By Sverre Alvik and Jørg Aarnes
World Economic Forum, Jul. 7, 2022
Hydrogen is key to the energy transition, helping to decarbonize hard-to-abate sectors.
Climate targets will require huge uptake and investment in hydrogen by mid-century.
Urgent policy action is needed across sectors to build value chains and scale the hydrogen economy.
Hydrogen has a crucial role to play in the energy transition, decarbonizing sectors that cannot be electrified, like aviation, maritime, and high-heat manufacturing. Being rightly prioritized for use in these sectors, hydrogen and derivatives such as ammonia will account for 5% of world energy demand by mid-century, according to DNV’s new Hydrogen Forecast to 2050 – our independent view on the world’s most likely energy future.
To meet the targets of the Paris Agreement, however, our most likely forecast for the uptake of hydrogen and derivatives would need to triple, meeting around 15% of world energy demand by mid-century.
This future is feasible, but it will require urgent, significant policy interventions – in the form of stronger mandates, demand-side measures giving confidence to producers, and higher carbon prices.
Huge investments required for a large-scale hydrogen economy
There is currently unprecedented interest in renewable and low-carbon hydrogen as an energy carrier, fuel, and clean molecule. However, there is still a long way to go: first for investment to flow beyond research and pilot projects, and second to realize many large-scale hydrogen projects and develop or retrofit infrastructure.
We forecast that $6.8 trillion will be spent on producing hydrogen for energy purposes from now until 2050, in order to scale up to meet 5% of energy demand, with an additional $180 billion spent on hydrogen pipelines and $530 billion on building and operating ammonia terminals. As impressive as these figures are though, much more investment will be needed in hydrogen, and sooner, to ensure a Paris-compliant energy transition.