Global Hydrogen Review2022

Hydrogen demand is growing, with positive signals in key applications Hydrogen demand reached 94 million tonnes (Mt) in 2021, recovering to above pre-pandemic levels (91 Mt in 2019), and containing energy equal to about 2.5% of global final energy consumption. Most of the increase came from traditional uses in refining and industry, though demand for new applications grew to about 40 thousand tonnes (up 60% from 2020, albeit from a low base). Some key new applications for hydrogen are showing signs of progress. Announcements for new steel projects are growing fast just one year after the start-up of the first demonstration project for using pure hydrogen in direct reduction of iron. The first fleet of hydrogen fuel cell trains started operating in Germany. There are also more than 100 pilot and demonstration projects for using hydrogen and its derivatives in shipping, and major companies are already signing strategic partnerships to secure the supply of these fuels. In the power sector, the use of hydrogen and ammonia is attracting more attention; announced projects stack up to almost 3.5 GW of potential capacity by 2030.

Global hydrogen demand reached more than 94 million tonnes (Mt) in 20215, a 5% increase from the previous year and compared to 91 Mt in 2019 (pre-pandemic level). Most of the increase was for the use of hydrogen in traditional applications, particularly in chemicals, with nearly 3 Mt increase, and in refining with about 2 Mt increase from 2020. These sub-sectors, particularly refining, were strongly affected by the Covid-19 pandemic. Activity that was restrained due to the lockdowns and the general economic slowdown started to recover in 2021, as reflected in increased hydrogen demand. Most of the hydrogen supplied was produced from fossil fuels with no benefit for climate change.

Several projects have been announced or are under development that could represent around 3 500 MW of hydrogen- and ammonia-fired power plant capacity worldwide by 2030.28 Around 85% of these projects focus on the use of hydrogen in combined-cycle or open-cycle gas turbines. The use of hydrogen in fuel cells and the co-firing of ammonia in coal-fired power plants each account for around 10% and 6%, respectively, of the capacity of the project pipeline by 2030. Most of the gas turbine projects initially start with a hydrogen co-firing share in the range of 5-10% in energy terms (15-30% volumetric), but plan to move to higher shares and in some cases even 100% hydrogen firing in the longer term.

Current status of hydrogen production Demand for hydrogen is met almost entirely by hydrogen production from unabated fossil fuels. In 2021, total global production was 94 million tonnes of hydrogen (Mt H2) with associated emissions of more than 900 Mt CO2.30 Natural gas without CCUS31 is the main route and accounted for 62% of hydrogen production in 2021. Hydrogen is also produced as a by-product of naphtha reforming at refineries (18%) and then used for other refinery processes (e.g. hydrocracking, desulphurisation). Hydrogen production from coal accounted for 19% of total production in 2021, mainly based in China. Limited amounts of oil (less than 1%) were also used to produce hydrogen.

A hydrogen cluster, also called hub or valley57, is defined as a network of hydrogen producers (sometimes including renewable electricity production), potential users and infrastructure connecting the two. Clusters are expected to form in and around first-mover hydrogen supply and demand areas. These include industrial clusters, ports, cities and other locations that are already embracing pilot projects and commercial hydrogen developments. Hydrogen clusters will catalyse larger infrastructure development and will facilitate large-scale hydrogen trade when linked to ports. While it is desirable, to produce low-emission hydrogen at the beginning, though not strictly necessary, public support may be conditional on hydrogen being produced by low-emission technologies or below specified life cycle emissions values.

Beyond individual national efforts, international co-operation is paramount to align objectives, increase market size and promote knowledge-sharing and the development of best practices. International co-operation related to hydrogen remained strong over the last year and is expected to accelerate as a consequence of the Russian invasion of Ukraine and growing concerns about energy security. Since September 2021, fifteen new bilateral international agreements between governments have been signed – most focus on the development of international hydrogen trade. Governments, particularly in Europe, are looking at opportunities to accelerate the commercial availability of hydrogen technologies and the development of international trade to reduce dependency on fossil fuels as fast as possible. Moreover, European institutions are actively signing international agreements with non-European governments seeking to facilitate investment and accelerate development of international supply chains. Examples include the case of the European Investment Bank with Mauritania to scale up investment in wind, solar and green hydrogen and the European Bank for Reconstruction and Development with Egypt to assess the potential to develop low-emission hydrogen supply chains in Egypt.

Global hydrogen demand in 2021 was 94 Mt.78 Almost all of it is concentrated in refining and industrial applications, with very little demand in other sectors (around 40 kilotonnes [kt], practically all in road transport). More than 80% of hydrogen is produced from fossil fuels, with the remainder largely from refineries where hydrogen is produced as a by-product of processes that use fossil fuels as inputs. The production of renewables-based hydrogen is very low, accounting for around 0.1% of total production. Almost all dedicated hydrogen production, excluding by-product hydrogen, occurs onsite at the same industrial facility or refinery that consume the hydrogen. Only a small fraction (7%) is produced in external facilities and delivered as merchant hydrogen. Most of the merchant hydrogen is consumed in refineries that require a more flexible operation to respond to variable demand for oil products.


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