Executive summary A successful transition to a clean energy future will be supported by rapid changes in the global economy and in people’s patterns of energy consumption, all of which have the potential to sustain healthier societies, more equitable outcomes and a more resilient planet. Technology will be at the heart of many of these changes, and nowhere more so than in the scale-up of hydrogen as a clean energy carrier. While strong policy will be needed to make low-emission hydrogen cost-competitive, it will not be possible without technology improvements across a value chain that touches nearly every part of the energy system. Innovators around the world are ramping up their efforts in areas as diverse as fossil fuel conversion, electrochemical splitting of water, graphene tanks, cryogenic storage, fuel cell motors for aircraft and the reduction of iron ore. If hydrogen is to play a major role in reducing fossil fuel emissions, its future depends on uniting a wide range of advances in different types of hardware and creating new markets for them. Compared with digital technologies such as software, hardware generally takes more time to develop and involves greater investment risk during the prototyping and market entry phases. Through patenting, inventors seek to ensure that they can recoup these investments in innovation.

Key findings Global patenting in hydrogen is led by Europe and Japan, with the US losing ground in the period 2011–2020 and hydrogen-related innovation from R. Korea and P.R. China only starting to emerge at the international level. About half of international patent families (IPFs)1 in hydrogen technologies in the period 2011–2020 were related to hydrogen production. The other IPFs were split between end-use applications of hydrogen and technologies for the storage, distribution and transformation of hydrogen. With 28% of all IPFs in the period 2011–2020 and revealed technology advantages (RTA2 ) across the three technology segments of the hydrogen value chain, EU countries are global leaders in hydrogen patenting (including 11% from Germany and 6% from France).

Share of international patenting and revealed technology advantage by main world regions and value chain segments (IPFs, 2011–2020)

Patenting underpins fundraising by start-ups developing hydrogen businesses, with more than 80% of later-stage investment in hydrogen start-ups going to companies which had already filed a patent application, indicating the importance of patenting for young firms in this area. Almost 70% of the 391 start-ups which have activities related to hydrogen hold at least one patent application. Indeed, the majority of start-ups in the hydrogen sector start their journey in the laboratory and rely either on the recombination of existing technologies or on leveraging emerging technologies to address fundamental technical problems. These types of ventures require significant investments in R&D and engineering, and typically rely on patents to secure those investments. Only 117 of the 391 start-ups filed IPFs in the scope of this study during the period 2011–2020, mostly in the EU (34%) and the US (33%), but they attracted 55% of the venture capital funding provided for early, late and IPO/post-IPO stages. A broader analysis of venture capital deals involving hydrogen start-ups with or without patent applications shows that the share of the total amount of funding raised by companies with patent applications grows consistently when moving to later funding rounds. More than 80% of the later-stage investment in hydrogen start-ups is received by companies which had already filed their first patent application. This percentage increases to 95% when funding acquired in the IPO/post-IPO stage is taken into consideration.

Share of funding accruing to start-ups, by funding stage, 2000-2020

The identification of the leading global applicants in established technologies and emerging technologies motivated by climate in the period 2011–2020 provides further insights into the industry dynamics underpinning those trends. For starters, features the top ten global applicants in established technologies (accounting together for around a fifth of all IPFs in that field) as well as the distribution of their IPFs between the main subcategories of established and emerging climate-motivated technologies. This list is dominated by chemical companies, such as Air Liquide, Linde and Air Products, which are building on an extensive background in the production and handling of hydrogen from fossil fuels to expand their businesses into the supply of lowemission hydrogen. Unsurprisingly, their specialisation is concentrated in improving established technologies for hydrogen production, storage and industrial applications.

Profile of the top ten corporate applicants in established hydrogen technologies (IPFs, 2011–2020)

Hydrogen start-ups and patents Start-ups are one of the main routes by which hydrogen innovations reach the marketplace. Many of the underlying technologies depend on advanced science coming out of public research organisations and universities, and represent high-risk, disruptive bets for business developers. However, given that many of the technologies also have small unit sizes that lend themselves to standardised manufacturing, they are attractive to venture capital investors hunting for exponential returns as the clean energy transition gathers speed. Since 2000, the number of new, independent companies founded in the hydrogen sector has grown consistently, and many of them owned patents at the time they were incorporated or filed for them shortly afterwards. We estimate that 70% of start-ups active in the hydrogen technology areas covered by this study hold at least one patent application. Owning intellectual property can provide investors with confidence in the underlying technology and insure against imitation by competitors. These benefits are critically important when there can be long development timescales before early-stage investors are able to see any returns from product sales, acquisitions or stock market flotation. As part of the category of companies often referred to as “deep tech” start-ups, hydrogen entrepreneurs typically require significant R&D and engineering to test their ideas, build prototypes and develop practical market offerings.7 The technology development cycles are therefore much longer than those in the ICT sector, with the average age of hydrogen start-ups raising later-stage venture capital funding being around ten years. For these entrepreneurs, patents can be used as proof of innovation, a signal of value and even collateral against debt.

Number of hydrogen start-ups founded annually and their patent applications (2000–2020)

Hydrogen production Global hydrogen demand of 94 Mt in 2021 was met almost entirely by fossil fuel-based hydrogen, 62% of which came from dedicated natural gas reforming plants without CO2 capture. Unabated coal plants, mostly in P.R. China, supplied 19% of the total, with most of the remainder coming as a by-product from facilities designed primarily for other products, such as refineries that reform naphtha into gasoline and generate hydrogen as an inevitable part of the process. The dominance of fossil fuels made hydrogen production responsible for over 900 Mt of direct CO2 emissions in 2020 (2.5% of global CO2 emissions in energy and industry). As the production of hydrogen from coal and natural gas is an established, competitive business, there has been a substantial amount of incremental innovation to improve efficiency and environmental performance. However, technology development motivated by climate concerns is growing in the area of hydrogen production. These technologies can help produce low-emission hydrogen in various ways: from water and electricity (known as electrolysis), from fossil fuels with minimal CO2 emissions (using carbon capture, utilisation and storage (CCUS)), and from bioenergy (for example via biomass gasification). The first two of these are already used commercially, but in very limited quantities because they are more expensive than using fossil fuels, given the limited regulatory costs of emitting CO2 . Sixteen natural gas plants with CCUS produced 0.7 Mt of low-emission hydrogen (0.7% of total hydrogen production) in 2021, while water electrolysis was responsible for around 0.04% of total hydrogen production.

Main patenting trends in hydrogen storage, distribution and transformation Patenting trends since 2001 show that established technologies have attracted increasing innovation efforts over the last two decades. Innovation in distribution infrastructure, such as pipeline networks and related ancillary equipment (e.g. cryogenic heat pumps, valves), has generated high levels of patenting activities, with an increasing trend over the period. Having experienced rapid growth since 2001, the number of published IPFs related to the storage of pure hydrogen in 2020 was almost equivalent to a compound average growth rate of 13%. Innovation has taken off more recently in liquid storage and vehicle refuelling, but still with high compound average growth rates of 13% in both cases in the period 2011–2020.

Patenting trends in hydrogen storage, distribution and transformation technologies (IPFs, 2001–2020)

End-use applications Global hydrogen demand was around 94 Mt H2 in 2021, more than 50% higher than in 2000. Almost all of this demand comes from established refining and industrial applications. Refineries consumed close to 40 Mt H2 as feedstock and reagents or as a source of energy. Chemical production accounted for nearly 50 Mt H2 of demand, with roughly three-quarters directed at ammonia production (for fertilisers, explosives and other chemicals) and one-quarter at methanol (for solvents, fuels and petrochemicals). Although the equipment supplied for these applications is dominated by a small number of large companies, there is a competitive market for cheaper and more profitable products that continues to drive innovation for marginal gains, even for processes that have changed only marginally in many decades. In recent years, many of these companies, their customers and their suppliers have begun to expect that they will need to radically curtail fossil fuel emissions and are exploring technologies for integrating low-emission hydrogen sources directly into their processes.

The top ten applicants with the largest number of IPFs related to fuel cells for automotive propulsion include nine automotive OEMs and one of their key suppliers, Bosch. It is noticeable that “pure play” fuel cell developers, such as Ballard, a Canadian company, or Plug Power, a US company, have fewer patents in this area, though they also own intellectual property in more generic fuel cell technology unrelated to automotive integration. These top ten applicants together account for nearly 80% of the IPFs published in that field between 2011 and 2020 (Figure 5.8). They are led by two Japanese companies (Toyota and Honda) and two Korean companies (Hyundai and Kia).

Top ten applicants in automotive applications, 2011–2020

Today, there is a near universal consensus that hydrogen is one of the means by which a fully decarbonised future can be realised. Expectations for the scale-up of hydrogen to meet clean energy goals have continued to grow in 2022, and it is widely understood that this outcome hinges on reductions in costs of hydrogen-related equipment. However, the full scope and dynamics of this transition remain difficult to grasp. There is often little awareness of which elements of the value chain need to come together to connect hydrogen supply to a wider range of hydrogen applications, where novel solutions are required to supplement tried and tested technologies, and which industry actors will drive these transformations. The purpose of this study is to address these questions by providing a comprehensive overview of the evolving hydrogen technology landscape using patent data as a measure of innovation.

Source:http://IEA