Market Trends of Green Hydrogen Industry
Surging Demand in the Chemical Industry
- The chemical industry is one of the largest consumers of hydrogen as it is the largest user of energy in the industry sector.
- Currently, the EU uses about 10 million tons of hydrogen annually, primarily as a feedstock for the production of ammonia and in the refining sector. The two main low-CO2 alternatives to grey hydrogen, which accounts for 95% of today's hydrogen generation, are blue and green hydrogen.
- Ammonia is mainly used as a fertilizer but it is also a key component of various household cleaning products in the form of ammonium hydroxide.
- The global production of ammonia was approximately 150 million metric tons in 2022. East Asia was the highest ammonia-producing region with approximately 64.6 million metric tons. China alone produced roughly 42 million metric tons of ammonia in 2022, leading the ranking of ammonia-producing countries globally.
- Currently, the consumption of ammonia in China is mainly driven by agricultural applications. In 2021, around 51.9 million metric tons of chemical fertilizer were used in China. Moreover, the production of ammonia in the United States stood at approximately 13 million metric tons in 2022, recording an increase of roughly 50 percent in the last eight years.
- Additionally, low-CO2 hydrogen and derivatives are likely to play a key role as a sustainable fuel, and as a sustainable feedstock for the chemical industry.
- Furthermore, the United Arab Emirates is also raising ambition, with the country's new hydrogen strategy aiming to hold a fourth of the global low-carbon hydrogen market by 2030. Moreover, Japan recently announced that it will invest USD 3.4 billion from its green innovation fund to accelerate research and development and promotion of hydrogen use over the next 10 years.
- Therefore, these aforementioned factors are expected to boost the consumption of green hydrogen in the power generation sector, thereby, propelling the overall industry growth.
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Europe is Expected to Dominate the Market
- Green hydrogen is made from water by electrolysis using renewable wind and solar power.
- Hydrogen is key in Europe's energy transition to a sustainable environment and net zero emissions by 2050. There are multiple ways green hydrogen can displace fossil fuels in the industrial, power, and transportation sectors. It can be used as a feedstock for steel-making instead of highly polluting coking coal and it can also be replaced by natural gas in the petroleum refining sector.
- The demand for green hydrogen is likely to increase rapidly in Germany as it is moving towards fully decarbonized electricity systems. According to the German Ministry of Economy and Climate Action, demand is anticipated to reach 90-110 TWh in 2030 and is projected to exceed 600 TWh in 2050. Up until 2030, industrial demand growth is likely to be the primary driver of demand, but after 2050, transportation is anticipated to have the highest demand.
- In addition to extending its value chain, Iberdrola is already engaged in various projects that will aid in the decarbonization of heavy industry and transportation in Spain and the UK. By 2030, the business aims to produce 350,000 tonnes of green hydrogen yearly and will have a portfolio of finished projects totaling 2,400 MW by that time. Iberdrola has submitted a further 54 projects to the Next Generation EU program, totaling Euro 2.5 billion (USD 2.92 billion) in investments.
- Moreover, according to the International Energy Agency (IEA), the world's energy demand would rise by 25% to 30% by 2040. As per IEA, this method of obtaining green hydrogen would save the 830 million tonnes of CO2 that are emitted annually when this gas is produced using fossil fuels.
- Furthermore, several manufacturers of green hydrogen are focusing to enhance its production and also expanding its applications in several sectors. For instance, Linde is taking an important first step towards establishing the green hydrogen economy in Greece, to advance its sustainability agenda across the country.
- In January 2022, Yara International signed a contract with Linde Engineering for the construction and delivery of a green hydrogen demonstration plant at Yara's ammonia production facility at Herøya Industripark in Porsgrunn, Norway.
- These above-mentioned factors are expected to boost the consumption of green hydrogen across European countries.
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