Low-carbon hydrogen: defining the path to commercial scalability

Low-carbon hydrogen is one of the hottest topics in the energy transition. Global demand is poised to increase from below 1Mt today, to 223Mt by 2050. The project pipeline is growing fast – but policy support and investment of at least US$600 billion is required to realise the opportunity.

At our inaugural Low-Carbon Hydrogen Conference a team of research analysts and consultants gathered alongside leading industry experts to explore the road ahead – and the challenges to be faced along the way.

It was a packed, two-day agenda, ranging from the fastest routes to net zero hydrogen to financing the hydrogen economy. Missed it? You needn’t miss out. On-demand tickets are now available. And read on for some reflections from just a few of our many speakers.

Melany Vargas, Head of Americas Hydrogen Consulting, Wood Mackenzie

The conference was a fascinating look at all things hydrogen. In my session, we delved into green hydrogen as a flexibility asset for the grid and how utilities are integrating it into their existing systems. Hydrogen can act as a balancing mechanism in power, alleviating congestion derived from excess power from renewable sources at peak time.

Another interesting trend is that we’re seeing a lot of projects around ammonia imports, targeting the decarbonisation of power – typically coal combustion. Also firmly on our radar is how the Russia-Ukraine war will impact the energy transition, and hydrogen specifically. That uncertainty was a real talking point throughout the event.

Melany Vargas held a fireside chat on the role of green hydrogen as a balancing mechanism in power.

William Mezzullo, Head of Hydrogen Energy Marketing & Trading, Centrica

What we discussed was around what Centrica is doing in terms of enabling hydrogen as a decarbonisation solution for the economy. The trends we’re seeing are around a multi-coloured approach – so we’re seeing blue hydrogen projects being developed, green hydrogen – but really a focus on end use of hydrogen as a really important trend.

It’s exciting, but it’s all about making sure that demand and supply are being met.

William Mezzullo took part in a fireside chat with Jonny Sultoon, our Global Head of Multi-Commodity Research, on hydrogen as a foundational piece in the decarbonisation puzzle.

Mhairidh Evans, Head of CCUS Research, Wood Mackenzie

In the panel I had the pleasure to moderate we had three industry leaders talking specifically about blue hydrogen, and how carbon capture and storage (CCS) will help to create the market.

The role CCS will play in hydrogen production is a really key theme right now, and one we’re tracking closely. This year we’re looking for some big project FIDs, especially in the UK and Northern Europe. These are going to be landmark cluster projects that will not only set the CCS industry off for the 2020s, but blue hydrogen production too.

Mhairidh Evans hosted the panel discussion: When does blue hydrogen make sense and why? Unpacking the key technology, policy and demand drivers for CCS clusters.

Celia Greaves, CEO, UK Hydrogen and Fuel Cell Association

In my session I covered two main areas. One was regarding government support and what we’re seeing in terms of hydrogen supply side in the UK. From a UKHFCA point of view we’ve welcomed the recent announcements in terms of the doubling of the target and the equal split across CCUS enabled and renewable hydrogen. But we really do need to go farther and faster if we’re to meet our net zero ambitions – and also to position the UK as a leading global player in the hydrogen space.

I think one trend that’s really encouraging is the interest from banks. So we’ve seen on the one hand global hydrogen strategies and targets coming through across the piece but the sorts of commitments we’re seeing from government financially are only going to be part of the solution in terms of the funds that need to go into the sector. Having that input and interest from the private sector on the investment side is going to be hugely important.

Celia Greaves took part in our ‘Towards gigawatt scale’ panel discussion. The panel explored key electrolyser tech innovations, enhanced production capabilities and the pace of technology cost declines to understand green hydrogen’s economics and scalability potential.

Bridget van Dorsten, Research Analyst, Hydrogen and Emerging Technologies, Wood Mackenzie

We discussed the current cost-competitiveness of different colours of hydrogen given the energy crisis, in addition to the outlook on demand for different end-use sectors.

Energy security and net zero commitments will drive demand in many sectors such as power, steel and ammonia. On the demand side ammonia stands out as a key end use sector, because of hydrogen’s versatility to both be a low-carbon fuel and help to decarbonise the fertiliser sector.

The biggest trend that we’re seeing in the market right now – and perhaps what’s been talked about most – is around offtake agreements and long term contracts, which will play a role in derisking the supply pipeline and securing demand for different end- use sectors.

Bridget van Dorsten took part in several sessions, including the WoodMac Research Spotlight: From production points to centres of demand – moving low-carbon hydrogen globally.

Flor Lucia De la Cruz, Senior Research Analyst, Hydrogen and Emerging Technologies, Wood Mackenzie

We explored our long term outlook and the key drivers for supply and demand, and how they evolve from today, to the next five years, and out to 2050. Over time we start to see Australia lead in the supply of both green and blue hydrogen.

I would agree that offtake agreements were one of the hottest topics at the conference. We’ve really seen those come through this year – Jera just announced an offtake agreement for low-carbon ammonia, and ArcelorMittal just joined the Hydeal consortium to offtake some low carbon hydrogen for their green steel facilities in the north of Spain. We believe these will eventually lead to long term contracts, which is what the market really needs to mature.

Flor Lucia De la Cruz took part in several sessions, including the WoodMac Research Spotlight: Where is low-carbon hydrogen today and what can we expect over the next five years?

Get the whole story on all things hydrogen

Wood Mackenzie’s inaugural Hydrogen Conference was a two-day event with a full agenda and a host of expert speakers and panellists. Find out more about on-demand access to all recorded sessions.