A new International Energy Agency (IEA) report shows that the number of low-emission hydrogen projects to have advanced to a final investment decision (FID) stage doubled over the last 12 months, representing yearly production of 3.4-million tonnes.

These FIDs are split between green-hydrogen electrolysis projects, with a combined yearly capacity of 1.9-million tonnes, and fossil-fuel hydrogen with carbon capture, utilisation and storage, with a combined capacity of 1.5-million tonnes.

A total of 20 GW of announced electrolyser capacity has advanced to FID stage, with 6.5 GW having breached the milestone over the last 12 months, and with China accounting for 40% of these FIDs in capacity terms.

The ‘Global Hydrogen Review 2024’ also reports that, while less than 1-million tons of low-emission hydrogen was produced in 2023, yearly production could reach nearly 50-million tons by 2030 based on announced projects.

If realise, such growth would be driven by electrolysis projects, with announced electrolysis capacity amounting to almost 520 GW.

This would require the hydrogen sector to grow at an “unprecedented” compound annual growth rate of over 90% between now and 2030, however, well above the growth experienced by solar PV during its fastest expansion phases. 

Such a ramp-up, the IEA says, would require greater regulatory and demand certainty; the absence of which has resulted in most potential production still being in planning or early-stage development.

The report also highlights a material gap between government goals for yearly production of 43-million tonnes by 2030 and yearly demand of only 11-million tonnes by 2030, which represents a three-million-tonnes reduction when compared with the IEA’s 2023 report.

While some policies were emerging to  stimulate demand – including carbon contracts for difference and sustainable-fuel quotas for aviation and shipping – far more buyers were needed to firm up demand for low-emission hydrogen, which will remain expensive in the short term.

The cost outlook, meanwhile, is heavily dependent on the level and pace of deployment, with significant cost reductions association with the implementation of the full 520 GW of announced electrolysis projects.

“Globally, by 2030, more than 5-million tonnes per year could be produced at a cost competitive with production from unabated fossil fuels, and up to 12-million tonnes per year with a cost premium of $1.5/kg of hydrogen.”

The outlook for costs is also likely to vary between regions, with China expected to be a front-runner, owing to the country’s strength in the mass manufacturing of clean-energy technologies and the fact that it is already home to 60% of global electrolyser manufacturing capacity.