Industrial decarbonisation to grow hydrogen economy shows report

While growth of the hydrogen economy has not been as robust as initially predicted, the demand for low-carbon hydrogen is expected to grow significantly as industries decarbonise operations.

A new report released by analytics company GlobalData, Hydrogen, shows that hydrogen is in a critical phase of development as industries such as steel, cement, transportation and power decarbonise.

The oil and gas industry, in particular, will remain the dominant driver for the growth of hydrogen in the forseeable future, due to its use as a reagent in the refining sector and as a feedstock in the petrochemical sector.

GlobalData's report also highlights that growing demand for hydrogen is expected to emerge from industries such as metallurgy, power generation, and transportation.

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Ravindra Puranik, Oil and Gas analyst at GlobalData, commented in a statement: “Low-carbon hydrogen is set to occupy a crucial role in the decarbonisation efforts of several energy-intensive industry verticals. As hydrogen is an essential feedstock in downstream oil and gas processes, switching to low-carbon hydrogen would help companies reduce their emissions footprint. It also has massive potential in the transportation sector, especially in marine and heavy vehicle applications, due to its energy density properties.

“There has been a significant jump in low-carbon hydrogen project announcements in the last few years as industries unveiled plans to decarbonise their operations. Nearly 75% of these projects are in the feasibility stage of development. This reflects the momentum in new plant announcements within this market to reap from the global energy transition.”

According to the report, purple and turquoise hydrogen will make a minor contribution to the growth of the sector. On the other hand, about 83% of the low carbon hydrogen capacity coming online by 2030 is expected to come from green hydrogen plants.

For oil and gas companies, blue and green hydrogen production offers the most promise for decarbonisation gains, with most preferring green hydrogen to reach their long term net-zero goals.

Puranik added: “Several oil and gas companies have announced new blue and green hydrogen plants, which are expected to be operational by 2030. Nevertheless, there is a need for the hydrogen distribution network to expand at scale, which includes the addition of new pipelines. The current scenario signals a critical phase for the development of the global hydrogen economy. Its fate and momentum in the coming years will be decided by how things pan out in the near future.”