As part of Foresight's 'Hydrogen Horizons' event, we welcomed the Minister for Energy Efficiency and Green Finance, Lord Callanan and industry experts from Aurora Energy Research, Cadent Gas Limited, ATOME, Progressive Energy and Imperial College London to Foresight's HQ to discuss the future of green hydrogen.

 

We explored the pathways to scaling up the green hydrogen market and debated its potential to become an internationally traded commodity by 2030.

 

Watch the film: 

 

Key Takeaways:

Panel Discussion: What is required to scale up the market for green hydrogen?

Government policy and legislation: Government policy and legislation will play pivotal roles in facilitating the scaling up of hydrogen, supporting substantial investments in infrastructure and technology. As demand increases and policies are leveraged, it is important that governments acknowledge the longevity of hydrogen assets and to ensure legislative support extends far beyond a single electoral cycle. Alongside this, the harmonisation of global standards, coupled with robust financial markets and certainty of off takers, will unlock significant long-term value.

 

“Make no mistake, low carbon hydrogen will need to be a key part of the UK’s future energy system. The UK’s geography, its geology, its infrastructure and its expertise, in my view, make it particularly suited to rapidly developing that low carbon hydrogen economy." - Lord Callanan, UK's Minister of Energy and Green Finance

 

Survey Insights: We asked our audiences if current policies and regulations are adequately driving the scale-up of green hydrogen. 45% of event participants and 46% of our LinkedIn audience agreed that while government ambition is evident, additional policy measures is required.

 

Digitisation and technology: Digitisation is a crucial catalyst for the future success of green hydrogen. As governments begin to implement reforms, we witness significant expansion of renewable energy infrastructure. David Watson, Cadent Gas Limited, noted that offshore capacity is projected to increase from 14GW to 50GW by the decade's end. Whilst this brings challenges, it also brings new opportunities to strategically deploy green hydrogen technologies and mitigate constraints. Relying solely on the co-location of industry and renewable projects, however, will not be sufficient. Investment into new skills, technology, transportation, and storage sectors must be prioritised if we are to revolutionise the grid and keep up with the pace of demand.

 

Survey Insights: How crucial are the following technical aspects to enabling large scale hydrogen deployment? Both electrolyser production efficiency and supply chain capacity ranked highest in our event poll, with standardisation of equipment design considered least important for enabling large-scale development.

1. Electrolyser production efficiency - 28.3%
2. Supply chain capacity - 28%
3. Reliability & longevity of equipment - 25.4%
4. Standardisation of equipment design - 18.3%

 

Cost and system value: Whilst the levelised cost of hydrogen serves as a valuable metric in understanding hydrogen’s ability to disrupt existing energy systems, emphasis should be on understanding its role as a commodity and solution to decarbonise our broader energy system. The alignment of supply and demand, coupled with a comprehensive grasp of hydrogen’s applications, is crucial for scalability. In turn, this will lead to more projects taking a Final Investment Decision (FID).

Whilst certain components of the hydrogen value chain have existed for over a century, the significant scaling up of supply chains that is required should not be lost in the focus on economic and cost models.

 

 

Expansion of infrastructure: As we stride towards a decarbonised energy mix, the urgency to align investment timing and expansion of much needed infrastructure has never been more pronounced. Bridging the gap between the availability of financial and human capital and the necessity of new infrastructure requires concerted efforts. There is a need for a vision that goes beyond governmental subsidies and focuses on mobilising private markets and reskilling our workforce.

 

A total of $268 billion is still required to finance hydrogen projects announced, but not yet through FID until 2030 (1)

 

Global Cooperation: Collaboration across countries and throughout the supply chain is crucial to ensure the successful expansion of hydrogen initiatives. Aurora notes a significant appetite for a global hydrogen export market, with more than half of planned projects falling under the category of global electrolyser projects. However, when considering scalability, countries should also prioritise local development. This entails building robust pipelines, networks, and supply and demand infrastructure at home to then enable more effective expansion.

 

Survey Insights: What sectors will green hydrogen have the most impact? Hard-to-abate industry emerged as the top choice, closely followed by aviation and shipping. Domestic heating was perceived as the sector likely to experience the least impact from green hydrogen.

Energy was also discussed as an important sector where, certainly in the future, hydrogen will play a significant role. On LinkedIn, 27% of our audience thought energy would be impacted the most following aviation and shipping industries.

1. Hard to-abate industry - 31.3%
2. Aviation - 20.7%
3. Shipping -18.4%
4. Fertiliser Production - 16.2%
5. Road Transport - 11.2 %
6. Domestic Heating - 2.2%

 

Debate: Will hydrogen become an internationally traded commodity by 2030?

Olivier Mussat, CEO at Atome (For) and David Parkin, Director at Progressive Energy (Against)

 

Although advancements are being made, David Parkin, Director of the clean energy firm Progressive Energy, suggests that hydrogen's potential to become an internationally traded commodity by 2030 remains doubtful due to anticipated pricing misalignment with commodities such as natural gas and insufficient infrastructure. Nonetheless, Olivier Mussat, CEO of the fertiliser company Atome, proposes that derivatives of hydrogen, such as ammonia, are poised to be traded as commodities by 2030.

 

Survey Insights: Closing a lively debate, we asked attendees if hydrogen will become an internationally traded commodity by 2030?

A conclusive 80% of in person attendees voted against hydrogen becoming an internationally traded commodity. However, our LinkedIn poll thought differently, with 66% voting in favour of the energy source being commoditised by 2030.

 

Looking Ahead:

Underscoring all the discussions was the importance of nurturing the next generation and future skills needed to maintain scale and pace. It is imperative for policymakers, industry leaders, and financial institutions to share knowledge and drive conversations such as these, to power a brighter future.

 

"With the announcements of policy-backed national strategies, demand from off takers and a rapidly responding supply chain, the market is poised to enter its growth phase. Equipped with these key structural components, projects can now transition into the construction and operational stages. As there remains a significant pipeline of opportunities yet to be fully developed, now is the ideal time to invest in the sector." - Chris Holmes, Foresight Partner

 

We are looking forward to continuing these discussions as part of our Hydrogen Horizons initiative, creating invaluable opportunities to spotlight the innovative ideas, and thinking of the individuals who are actively influencing hydrogen's evolution. Through our experienced team, Foresight offers a distinct proposition, investing into impactful hydrogen solutions in hard-to-abate sectors. Working with organisations such as Progressive Energy, we support green hydrogen projects, which pave the way in unlocking vital investment opportunities.

 

Find out more: Hydrogen (foresight.group)

 

References:

1 - Global Hydrogen Review, IEA (https://www.iea.org/reports/global-hydrogen-review-2023/executive-summary)