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The global interest in low-emissions hydrogen projects is on the rise, despite encountering challenges such as limited financial incentives and persistent cost pressures. Over 40 countries have established national hydrogen strategies, and there’s a growing number of low-emissions hydrogen projects in the pipeline. However, the actual capacity and volumes of these projects remain modest, primarily due to the anticipation of government support.

Low-emissions hydrogen presently accounts for less than 1% of the total hydrogen production and utilization. Increased costs driven by global energy crises, inflation, and supply chain disruptions, temporarily affect new projects impact profitability and financing.

On the bright side, electrolyzer capacity for hydrogen production has made significant progress. It reached nearly 700 MW by the end of 2022, with the potential to triple by the end of 2023. If all announced projects materialize, the total capacity could reach 420 GW by 2030. This will mark a 75% increase from 2022 levels.

Efforts to stimulate demand for low-emissions hydrogen are lagging behind climate goals, as only 0.6% of total hydrogen demand in 2022 was for low emissions, even though global hydrogen use reached 95 million tonnes.

Various government funding programs, such as the US Clean Hydrogen Production Tax Credit, the EU’s Important Projects of Common European Interest, and the UK Low Carbon Hydrogen Business Model, are available. However, policy announcements and implementation delay the progress.

Low-emissions hydrogen has the potential to significantly benefit hard-to-abate industrial sectors by replacing hydrogen produced from unabated fossil fuels. Unfortunately, progress in this aspect has been slow.

The report suggests several steps for governments, including effective support scheme delivery, bolder actions to stimulate demand, and addressing market barriers like licensing and permitting. International cooperation is also essential to establish common standards, regulations, and certifications for hydrogen markets.

Source: International Energy Agency

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