Factoring in the cost of storage and gas pipeline infrastructure, the the delivered cost of renewable hydrogen could fall to around $2/kg in 2030 and $1/kg in China, India and Western Europe by 2050. In this event, green hydrogen would effectively outcompete both coal and natural gas as a fuel for power generation.
Clean fuel for energy-intensive industries
Today, some 70 million tonnes of hydrogen are already used for oil refining and in the petrochemical industry worldwide. Falling costs for hydrogen would spiral up the use of that clean fuel and help decarbonizes some of the most energy-intensive industries.
However, a decisive build-out in electrolysers to get hydrogen produced in sufficient quantities will require a determined push by policymakers, BNEF underlined. “The clean hydrogen industry is currently tiny and costs are high. There is big potential for costs to fall, but the use of hydrogen needs to be scaled up and a network of supply infrastructure created,” said Kobad Bhavnagri, head of industrial decarbonisation for BNEF.
“This needs policy coordination across government, frameworks for private investment, and the roll-out of around $150 billion of subsidies over the next decade,” he forecast.
EU-wide push to deliver hydrogen at scale
Across Europe, hydrogen gains momentum with up to 10 MW of larger-scale project announced, amid supportive policies in France and soon also in Germany.
The European Commission is preparing to launch an EU-wide “clean hydrogen alliance” in the summer, bringing together national governments and companies involved in the hydrogen value chain. The initiative will be modelled on the European Battery Alliance, which brought together more than 200 companies, policy makers and research organisations around battery manufacturing.