Hydrogen is a fuel for the future, but its use is already well established. To harness its potential to decarbonize energy systems and create a real hydrogen economy, large-scale investments are needed.
In December 2019, Japan’s Kawasaki Heavy Industries launched the world’s first ocean-going liquefied hydrogen vessel. It is part of an ambitious plan to produce hydrogen in Australia from coal and deliver it to Japan, but also symbolic of the growing interest in hydrogen’s potential to deliver a cleaner energy future.
Hydrogen use is already well-established in industry, such as oil refining and ammonia production, but the Hydrogen Council believes hydrogen can address 18% of global energy demand and abate one fifth of carbon emissions. The ship won’t come cheap. Scaling up the hydrogen economy will take investments of $20 billion-$25 billion each year through 2030, the council says.
Compared with other commodities, there is not much of a market for hydrogen. Trade is localized, and takes place between supplier and end user based on bilateral transactions, with little chance for price discovery.
Currently, roughly 95% of hydrogen is produced on-site. For example, refiners will contract with a hydrogen supplier to build a hydrogen production facility on the refining site, to produce so-called “on-purpose hydrogen.” Hydrogen not produced on-site is transported as a compressed gas, either via dedicated pipeline or truck (typically for the transportation market).
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