Nevertheless, there are still several challenges that prevent the widespread use of hydrogen. First of all, even though renewable hydrogen is much more competitive today thanks to the significant decreasing costs of renewable power (wind and solar), production costs are still non-negligible. In this context, hydrogen is already exploited at industrial level worldwide, but the majority of it is supplied from natural gas and coal, thus contributing to CO2 emissions. In addition, the development of hydrogen infrastructure is currently slow-paced, so planning and coordination will be required at national and supranational level. In this regard, it is necessary that government and industry cooperate in order to put in place a regulatory framework that could foster higher investments and reduce barriers.

Considering the role played by hydrogen in multiple industries, a high number of companies is involved in hydrogen production. For instance, industrial gas suppliers today are more focused on the fossil-fuel-based hydrogen production, whereas equipment suppliers often contribute to innovate and make hydrogen a more efficient and less expensive energy source as well as to find new application to this technology. Moreover, also energy players, construction companies, steelmakers, transportation and chemical companies increasingly become hydrogen producers and distributors in order to de-carbonate their production processes.

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