Global Low Carbon Hydrogen Production Forecasted to Drop Significantly by 2030
The International Energy Agency (IEA) has revised its projections for low carbon hydrogen production, forecasting an output of approximately 37 million metric tons per year by 2030, a notable decrease from last year's estimate of 49 million metric tons. This decline, driven by a wave of project cancellations, rising costs, and uncertainties in policy frameworks, signals a significant challenge for the global push towards sustainable energy. The report highlights that actual production may fall short of estimates, as not all proposed projects are likely to materialize.
Despite these setbacks, the IEA anticipates a more than fivefold increase in operational capacity from 2024 levels, potentially exceeding 4 million metric tons annually by 2030. A further 6 million metric tons could be achieved if governments enact robust demand-creation policies and expedite infrastructure development.
However, the industry faces a central hurdle: cost competitiveness. Recently, declining natural gas prices have made fossil-based hydrogen cheaper, while rising electrolyzer prices have placed financial strains on low carbon initiatives.
China remains a dominant force in the hydrogen landscape, accounting for 65% of global electrolyzer capacity and nearly 60% of electrolyzer manufacturing. Yet, manufacturers outside of China are grappling with financial pressures due to high costs and sluggish adoption rates. Notably, an IEA analysis indicates that the cost advantages of Chinese-made electrolysers diminish when transport costs and tariffs are considered.
Southeast Asia is emerging as a significant player in the hydrogen market, with announced projects projecting an increase in low emissions hydrogen production from approximately 3,000 tons currently to 430,000 tons annually by 2030. However, many projects remain in early development stages, emphasizing the need for accelerated renewable energy deployment and targeted policies to realize this potential.
As the global community strives to decarbonize, the IEA underscores the urgent need for stronger policies and collaborative efforts to maintain momentum in the transition to low carbon hydrogen, even amid a contracting project pipeline.
