By Forrest Crellin
PARIS (Reuters) – Final investment decisions for hydrogen projects have doubled in the past 12 months, dominated by China, but installed capacity and demand are low as the industry faces uncertainty, the International Energy Agency (IEA) said in a report on Wednesday.
The investment decisions represent a fivefold increase in current low-emission hydrogen production by 2030, with China accounting for more than 40% in the past 12 months, eclipsing solar expansion at its fastest pace, the company said. group.
However, demand targets only amount to just over a quarter of production projects, and progress made so far in the hydrogen sector is not enough to meet climate targets, the IEA added.
Most projects are also at early stages, the IEA said, and the project pipeline is at risk due to unclear demand signals, financing hurdles, stimulus delays, regulatory uncertainties, licensing and permitting issues and operational challenges.
“Policymakers and developers should look carefully at the tools to support demand creation while reducing costs and ensuring there is clear regulation that will support further investment in the sector,” said Fatih Birol, Executive Director of the IEA .
Global demand for hydrogen could grow by around 3 million tonnes (Mt) in 2024, concentrated in the refining and chemical sectors, but that should be seen as a result of broader economic trends and not as a result of successful policies, he said. the IEA.
Demand is currently largely met by hydrogen produced by unabated fossil fuels, with low-emission hydrogen still playing only a marginal role, it added.
Pressure on technology and production costs remains a major factor, with electrolysers in particular declining due to higher prices and tight supply chains, while cost reduction is dependent on technological development and achieving economies of scale.
