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Green hydrogen:

Energizing the path to net zero

Deloitte’s 2023 global green hydrogen outlook

Foreword 03

Executive Summary 04

The critical role of clean hydrogen on the way to

climate neutrality 05

The emerging green hydrogen economy:

Deloitte’s outlook 05

Global trade connects thedots 06

Redirecting investments from fossil fuels to

clean hydrogen 06

Future-focused policy action 07

Introduction. Deloitte’s outlook on the

global clean hydrogen market 08

Part 1. Envisioning a 600 million metric

ton market 12

Climate policy helps shape the market 15

Part 2. Developing the clean hydrogen

value chain 18

Assessing clean hydrogen supply opportunities 19

Overcoming bottlenecks for green

hydrogen production 24

Implications for trade opportunities 25

The importance of transport infrastructure 27

Part 3. The emergence of a global clean

hydrogen market 30

A market set for fastgrowth 32

Green hydrogen dominates the market from

the beginning 33

Global trade is mostly about derivatives 34

Global trade connects key exporting and

importing hubs 36

Part 4. One new market, multiple benets 40

Economic development 41

Eciency gains from freetrade 43

Enhanced energy security 44

Part 5. Over US$9 trillion of investment

needed 46

Investments should happen globally 47

Transport and conversion assets should

not beneglected 49

Investments should take place now 50

Part 6. A call for action 52

Help lay the foundations for a climate-

oriented market 53

Create a business case 54

Ensure long-term resilience 55

Balancing competition and cooperation 55

Appendix: The Hydrogen Pathway

Exploration (HyPE) model 56

Upstream representation: hydrogen production 57

Midstream transport representation 61

Calculation of country-specic cost of capital 65

Endnotes 66

Authors 70

Global contacts 72

Deloitte Economics Institute 73

Deloitte Center forSustainable Progress 74

Foreword

When it comes to tackling climate change, the world is

rapidly moving from ambition to action. In just the past

few years, private companies, research institutions,

regulators, nanciers, and governments have

accelerated in the race to decarbonize organizations,

supply chains, sectors, and, indeed, economies.

Thisnewfound zeal nds its motivation in the very

crucible of innovation: necessity—the necessity of

tackling climate change, the necessity for energy

security, the necessity for geopolitical recalibration.

The calls for action have nally found voice. Deloitte’s

Turning Point analysis pointed to economic arguments

for action on climate change—from a regional

perspective and a global perspective. This economic and

commercial perspective has highlighted the structural

and transformative challenge of climate change and

advanced the energy transition as a necessary condition

for growth and sustainable development.

Globally, the movement toward net-zero is now broadly

acknowledged, while debate continues around the pace

and scale of change across industries and nation-states.

Yet, the crescendo of attention to the common concern

to humankind poised by climate change is juxtaposed

with a narrowing window for action highlighted by

scientists, the Intergovernmental Panel on Climate

Change (IPCC), and the international community.

At its core, a shift in the energy mix will transform

economies’ production systems. In terms of scale, it

truly can be that profound. The speed of transformation

will be dictated by the calculus of physical and economic

damages of climate change, alongside the costs to

decarbonize, inuenced by the interplay of the supply

and demand of old and new energy. In the end, the

constant is an inevitability of change.

While the greatest energy mix switch will be toward

electricity from renewable sources, 15% to 30% of

futureenergy needs is likely to be satised by hydrogen,

a function of sectors that may not be able to electrify

easily (hard-to-abate sectors) and of the creation of

additional demand from new products and services—

for example, green steel. In the context of the timeframe

for the world to achieve net-zero, hydrogen, and in

particular green hydrogen, gains signicant currency.

Using projections from Deloitte Economics Institute’s

Hydrogen Pathway Explorer (HyPE) model, this report

oers a comprehensive analysis of the development of

renewable hydrogen to energize the global economy

toward net-zero by 2050. The development of green

hydrogen is a key element in the transition pathway

from a high-emissions intensive energy system to a

net-zero economy by 2050.

The signicance of Deloitte’s analysis—a US$1.4 trillion

market by 2050 in which green hydrogen comprises

some 85% of the hydrogen market, with 20% traded

around the world—is twofold: rst, this trade is critical

to the lowest-cost decarbonization of the world

economy; second, the production and export of green

hydrogen can oer a global sustainable development

realignment for developing and emerging economies

across Africa, Latin America, and the Pacic, alongside

countries such as Australia and the United States and

regions such as the Gulf States.

This report is not a prediction—it is a plausible

scenario of how this new energy transition could

unfold based on some of the latest, credible data,

assessments, and regulatory and policy developments.

As the global economy searches for new sources of

value and a new growth path for sustainable economic

development, green hydrogen can provide a pathway

of hope and prosperity. Please join us on this global

project of decarbonization and write the chapter to

unlock the green hydrogen economy together.

Jennifer Steinmann

Global Sustainability &

Climate Practice Leader

Deloitte Global

Green hydrogen: Energizing the path to net zero | Foreword

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Greenhydrogen:EnergizingthepathtonetzeroDeloitte’s2023globalgreenhydrogenoutlookForeword03ExecutiveSummary04Thecriticalroleofcleanhydrogenonthewaytoclimateneutrality05Theemerginggreenhydrogeneconomy:Deloitte’soutlook05Globaltradeconnectsthedots06Redirectinginvestmentsfromfossilfuelstocleanhydrogen06Future-focusedpolicyaction07Introduction.Deloitte’soutlookontheglobalcleanhydrogenmarket08Part1.Envisioninga600millionmetrictonmarket12Climatepolicyhelpsshapethemarket15Part2.Developingthecleanhydrogenvaluechain18Assessingcleanhydrogensupplyopportunities19Overcomingbottlenecksforgreenhydrogenproduction24Implicationsfortradeopportunities25Theimportanceoftransportinfrastructure27Part3.Theemergenceofaglobalcleanhydrogenmarket30Amarketsetforfastgrowth32Greenhydrogendominatesthemarketfromthebeginning33Globaltradeismostlyaboutderivatives34Globaltradeconnectskeyexportingandimportinghubs36Part4.Onenewmarket,multiplebenefits40Economicdevelopment41Efficiencygainsfromfreetrade43Enhancedenergysecurity44Part5.OverUS$9trillionofinvestmentneeded46Investmentsshouldhappenglobally47Transportandconversionassetsshouldnotbeneglected49Investmentsshouldtakeplacenow50Part6.Acallforaction52Helplaythefoundationsforaclimate-orientedmarket53Createabusinesscase54Ensurelong-termresilience55Balancingcompetitionandcooperation55Appendix:TheHydrogenPathwayExploration(HyPE)model56Upstreamrepresentation:hydrogenproduction57Midstreamtransportrepresentation61Calculationofcountry-specificcostofcapital65Endnotes66Authors70Globalcontacts72DeloitteEconomicsInstitute73DeloitteCenterforSustainableProgress74ForewordWhenitcomestotacklingclimatechange,theworldisrapidlymovingfromambitiontoaction.Injustthepastfewyears,privatecompanies,researchinstitutions,regulators,financiers,andgovernmentshaveacceleratedintheracetodecarbonizeorganizations,supplychains,sectors,and,indeed,economies.Thisnewfoundzealfindsitsmotivationintheverycrucibleofinnovation:necessity—thenecessityoftacklingclimatechange,thenecessityforenergysecurity,thenecessityforgeopoliticalrecalibration.Thecallsforactionhavefinallyfoundvoice.Deloitte’sTurningPointanalysispointedtoeconomicargumentsforactiononclimatechange—fromaregionalperspectiveandaglobalperspective.Thiseconomicandcommercialperspectivehashighlightedthestructuralandtransformativechallengeofclimatechangeandadvancedtheenergytransitionasanecessaryconditionforgrowthandsustainabledevelopment.Globally,themovementtowardnet-zeroisnowbroadlyacknowledged,whiledebatecontinuesaroundthepaceandscaleofchangeacrossindustriesandnation-states.Yet,thecrescendoofattentiontothecommonconcerntohumankindpoisedbyclimatechangeisjuxtaposedwithanarrowingwindowforactionhighlightedbyscientists,theIntergovernmentalPanelonClimateChange(IPCC),andtheinternationalcommunity.Atitscore,ashiftintheenergymixwilltransformeconomies’productionsystems.Intermsofscale,ittrulycanbethatprofound.Thespeedoftransformationwillbedictatedbythecalculusofphysicalandeconomicdamagesofclimatechange,alongsidethecoststodecarbonize,influencedbytheinterplayofthesupplyanddemandofoldandnewenergy.Intheend,theconstantisaninevitabilityofchange.Whilethegreatestenergymixswitchwillbetowardelectricityfromrenewablesources,15%to30%offutureenergyneedsislikelytobesatisfiedbyhydrogen,afunctionofsectorsthatmaynotbeabletoelectrifyeasily(hard-to-abatesectors)andofthecreationofadditionaldemandfromnewproductsandservices—forexample,greensteel.Inthecontextofthetimeframefortheworldtoachievenet-zero,hydrogen,andinparticulargreenhydrogen,gainssignificantcurrency.UsingprojectionsfromDeloitteEconomicsInstitute’sHydrogenPathwayExplorer(HyPE)model,thisreportoffersacomprehensiveanalysisofthedevelopmentofrenewablehydrogentoenergizetheglobaleconomytowardnet-zeroby2050.Thedevelopmentofgreenhydrogenisakeyelementinthetransitionpathwayfromahigh-emissionsintensiveenergysystemtoanet-zeroeconomyby2050.ThesignificanceofDeloitte’sanalysis—aUS$1.4trillionmarketby2050inwhichgreenhydrogencomprisessome85%ofthehydrogenmarket,with20%tradedaroundtheworld—istwofold:first,thistradeiscriticaltothelowest-costdecarbonizationoftheworldeconomy;second,theproductionandexportofgreenhydrogencanofferaglobalsustainabledevelopmentrealignmentfordevelopingandemergingeconomiesacrossAfrica,LatinAmerica,andthePacific,alongsidecountriessuchasAustraliaandtheUnitedStatesandregionssuchastheGulfStates.Thisreportisnotaprediction—itisaplausiblescenarioofhowthisnewenergytransitioncouldunfoldbasedonsomeofthelatest,credibledata,assessments,andregulatoryandpolicydevelopments.Astheglobaleconomysearchesfornewsourcesofvalueandanewgrowthpathforsustainableeconomicdevelopment,greenhydrogencanprovideapathwayofhopeandprosperity.Pleasejoinusonthisglobalprojectofdecarbonizationandwritethechaptertounlockthegreenhydrogeneconomytogether.JenniferSteinmannGlobalSustainability&ClimatePracticeLeaderDeloitteGlobalGreenhydrogen:EnergizingthepathtonetzeroForeword03ExecutiveSummaryGreenhydrogen:EnergizingthepathtonetzeroExecutiveSummary04ThecriticalroleofcleanhydrogenonthewaytoclimateneutralityGovernments,executives,researchers,andotherpartiesaroundtheworldarelookingtoacceleratetheongoingenergytransitiontoreachcarbonneutrality.AligningeconomieswiththetargetslaidoutintheParisAgreement—limitingglobalwarmingtowellbelow2°C,whilepursuingeffortstolimittheincreaseto1.5°C1—requiresreplacinglegacysystemspoweredbyfossilfuelswithlow-carbonenergysourcessuchasrenewables.Evanaselectrificationleveragingonlow-carbontechnologiessuchasrenewablesclearlyappearsasanessentialsolution,itstillfacesrealbarriers,particularlywhenitcomestodecarbonizinghard-to-abatesectorssuchasheavyindustryandtransport.Activitiessuchashigh-temperatureheating,feedstocksupplyforchemicals,orheavy-dutyfreightareindeedhardtofullyelectrify.Besides,ifwindandsolarpowercontinuetoexpandaspricesfall,networkstabilizationissuescanarisewiththeneedtotakeintoaccounttheirvariability.Cleanhydrogenisnowclearlyrecognizedasapotentialbreakthroughtechnologytoovercometheselimits.2Hydrogenisaversatilemolecule,3whichcanbeuseddirectlyviafuelcellsorforelectricitygeneration,andasfeedstocktoproducemoresuitablederivatives—suchasammonia,methanol,orsustainableaviationfuels(SAF)—tospecificindustrialandtransportapplications.Hydrogensupplycurrentlyalmostentirelyreliesonnaturalgasreformingandcoalgasification,whicharehighlycarbonintensive(morethan1GtofCO2emissionsperyear).Therealbreakthroughisthepotentialofcleanhydrogentodecarbonizecurrentsupplyanddevelopnewendusesatscale.4Greenhydrogen,producedfromrenewableelectricityviaelectrolysis,isthemostpromisingandtrulysustainabletechnology.Bluehydrogen,producedvianaturalgascoupledwithcarboncaptureandstorage,canalsobelabeled“clean”provideditmeetsstringentmethaneemissionsandcarboncapturestandards.Deloitte’soutlook,leveragingadata-drivenandmodel-basedquantitativeanalysis,explorestheemergenceofacarbon-neutral,inclusivecleanhydrogeneconomyinthecomingyears.ThisoutlookreliesonDeloitte’sHydrogenPathwayExplorer(HyPE)model(seeAppendix)andproposesavisionforafast-trackeddevelopmentofthecleanhydrogeneconomy,highlightingtheassociatedchallengesandbottlenecks.Itshowcasesasteadymarketgrowth,fromUS$642billioninannualrevenuein2030toUS$1.4trillionperyearin2050,arecognizedmilestonetoreachclimateneutrality.Theemerginggreenhydrogeneconomy:Deloitte’soutlookToachieveclimateneutralityby2050,thecleanhydrogenmarketcapacitycangrowto170milliontons(MtH2eq)in2030andto600MtH2eqin2050.Demandisexpectedtoinitiallybuildonthedecarbonizationofexistingindustrialusesofhydrogen(95MtH2eq),mostnotablyforfertilizerproduction.5Thenet-zerotransitionthenunderpinsrapiddemandgrowth,cementinghydrogen’sroleasaversatilesolutionfordecarbonization.By2050,industry(ironandsteel,chemicals,cement,andhigh-temperatureheating)andtransport(aviation,shipping,andheavyroadtransport)respectivelycanaccountfor42%and36%oftotalcleanhydrogendemand.Overall,thisoutlookshowscleanhydrogendeliveringcrucialcarbonemissionreductions.Decarbonizingcurrentanddevelopingnewend-uses,itcanabateupto85GtCO2eqincumulativeemissionsby2050,morethantwiceglobalCO2emissionsin2021.Whiledemandisexpectedtoquicklyrampupinindustrializedeconomies,cleanhydrogencanalsorepresentamajorsustainablegrowthopportunityfordevelopingcountries,leadingtotheprogressivestructuringofatrulyglobalmarket.Yet,materializinganewmajorindustrywithinlessthanthreedecadespresentsanunprecedentedchallengealongthestill-nascentvaluechain.Projectsinitiallydependonpublicsupporttobreakeven,asillustratedbythefirstmajorgovernmentprogramssuchastheUnitedStatesInflationReductionAct,theAustralianCleanEnergyFinanceCorp.,theEuropeanUnionFit-for-55packageandImportantProjectsofCommonEuropeanInterest(IPCEI)fundingprogram,andJapanesedemand-sideresearchanddevelopment(R&D)supportprograms.Indeed,theproductioncostofconventionalcarbon-intensivehydrogendoesnotsufficientlyreflectitsimpactonclimate.Government’ssupportmaybeneededuntilclean,andespeciallygreenhydrogencatchesupintermsofcosts,leveragingoneconomiesofscaleandtighteningCO2pricing.Thebreakevenpointcanbereachedby2030forammonia,2035forgaseoushydrogen,2045formethanol,and2050forSAF.Therefore,withtime,greenhydrogencanstandonitsownfeet.By2050,theglobalhydrogenmarketcanreachmaturityassupplycapacitiesmassivelyscaleuptomeetthedemand,underpinnedbynewendusesinindustryandtransport.Themarketgrowthisexpectedtoallowspotmarketstodominatepriceformation,improvingresilienceandchannelinginvestmentstothemostcompetitivegeographicalareas.Greenhydrogen:EnergizingthepathtonetzeroExecutiveSummary05Deloitte’smodelingresultsshowthatgreenhydrogencandominatethesupplymixfromthebeginning,reaching85%ofmarketsharein2050(above500MtH2eq).Bluehydrogencanhelptobuildupdemandintheearlystages,facilitatingtheemergenceofthehydrogeneconomyinregionsthatcanleveragenaturalgasreservessuchastheMiddleEast,NorthAfrica,NorthAmerica,andAustralia.Productionpeaksin2040atalmost125MtH2eq(30%ofsupply),afterwhichbluehydrogenissettograduallybecrowdedoutbymorecompetitivegreenhydrogenandtighteningenvironmentalconstraintsonunabatedmethaneandCO2emissions.GlobaltradeconnectsthedotsThroughoutthisoutlook,globaltradebetweenmajorregionscanrepresentalmostone-fifthoftotalvolume,reachingabout110MtH2eqin2050.Themostcommonproductsarehydrogenderivatives—ammonia,methanol,andSAF—whichareeasiertotransportoverlongdistances.Ammoniaalsocanbecomeamediumfortransportinghydrogen,implyingconversionandre-conversionsteps.By2050,fourregionscollectivelyaccountforabout45%ofglobalhydrogenproductionand90%oftrade:NorthAfricaandAustraliahavethehighestexportpotential(44MtH2eqand16MtH2eqrespectively)comparedtotheirdomesticdemand.TheyarefollowedbyNorthAmerica(24MtH2eq)andtheMiddleEast(13MtH2eq).SouthAmericaandsub-SaharanAfricacanalsoactivelytakepartinglobaltrade,withsome10%oftradedvolumes.Ontheimportside,JapanandKoreafacingresourceandland-availabilityconstraints,canheavilydependonglobaltrade,importing90%oftheirdemandbetween2030and2050.Europe,China,andIndiacanproducesubstantialamountsofhydrogenbutalsoarelikelytorelyonimportsthroughoutthetransition.In2050,globaltradebetweenmajorregionscangeneratemorethanUS$280billioninannualexportrevenuesin2050.ThemainrecipientsincludeNorthAfrica(US$110billionperyear),NorthAmerica(US$63billion),Australia(US$39billion),andtheMiddleEast(US$20billion).Freeanddiversifiedtradecansignificantlyreducecosts,improveenergysecurity,andfostereconomicdevelopmentindevelopingandemergingmarkets.Exportrevenuesfromcleanhydrogencanhelptoday’sfossilfuelexportersoffsetdecliningrevenuefromoil,naturalgas,andcoal.RedirectinginvestmentsfromfossilfuelstocleanhydrogenCreatingthepathwaytonet-zerocompliancein2050asitismaterializedinthisoutlookisestimatedtorequireoverUS$9trillionofcumulativeinvestmentsintheglobalhydrogensupplychain,includingUS$3.1trillionindevelopingeconomies.Thefiguresmaysounddaunting,butaverageannualinvestmentsoverthis25-yearperiod,areactuallylessthantheUS$417billionspentonoilandgasproductionin2022.Ifgovernmentsandcompaniescanredirectspendingonoilandgastocleanhydrogen,thisseemstobeamanageableendeavor.Deloitte’soutlooksuggeststhatChina,Europe,andNorthAmerica—themainconsumingregions,alsoaccountingformorethanhalfofproduction—investUS$2trillion,US$1.2trillion,andUS$1trillion,respectively.Significantfundingshouldalsoberaisedindevelopingandemergingeconomies,includingaboutUS$900billioninNorthAfrica,US$400billioninSouthAmerica,andUS$300billioneachinSub-SaharanAfricaandCentralAmerica.Intheseregions,thedevelopmentofthegreenhydrogeneconomycanbeauniqueopportunitytoattractforeigninvestment.Greenhydrogen:EnergizingthepathtonetzeroExecutiveSummary06Decisivepolicysupportcanhelptoscaleupthecleanhydrogeneconomyandensurethat,especially,greenhydrogenplaysitsneededroleonthepathtoclimateneutrality.Todate,morethan140countries(collectivelyresponsiblefor88%ofglobalCO2emissions6)haveadoptednet-zerotargets.However,cleanhydrogenprojectsannouncedworldwidewouldprovideacollectiveproductioncapacityofonly44MtH2eqby2030,one-quarterofthisdemandscenario.Targetedpolicysupportforcleanhydrogenmaybecrucialtohelpensurethatearlyprojects,suchaspilotandheadofseries,cancompeteonalevelplayingfield,enterthemarket,andtriggereconomiesofscale.Policymakersshouldfocusattentiononthreecomponents:Layingthefoundationsforaclimate-orientedmarket.Policymakerscanlayoutnationalandregionalstrategiestoboostthevisibilityandcredibilityofdevelopmentprospects.Arobustandsharedcertificationprocessforcleanhydrogencanensuretransparencyandavoidtechnologicallock-ins.Internationalcooperationisacriticalpiecetohelpmitigatepoliticalfrictionandensurealevelplayingfield.Ensuringlong-termresilience.Nationalstrategiesshouldaimfordiversificationallalongthevaluechain,fromtradepartnerstoequipmentandrawmaterialsuppliers,tohelpavoidcostlybottlenecksduringtheramp-upandbolstermarketresilience.Extensivepublicsupportshouldalsobededicatedtoinfrastructuredesigntotransport(pipelinesandmarineroads)andstore(strategicreserves)cleanhydrogencommodities.Governmentsshouldaimtostrikeinternationalcooperationtostrengthensynergiesbetweenenergy,climate,anddevelopmentpoliciesincludingpromotingstrongregionalintegration.Creatingabusinesscase.Policymakerscanusetargetedinstruments(forexample,mandates,directsubsidies,CarbonContractsforDifference,fiscalincentives,publicguarantees,andcreatingtargetsormarketsforhydrogen-basedproducts)toreducethecostdifferencebetweencleanandfossil-basedtechnologies.Long-termofftakemechanisms,suchasGermany’sH2Globalproject7,cansubstantiallymitigateprojectrisks,bridgethegapbetweenpriceandwillingnesstopay,andstrengthenpricestability.Future-focusedpolicyactionGreenhydrogen:EnergizingthepathtonetzeroExecutiveSummary07Introduction.Deloitte’soutlookontheglobalcleanhydrogenmarketGreenhydrogen:EnergizingthepathtonetzeroIntroduction.Deloitte’soutlookontheglobalcleanhydrogenmarket08ERR能研微讯微信公众号：Energy-report欢迎申请加入ERR能研微讯开发的能源研究微信群，请提供单位姓名（或学校姓名），申请添加智库掌门人（下面二维码）微信，智库掌门人会进行进群审核，已在能源研究群的人员请勿申请；群组禁止不通过智库掌门人拉人进群。ERR能研微讯聚焦世界能源行业热点资讯，发布最新能源研究报告，提供能源行业咨询。本订阅号原创内容包含能源行业最新动态、趋势、深度调查、科技发现等内容，同时为读者带来国内外高端能源报告主要内容的提炼、摘要、翻译、编辑和综述，内容版权遵循CreativeCommons协议。知识星球提供能源行业最新资讯、政策、前沿分析、报告（日均更新15条+，十年plus能源行业分析师主理）提供能源投资研究报告（日均更新8~12篇，覆盖数十家券商研究所）二维码矩阵资报告号：ERR能研微讯订阅号二维码（左）丨行业咨询、情报、专家合作：ERR能研君（右)视频、图表号、研究成果：能研智库订阅号二维码（左）丨ERR能研微讯头条号、西瓜视频（右)能研智库视频号（左）丨能研智库抖音号（右)Nearly200partiessignedtheParisAgreementinDecember2015,aimingtolimitglobalwarmingtowellbelow2°C,whilepursuingeffortstolimittheincreaseto1.5°C—atargetthatrequiresachievingworldwidegreenhousegas(GHG)emissionneutralitybynolaterthan2050.8Butdecarbonizingtheglobaleconomylikelycannothappenwithouttechnologicalchange,bothontheenergysupplyside—viathelarge-scaledevelopmentofrenewables9—andend-useshifttowardlow-carbonenergycarriers.10,11Whileelectrificationiscentraltomuchoftheshift,decarbonizinghard-to-abatesectorsmayrequiresolutionsbeyondelectrification.Cleanhydrogencouldproveasoneofthekeyelementsofdecarbonization,helpingtoovercomethelimitsofelectrificationtodecarbonizesectorssuchasindustryorheavy-dutytransport.Biomass—forinstancetoproducebiogas—isunlikelytotakeovercleanhydrogen,butbothcancomplementforindustrialapplicationssuchashighheatformetallurgy,orfeedstockuseforchemicalsindustry.Hydrogenisaversatilemolecule—nottomentionthemostabundantintheuniverse12—thatcanbeusedbothasfeedstockandenergysourceinavarietyofapplications(figure1).Varioususescallforpurehydrogen(H2),othersforderivativemoleculesproducedfromcleanhydrogen,suchasammonia(NH3),13methanol(CH3OH),orsustainableaviationfuels(SAF).14Derivativesareeasiertostoreandtransportandcan,inthecaseofammonia,beconvertedbackintopurehydrogen,offeringinexpensivemaritimetransportoptions.15Figure1.Identifiedmainendusesofcleanhydrogenanditsderivativesinaclimate-neutralenergysystemSource:DeloitteanalysisbasedInternationalEnergyAgency(IEA)16,InternationalRenewableEnergyAgency(IRENA)17andHydrogen4EU.18ChemicalsHeavyroadtransportShippingAviationEnergystorageFlexibilityNetworkstabilityFertilizersGasblendingIronandsteelHightemperatureheating(inc.cementandrecycling)IndustryTransportBuildingsPowerCH2OHNH2NH2NH2NH2SAFH2H2H2H2NH2CH2OHH2H2H2Greenhydrogen:EnergizingthepathtonetzeroIntroduction.Deloitte’soutlookontheglobalcleanhydrogenmarket09HydrogenproductiontechnologiesSeveraltechnologiesalreadyexisttoproducehydrogen,withnewtechnologiesinvariousstagesofdevelopment.Thenewtechnologiesmostlyfocusonmakingtheproductionprocesszero-orlow-emission.Theindustryusescolorstohelpdifferentiatetechnologicalfamiliesofhydrogen,distinguishingbetweencarbon-intensive(greyandblack/brown)andclean(green,blue,turquoise,white,andpink)hydrogen.19Greenhydrogenisproducedfromelectrolysisusingrenewableelectricity(e.g.solarandwind).Itisamongsttheleastcarbonintensivetechnologiesforproducinghydrogenandreleasesnodirectemissions.Itcaneasilybescalableandisexpectedtobecomehighlycost-competitivewithgrowingdeployment,similartowhatwasobservedfromrenewableenergies’developmentoverthepastdecade.Pinkhydrogenisproducedviaelectrolysisofwaterusingnuclearpower.Thisprocessisalsocarbon-neutral.Nuclearpowermayfacesocialacceptanceandscale-upissuesand/orcouldbededicatedinprioritytobaseloadelectricityproduction.Bluehydrogencomplementsgreyhydrogenwithcarboncaptureandstorage(CCS)technology.Byleveragingoncurrentgreyhydrogeninfrastructures,bluehydrogencanhelprapidlybuildupthedemandforcleanhydrogen.However,eveninthelong-run,thistechnologywillhardlyachievecarbonneutralityduetoresidualemissions(thehighestcarboncapturerateiscurrentlyestimatedataround95%)andupstreammethaneemissions.Turquoisehydrogencanbeproducedviapyrolysisofnaturalgas.Unlikegreyorbluehydrogen,thisprocessreleasessolid(andnotgaseous)carbon,whichcanbeeitherusedasfeedstockforotherindustrialprocesses(withoutreleasingitintotheatmosphereasCO2downthevaluechain)orstoredpermanently.Therefore,directcarbonemissionsareavoided.Nevertheless,thistechnologyistodateexpensivecomparedtoalternatives,hasnotproventobescalableyet,andwouldalsoneedtodealwiththeupstreammethaneemissions.Whitehydrogenreferstonaturalstockpilesofhydrogenwhichcanbeextractedfromdrillinginundergroundwells.Theendowmentsarenegligiblewithcomparedtoglobalneeds.Blackorbrownhydrogenreferstothegasificationofcoal,themostpollutingtechnologywith20kgCO2/kgH2ofemissionsreleasedduringtheprocess.Greyhydrogenreliesonnaturalgasreforming(viasteammethanereformation,auto-thermalreformationofmethaneormethanegas-heatedreforming),themostwidelyadoptedtechnologytoday.CarbonemissionsassociatedwithSMR(9kgCO2/kgH2),andupstreammethaneemissionsresultingfromnaturalgassupply,makegreyhydrogenanemission-intensiveprocess.HydrogenproductiontechnologiesCarbonneutralCarbonabated,residualmethaneemissionsCarbonintensiveCoalNaturalgasNaturalNucleardepositspowerRenewablesGreenhydrogen:EnergizingthepathtonetzeroIntroduction.Deloitte’soutlookontheglobalcleanhydrogenmarket10Unlockingcleanhydrogen’sdecarbonizationpotentialmayrequirecleanproductiontechnologiesconsistentwithnet-zeroemissiontargets.Currently,electrolysisbasedonrenewableelectricityisrecognizedasthemostpromisingandsustainabletechnologicalsolutionforproducinggreenhydrogen.Thoughthereisalongwaytomakethathappen:Nearlyalloftoday’s95MtH2eqglobalhydrogen-equivalent20productionisbasedonfossilfuels,primarilythroughsteamreformingofnaturalgas(greyhydrogen)orgasificationofcoal(brownorblackhydrogen).Thisgeneratesmorethan1GtofannualCO2emissions—2.5%ofglobalannualemissions,onparwiththeentireaviationsector.Couplingexistingnaturalgas-basedtechnologieswithcarboncaptureandstorage(bluehydrogen)canbeanimportantinterimstep,withexpectationsofupto95%reductionindirectCO2emissionsforthemostefficientprocesses.21Theemergenceofacleanhydrogenmarketcomeswithopportunitiesandchallengesateachstageofthevaluechain.Achievingcarbonneutralityentailsnotonlydecarbonizingthecurrenthydrogensupplybutscalingitmorethansixfoldtohelpcoverthenewusesessentialtotheenergytransition.Thiswoulddemandanunprecedentedrampingupoftechnologicaldevelopment(fuelcells,directreductionforironandsteelmaking,andtheprocessesforproducingsustainableaviationfuel),manufacturingcapabilities(electrolyzers,solarpanels,andwindturbines),andinfrastructure(production,transport,andstoragefacilities)whilebuildingnewsupplychainsandestablishingaglobalhydrogentrade.22Largeuncertaintiesremainonwhichpathwaytheglobalvaluechainfollows,23dependingonchoicesofsupplytechnologiesandassociatedleadership,productionandconsumptionlocationsandresultingenergytraderoutes,andhydrogenapplications.Thesedecisionscouldcreateconflictsbetweenthevariousstakeholdersinthehydrogeneconomy,suchasgovernments(energysecurityandindustrialpolicy),energysuppliersandutilities,equipmentmanufacturers,consumers,andtransportactors(shippingcompaniesandportfacilitymanagers).ThisreportpresentsDeloitte’soutlookontheemergenceofacarbon-neutral,inclusivecleanhydrogeneconomyintheyearsleadingupto2050.Thisoutlookisbasedontheparadigmthattheglobaleconomyreachescarbonneutralitybythemiddleofthiscentury,withgovernmentsandcompaniesproactivelytacklingfinancialandgeopoliticalmatters,allowingfreecleanhydrogentradetounfoldinadiversifiedway,withtheGlobalSouthplayinganintegralpart.Suchalevelofambitionislikelynecessarytofightglobalwarmingwithoutdelaywhilecreatingfairdevelopmentopportunitiesand,withadiversifiedhydrogenvaluechain,improvingglobalenergysecurityandreducingtheriskofsupplychaindisruption.24Leveragingadata-drivenandmodel-basedquantitativeanalysis,thisoutlookproposesavisionforafast-trackeddevelopmentofthecleanhydrogeneconomy,highlightingtheassociatedchallengesandbottlenecks.ItreliesonDeloitte’sHydrogenPathwayExplorer(HyPE)model(seeAppendix)tohelpprovideasetofquantitativeresultsoncost-efficientsupplyandtradeflows,underlyingeconomicindicators—detailedviewsonproductioncosts,marketrevenues,andfinancingneeds—andkeypolicyactionsneededtohelpachieveclimateobjectivesinarobustandresilientfashion.CO2zeroemissionGreenhydrogen:EnergizingthepathtonetzeroIntroduction.Deloitte’soutlookontheglobalcleanhydrogenmarket11Part1.Envisioninga600millionmetrictonmarketGreenhydrogen:EnergizingthepathtonetzeroPart1.Envisioninga600millionmetrictonmarket12Achievingnet-zerogreenhousegasemissionsby2050willlikelyrequirethedevelopmentofa170-MtH2eqcleanhydrogenmarketby2030,growingtonearly600MtH2eqby2050.Toputthesenumbersinperspective,inenergyterms,600MtH2eqisequivalenttomorethan85%oftheglobalelectricityconsumptionin2019(22,850TWh25).Currently,thecleanhydrogenmarketcannotcompeteeconomicallywithfossilfuels,whosepricesrarelyincludetheirenvironmentalexternalities.26Deloitte’soutlookenvisionsthecleanhydrogeneconomyemerging,throughthepoliciesputinplacetoachievetheambitionstodecarbonizetheglobalenergysystem.27Deloitte’soutlookfirstenvisionsbuildingdemandonthedecarbonizationofexistingindustrialusesofhydrogen,notablyforproductionoffertilizers,beforeturningtonewuses(figure2).Then,theindustrialtransformationtonet-zerounderpinsfastdemandgrowthfornewenduses,underscoringhydrogen’sroleasaversatiletoolfordecarbonization.Overall,Deloitte’soutlookseespurehydrogendemandreachingnearly390Mtin2050(abouttwo-thirdsofthemarketinhydrogen-equivalentterms),followedbyammonia(morethan590Mtofammoniaor104MtH2eqinhydrogenequivalentterms),SAF(134Mtor80MtH2eq),andmethanol(130Mtor25MtH2eq).InDeloitte’sanalysis,hard-to-abatesectorscandrivethebulkoflong-termdemandforgreenhydrogen.•By2050,demandforcleanhydrogeniniron,steelandotherindustrytops250MtH2eq,or42%oftotaldemand.Cleanhydrogencanhelptodecarbonizecurrentfeedstockusesinthechemicalindustry,includingproducingammoniaforfertilizersandmethanolforplasticsandclothing.Intheironandsteelsector,purehydrogencanbeusedasareductionagentindirectreducedsteelmakingprocesses.Overall,purehydrogencanalsoserveasanenergysourceforindustrialapplicationsdependentonhighheat,includingmetallurgy(ironandsteel),chemicals,textilefibersmanufacturing,electronics,recycling,andoilrefining.•Fulldecarbonizationofthetransportsectorwilllikelyrequire215MtH2eqofcleanhydrogenby2050,36%oftotaldemandforcleanhydrogen.InDeloitte’soutlook,derivativescanbeparticularlyvaluabletohelpdecarbonizeshipping(asammoniaandmethanol)andaviation,whereelectricityandpurehydrogenmaynotbeviablesolutions.Purehydrogencanbeconsumedinfuelcellsorinternalcombustionenginesintheroadfreightsector,complementingelectricvehiclesespeciallyforlong-haulfreightrequirements.•Hydrogencanalsoplayanimportantroleinthepowersystemforenergystorageandflexibilityservices,requiringanother125MtH2eqby2050(aboutone-fifthoftotaldemand).Duringexcesssupplyperiods(highsolarirradiationorstrongwinds),hydrogencanbeproducedviaelectrolysisandstoredtobeconvertedbacktoelectricityinexcessdemandperiods,providingdownwardandupwardflexibilitytothepowersystem.28•Theinjectionofhydrogenintotheexistingnaturalgastransportanddistributionnetworkcanbeapotentialsolutiontoslightlylowerthecarbonfootprintofgasconsumptioninbuildings.However,Deloitte’soutlooksuggestsalimitedroleforblendingaselectrificationrapidlydisplacesnaturalgasconsumptioninthissector,inanet-zeroenvironment.Moreover,hydrogentransportanddistributionrequireastrictsafetyprotocol,29whiletheefficiencyofheatingbuildingsviahydrogenislimited.30Forthesereasons,itisexpectedthathydrogendemandinbuildingsremainsmarginal(5MtH2eqin2050,below1%oftotalneeds).20502045204020352030172290407502598IronandsteelOtherindustryTransportPowerBuildings55779811713511821512551071739969413572878804965828274Figure2.Evolutionofcleanhydrogendemandbysector,2030to2050(MtH2eq)Source:DeloitteanalysisGreenhydrogen:EnergizingthepathtonetzeroPart1.Envisioninga600millionmetrictonmarket13Asclimatechangebecomesaglobalimperative,withallmajoreconomieslookingtodecarbonizetheirenduses,cleanhydrogendemandwilllikelyskyrocketaroundtheworld,leadingtotheformationofatrulyglobalmarket(figure3).Whiledemandinitiallytakesoffinindustrializedeconomies,thehydrogenvaluechaincanbeamajorsustainablegrowthanddecarbonizationopportunityfordevelopingcountriesaswell.Cleanhydrogencanallowleapfroggingfossilfuelsinthepowersystemandfosteringlocalproductionforbothdomesticconsumptionandexports.31Developingcountriescantakeadvantageoftheirnaturalresourcestohelpdeveloptheirownecosystems,addressagrowinglocaldemanddrivenbythetransitiontowardclimateneutrality,andintegrateitintotheglobalvaluechainbyexportingthesurplusoftheirdomesticproductiontootherregions.Moreover,futurecleanhydrogenvaluechainscangofarbeyonddirectproductionorconsumptionaspects.Developingcountriescanbenefitfromtheeconomicdevelopmentopportunitiesofhydrogentransport,criticalmaterialssupplyforelectrolyzers,solarpanelsandwindturbines,orhydrogenprocessing/conversionplants.Conversely,successfuleconomicdevelopmentshouldbeapreconditiontohelpingachievenet-zeroinemergingmarkets.Reachingnet-zeroemissions,includingthewidespreaduseofcleanhydrogen,maydemandaconsciouslong-termstrategyratherthanaone-offapproach.InDeloitte’soutlook,investmentswouldbenecessaryinbothadvancedanddevelopingeconomies.Agreencolonialismmindsetwithdevelopingcountriesprovidingonlyrawmaterialstothehydrogeneconomy32wouldbecounterproductive,especiallysincetheenergytransitioncouldlikelybedelayedintheseregions—andglobally.Overall,Deloitte’sresultsshowthattheuptakeofcleanhydrogencandelivercrucialCO2reductionsinfinaldemand,abatingupto85GtCO2eqincumulativegreenhousegasemissionsby2050(figure4)bydecarbonizingcurrentanddevelopingnewenduses.33Toputthisvalueinperspective,remainingontrackwiththe1.5°Cglobalwarmingobjectivewouldlikelyrequirelimitingcumulativeemissionstonomorethan400GtCO2between2020and2050.Hydrogencanplayaparamountroleinsectorswhereemissionsarehardtoabate;whileiron,steelandotherindustryrepresentsonly42%ofhydrogendemandbetween2030and2050,cleanhydrogenaccountsfor60%oftotalcumulativeemissionreductionsinthissector.NorthAmerica20502045204020352030ChinaEuropeIndiaJapanandKoreaMiddleEastandNorthAfricaRestoftheworld46267510212313995542975104102764525915985634221697435451524535028169143030Figure3.Regionaldemandforcleanhydrogenanditsderivatives,2030to2050(MtH2eq)Source:DeloitteanalysisFigure4.GHGemissionsabatementunlockedbycleanhydrogen,2030to2050Source:Deloitteanalysis-90-60-30020502045204020352030IronandsteelOtherindustry-3-3-8-14-21-17-13-8-12-21-22-29-11-7-5-6-3-3-8-20-37-59-85YearCumulatedemissions(GtCO2eq)TransportPowerBuildings00-10-1-10Greenhydrogen:EnergizingthepathtonetzeroPart1.Envisioninga600millionmetrictonmarket14ClimatepolicyhelpsshapethemarketCostsareoneofthefundamentaldriversofthecleanhydrogenuptake—and,earlyon,anobstacletoovercome.Cleanhydrogeniscurrentlymoreexpensivetoproduceandtransportthanitsfossil-basedcompetitors(figure5).AccordingtoDeloitte’sanalysis,theproductioncostofgreenpurehydrogenrangesbetweenUS$2.50andUS$5/kgin2025,atleastUS$1.5/kgmorethangreyhydrogen.Mostcriticalcleanhydrogentechnologies—includingelectrolyzersandstorage—arestillatanearlystagewhilelegacyalternatives—suchassteammethanereformersandcoalgasificationplants—benefitfromdecadesofinfrastructureanddeployment.Aswithotherabatementtechnologies,economiesofscalecan,overtime,reversethecurrentrankingofcosts.Thesharpdeclineinthecostofrenewableelectricityisacaseinpoint.Sparkedbypublicsupport,massdeploymentofwindandsolarpowerplantstriggeredavirtuouscycleoflearningbydoing:Between2010and2021,productioncostsfelldramaticallyforsolar(88%),onshorewind(68%),andoffshorewind(60%).34,35Subsidiesandadvocacyarelikelyneededtodothesameforcleanhydrogen.Inanascentmarket,uncertaintiesaboutmarketoutlookcanundercutprivateinvestments.Theneedforeconomiesofscaletohelpreacheconomicviabilitypointstoadilemma:Uncertaintyabouttheuptakeofdemandforcleanhydrogenmayholdbackinvestmentinproductionortransport,whilelimitedavailabilityofcleanhydrogenandthecostgaptocarbon-intensivealternativescoulddeterwidespreadswitchingtocleanhydrogentechnologyontheend-useside.36Itthereforemayrequiregovernmentstomakeconsciouspolicydecisionstohelpsupporttheuptakeofagreenhydrogeneconomyandgivevisibilitytostakeholdersonboththemarket’sproductionandend-usesides.Deloitte’smodelingresultssuggestthatthegreenhydrogeneconomycouldbenefitfrompolicyactionsandregulatorysupportatleastuntilthemid-2030stohelpdevelopsolutionsatthenecessaryscale.Targetedpolicysupportforcleanhydrogenmaybecrucialtohelpensurethatearlyprojects,suchaspilotandheadofseries,cancompeteonalevelplayingfield.Forinstance,theUSInflationReductionActprovidesataxcreditofuptoUS$3/kgforgreenhydrogen(US$1/kgforbluehydrogen),morethanclosingthecostgapwithexistingtechnologies.TheEU’shydrogen-relatedImportantProjectsofCommonEuropeanInterest(IPCEI)program(directsubsidies)andGermanH2Globalinstrument(offtakecontractswithpublicsupport)areotherexamplesofpublicsupport.Deloitte’spathwayshowscleanhydrogencanstandonitsown,withthebreakevenpointreachedbefore2035forpurehydrogenandammonia,by2045formethanol,andby2050forSAF.Governmentsshouldalsoplayaroleinprovidingaclearandreliablevisiontoprivateactors.Stringentclimateregulation(forexamplecarbonpricing,greenfuelsstandards,carboncontractsfordifferences,andquotasforgreenfuelsintransportorgreenmaterials)andambitiousdecarbonizationtargets,includingmilestoneswithatimelineforthehydrogeneconomy(suchaselectrolysiscapacityandnumberofchargingstations)arecrucialtoanchorexpectationsandfacilitateinvestments.Graduallytighteningclimatestandards,includingcleanhydrogencertification,canplayaroleinhelpingtocontinuouslyshrinktheenvironmentalfootprintoffossil-basedproductionprocesses.ResidualmethaneandCO2emissionsfrombluehydrogenproductionshouldfallbelowsustainabilitythresholds,asalreadyimplementedbytheEuropeanUnion,theUnitedKingdom,andtheUnitedStates.Thenaturalgasindustry’sabilitytorapidlyadoptbestavailabletechnologiesintermsofcarboncaptureandstorage(CCS)andcurbingmethaneemissioncanbecriticalforbluehydrogendeployment.Inthisoutlook,sustainabilitythresholdsreachzerointhesecondhalfofthiscentury,incompliancewithclimatetargets.Deloitte’spathwayshowscleanhydrogencanstandonitsown,withthebreakevenpointreachedbefore2035forpurehydrogenandammonia,by2045formethanol,andby2050forSAF.Greenhydrogen:EnergizingthepathtonetzeroPart1.Envisioninga600millionmetrictonmarket15Figure5.Outlookonproductioncostsofcleanhydrogenanditsderivatives,2025to2050Source:Deloitteanalysis;TheproductioncostiscomputedhereasLCOH(levelizedcostofhydrogen),amethodologyaccountingforallcapitalandoperatingproductioncostsinthelevelizedmanneroveraunitcostofproducedhydrogenanditsderivative(US$/kg).Thegreenandblueareasrepresenttheproductioncostdistributionof80%ofcleanhydrogenanditsderivativesthatcanbeproducedinthisoutlook(solidlinesrepresentingthemedian).37Thecostofgreypurehydrogendirectlyaccountsfordetailedmodelingassumptions,whilethecostofgreyhydrogenderivatives(ammonia,methanol,andSAF)reliesonaverage2019worldmarketpricesandacarbonpriceinlinewiththeIEA’snet-zeropathway.A10%uncertaintyrangeisaddedtothecentralestimatetoaccountformarketuncertainties.Costofgreentechnologies(medianinsolidline)Costofbluetechnologies(medianinsolidline)Costoffossil-basedtechnologies1.02.03.04.05.06.0205020452040203520302025Levelizedcost(USD/kg)a)Purehydrogenc)Methanol0.00.20.40.60.81.0205020452040203520302025Levelizedcost(USD/kg)b)Ammoniad)SustainableaviationfuelsYearYear0.00.20.40.60.81.02050204520402035Levelizedcost(USD/kg)0.00.51.01.52.02.5205020452040203520302025Levelizedcost(USD/kg)YearYearGreenhydrogen:EnergizingthepathtonetzeroPart1.Envisioninga600millionmetrictonmarket16SustainabilitythresholdsforbluehydrogencertificationHydrogenproductionwillneedtocomplywithenvironmentalregulationstobecertifiedasclean,anindispensableprerequisiteforinternationaltrade.Forbluehydrogenbasedonnaturalgas,carbonintensityofproductionshouldrespectsustainabilitythresholdscoveringdirectemissions—thatis,efficiencyofCCStechnologies—andmethaneemissionsassociatedwithnaturalgassupply.SeveralregionsandcountriessuchastheEuropeanUnion(EUTaxonomy38),UnitedKingdom(LowCarbonHydrogenStandard39),andUnitedStates(CleanHydrogenProductionStandard40)havealreadyimplementedsuchstandards.Todate,oneofthemoststringentthresholdsistheUnitedKingdom’sstandard,at2.4kgCO2eq/kgH2in2025.Inparticular,methaneemissionsfromnaturalgassupplyshouldbeofcrucialimportanceinthecertificationofbluehydrogenandsubjecttoinvestorscrutiny.Theadoptionofthebestavailabletechnologiesforupstream,midstream,anddownstreammethaneleakageabatementshouldbeapreconditionforfurtheruseofnaturalgasinthenextfewyears,andassuch,forthedeploymentofbluehydrogeninapathwaythatiscompliantwithclimateneutralityobjectives.41InEurope,thisevolutioncouldleadtoamorethanfourfoldreductioninemissionsrelatedtotheconsumptionofnaturalgas.InDeloitte’soutlook,globaltradeofbluehydrogenisboundbyincreasinglystringentsustainabilitythresholdsthat,togetherwithadiminishingbusinesscase,eventuallyresultinphasingoutthistechnology.Inpractice,compliancewiththeUnitedKingdom’sstandardisretainedastheinitialconditiontotradecleanhydrogen(seedetailsinAppendix).Thisthresholdisassumedtodecreaselinearlytoreachzerointhesecondhalfofthiscentury.Residualdirectemissionsandmethaneleakagesareincompatible,inthelongterm,withclimateneutrality.Greenhydrogen:EnergizingthepathtonetzeroPart1.Envisioninga600millionmetrictonmarket17Part2.DevelopingthecleanhydrogenvaluechainGreenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain18AssessingcleanhydrogensupplyopportunitiesBy2050,thecleanhydrogensupplypotentialexceedsdemandbyfar.Thepotentialofcompetitivesupply—belowUS$1.5/kgoflevelizedcost,excludingtransportation—ofgreenhydrogenaloneislikelyexpectedtostandat2,400Mt,aboutfourtimestheprojecteddemand.Costisoneofthecoredriversofcompetitivenessbetweenregionsandunderpinstradeopportunities.Geopoliticalconcerns,transportoptions,andcostsalsohelpshapethedevelopmentoftheglobalmarket.Theproductioncostofcleanhydrogencanbebrokendownintothefollowingkeyelements(figure6):•Greenhydrogenisacapital-intensiveindustry.Overall,capitalexpendituretypicallyaccountsfor45%to50%oflevelizedproductioncost,including30%to40%fortheacquisitionofsolarpanelsorwindturbinestogenerateelectricity43and10%to20%forelectrolyzers.Therelativeshareofrenewablesinlevelizedcostsdependsoneachtechnology’sloadfactors(higherforwind)andspecificcost,alongwiththelocalrenewableenergyendowments—forinstance,betterwindorsunlightconditionsincreasetheamountofelectricitythatagiveninstalledcapacitygenerates.44Installedelectrolysiscapacityrequirementsevolveaccordingly.Operationalexpendituresaccountforanadditional20%to30%oflevelizedcosts.•Feedgasisoneofthekeydriversofbluehydrogencostandtypicallyaccountsforupto40%oflevelizedcosts.Naturalgasproducersmayhaveacomparativeadvantageforbluehydrogen.Fromtheperspectiveoffinancingabluehydrogenproject,naturalgassupply—withthepriceincorporatingthecapitalcostsofexplorationandproduction—isanoperatingexpenditure—tobeaddedtoanother40%ofnon-relatedoperatingcosts—thatdoesnotlikelyrequireupfrontfinancing,hencealowercapitalsharethangreenhydrogen.•Financingcostscouldbeparamountforaproject’scostcompetitiveness.Thehighcapitalintensitylikelyrequiresraisingsignificantamountsofdebtandequity,withtheresultingfinancingcostputtingupwardpressureonhydrogen’slevelizedcosts,typically10%forbluehydrogenandabout30%forgreen.Therapidcreationoftheglobalcleanhydrogenmarketisanunprecedentedchallenge,entailingthedecarbonizationoftheentirecurrenthydrogensupplyandaccordingtoDeloitte’soutlook,amorethansixfoldincreaseinnewusesoverthenextthreedecades.Onthedemandside,switchingtohydrogenmayrequirefundamentalshiftsinindustrialandtransporttechnologiessuchasfuelcellsandSAFproduction,someofwhichcanstillhavesubstantialpotentialforfurtherimprovement.Onthesupplyside,thecostsavingsthatmassdeploymentbringarestilltobeachieved.Moreover,governmentsandcompaniesshoulddevelopalarge-scaleglobaltransportandstorageinfrastructure,includingdomestictransmissionanddistributionpipelines,internationalpipelinesandvessels,seaborneterminals,andconversionandreconversionunitsincludingliquefactionandgasificationunits,ammoniasynthesis,andcrackingplants.Deloitte’spathwayshowsplayersharnessingtechnologicalprogressandinnovationacrossthewholevaluechain.Onlyamassivescale-upofrelatedinfrastructure,includingrenewableenergiesandelectrolyzermanufacturing,complementedbysustainedresearchanddevelopment(R&D)canhelpenablecleanhydrogentoplayitsdesiredroleinthetransitiontonet‑zero.42Figure6.Illustrativebreakdownofpurecleanhydrogenproductioncostin2050Source:Deloitteanalysis.Thelevelizedproductioncostrepresentstheaveragecostofbuilding,operating,andfinancingahydrogensupplytechnology.“Investment”costsonlycoverthedepreciationofassets,while“financing”costsincludeinterestsanddividendspaymentsovertheassetlifetime.Forgreenhydrogen,thisanalysisassumeselectrolyzersarepoweredsolelybyoff-gridrenewablecapacities,henceacrucialimpactofloadfactors.Aswindtechnologieshavehigherloadfactorsthanphotovoltaiccells(PV),theyrequirelesselectrolyzercapacitytoproducethesameamountofhydrogen.However,thecostofwindturbinesishigherthansolarpanels.Hence,investmentsininstalledcapacitiesofelectrolyzersandrenewablesareoptimizedtotakeadvantageoflocalwindandsolarirradiationpatterns.0.00.20.40.60.81.01.2Bluehydrogen(reformers),NorwayGreenhydrogen(PV),MoroccoGreenhydrogen(wind),MoroccoInvestment(electrolyzerrsorreformers)Investment(renewables)Levelisedcost(USD/kgH2)Operations(other)FinancingOperations(naturalgassupply)17%20%28%23%29%7%37%29%27%37%36%10%Greenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain19Figure7.Spatialdistributionoflevelizedcostsofgreenhydrogen,2050Source:DeloitteanalysisGreenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain20$4/kgH2$1/kgH2Greenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain21Nationsproducingnaturalgas—in2020,morethan70%ofprovenreserveswereheldbyRussia,Iran,Qatar,Turkmenistan,theUnitedStates,China,andVenezuela—maybeobviouscandidatestobecomemajorsuppliersofbluehydrogen.Thecompetitivenessofbluehydrogenlargelydependsontheoutlookfornaturalgasmarketsintermsofpriceevolution,thedevelopmentofnewreserves,andconsumptiontrends—suchasforheatingandpowergeneration.Inaddition,theneedtoadoptbestavailablemethaneemissionreductiontechnologies,tocomplywithsustainabilitystandards,placessomeofthemostadvancedcountries(Norway,Australia,theUnitedStates,Canada,andsomeMiddleEastcountries)aheadofthepack.Thewidespreadavailabilityandfallingcostofrenewableenergyproductionhelpstoensurethatgreenhydrogencanbeproducedvirtuallyanywhere(figure7),withdevelopingeconomiesgaininganedge—forinstance,in2050,producinggreenhydrogeninNorthAfricacouldcostone-quarterofEuropeanproduction.Benefitingfromhigh-qualityrenewableenergyendowments,Australia,Chile,Mexico,northernandsub-SaharanAfrica,andMiddleEasterncountriescanpresentparticularlyattractiveconditionstobecomemajorexportersofgreenhydrogen.Themanufacturingcostofgreenhydrogenequipmentcandropinthecomingdecades,boostingthetechnology’scompetitiveness.Whiletheinstallationcostofsolarpanelsandonshorewindisexpectedtodropby45%and18%,respectively,between2020and2050,thecostofelectrolyzers(especiallyalkalineandprotonexchangemembrane(PEM)technologies45)decreasesbytwo-thirdsoverthesametimeframe,makinggreenhydrogenproductiononeofthemostcost-competitivetechnologiesby2040.In2050,levelizedproductioncostscouldfallbelowUS$1/kgH2inChile,andbelowUS$1.1/kgH2innorthandsub-SaharanAfrica,Mexico,China,Australia,andIndonesia.Bluehydrogentechnologiescouldseesmallercostdecreases.Thecostsavingsachievedthroughscaling-upandR&DonCCStechnologiesare,atleastpartially,offsetbytighteningenvironmentalregulation—forexample,therisingcostofunabatedemissions,perhapsviacarbonpricing.Overall,thecostofnaturalgas-basedtechnologiesisexpectedtoremainflatbetween2030and2050,withsomeofthelowestproductioncosts(US$1.25/kgH2in2050)expectedinNorthAmerica,mainlyduetolow-costnaturalgassupply.Financialconditionscouldfavorsometechnologiesorgeographies.•Relianceonnaturalgas,bluehydrogentechnologiesmaysufferfromsustainabilityconcerns,reputationalconcerns,orlackoftrustinthecertificationprocess.Thetechnologycouldalsopresentariskoftechnologicallock-inthatcouldfurtherdelaythetransitiontocarbonneutrality.Inturn,bluehydrogensupplierscouldbeexposedtosomeofthevariouseconomicandfinancialcomponentsoftransitionrisks,particularlythedangerthatprojectsbecomestrandedassets.Environmental,social,andgovernance(ESG)investmentrulesandthepotentialpitfallsofaligningtodifferentcertificationprocessescouldalsomakeithardertoobtainfinancing,atleastinadvancedandenvironmentallysensitiveeconomies.Overall,inadvancedeconomies,bluehydrogenprojectsmaythereforebeexposedtoariskpremium.46Incontrast,accesstolow-coststatefinancingforbluehydrogencouldbefacilitatedincountrieswherenationaloilandgascompaniesdominate.•Someofthemostpromisinglocationsforgreenhydrogenprojectsmaysufferfromhighcountry-relatedpoliticalrisk.Inpractice,privateinvestorsandlendersexpecthigherratesofreturntocompensateforgreaterpoliticalrisk.Thus,accesstoaffordablefinancecanbeacriticalenablerforgreenhydrogenprojects,andparticularlythoselocatedinemergingmarketswithhighpoliticalriskthatmaybeotherwisepreventedfromtappingintotheirexceptionalproductionpotential(figure8).International(asprovidedbyexportcreditagenciesordevelopmentfinanceinstitutions)andgreenfinancecansucceedinloweringthecostofcapitalforgreenhydrogenprojects.Byreducingcountryriskdifferences,theseinstrumentscanbeparticularlypowerfulindevelopingcountries;theymaybenecessaryforproductionprojectstocompeteonalevelplayingfieldandtoensureafairenergytransition.47Greenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain220.500.751.001.251.501.752.002.252.50ArgentinaMexicoChileTunisiaEgyptMoroccoFrance-10%-16%-23%-48%-11%-18%-38%EuropeLatinAmericaAfricaLevelisedcost(USD/kgH2)CurrentcostofcapitalCostdiﬀerenceFavorablecostofcapitalFigure8.Illustrativesensitivitiesoflevelizedcostofgreenhydrogenwithfinancingcost,2050Source:DeloitteanalysisNote:The(weightedaverage)costofcapital(WACC)representsthefinancingconditionsaccountingfortheequityanddebtpricing.The“currentcostofcapital”(WACCvaryingbetween6%and12%)settingisbasedonillustrativemarketoutlook(i.e.,accountingfordifferencesincountryrisk),whilethe“lowcostofcapital”(WACCvaryingbetween4%and6%)assumesconvergenceoffinancialconditionsbetweencountriesachievedbypublicsupport.Greenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain232030requirementAnnouncementgapAnnounced(nodate)Announced(for2030)Existing(2021)21010540578Figure9.Globalelectrolyzermanufacturingcapacityrequiredby2030(GWperyear)Source:DeloitteanalysisbasedonInternationalEnergyAgency;the2030requirementisalowestimatebasedonlineardeploymentinthecomingdecade.OvercomingbottlenecksforgreenhydrogenproductionLandavailabilitycanbeachallengeforsomedenselypopulatedeconomies.Scalingupgreenhydrogenproductionmayrequirelargeareasoflandforthedevelopmentofsolarandwindinstallationsforrenewableelectricitygeneration.SincePVandwindpowerhavelowenergydensitypersurfacearea,land-availabilityrequirementscouldbeanobstacletolarge-scalegreenhydrogendeploymentindenselypopulatedcountriessuchasJapan,SouthKorea,andpartsofEurope.Somehighlyindustrializedcountriesmayfinditdifficulttoservetheirentirehydrogendemandfromdomesticsources.Forinstance,JapanandSouthKoreabothhavelessthan10%oftheirgroundavailabletoinstallrenewabletechnologies.48Bycontrast,manydevelopingcountriescanleveragelargereservesofavailable,sunbakedland—forexample,morethan80%oftheterritoryinAlgeria,Morocco,andSouthAfrica.Permittingprocessesfortheinstallationofnewrenewableassetscouldproveamajorbottleneckinsomecountries’productionscale-up.Unlockingtheriseofgreenhydrogendemandsthatpermittingandvalidationproceduresbesimplifiedandshortened.ThisconcernisparticularlyacuteinEurope,AustraliaandtheUnitedStates,49whichwouldotherwiseriskacceptingalowermarketshareofglobalproductioninthelongterm.Inaddition,theriseofgreenhydrogenshouldnotbethwartedbylimitedmanufacturingcapacityforelectrolyzers,PVpanels,andwindturbines.InDeloitte’soutlook,globalelectrolyzermanufacturingcapacitymayneedtoincreasebymorethan25-fold,tomorethan200GWperyearin2030,toreachagreenhydrogentrajectoryconsistentwithclimate-neutralitygoals.Similarly,globalPVmanufacturingcapacityshouldincreasefrom250GWperyearin2021to800GWperyearin2030.Inthesametimeframe,theinstalledcapacityofwindshouldquadruple,withunderlyingmanufacturingchallengesaswell.Anticipatingthegrowthoftheelectrolysismarket,industrialcompanieshavealreadyannouncedseveralprojectsthatcouldbringthetotalmanufacturingcapacityto65GWperyearin2030.50ChinaandEuropecouldleadtheway,with37%and31%oftheprojects,respectively,announcedtodate.Evenconsidering40GWofadditionalprojectsannouncedwithouttargetdates,amanufacturinggapofsome100GWstillmayneedtobeovercometohelpmeettheprojecteddemandin2030(figure9).Thelevelofindustrialambitionmustbefurtherraisedtoaccompanythecreationofthegreenhydrogeneconomy.Greenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain24Thefast-trackedadoptionofnewtechnologiescanputincreasingpressureoncriticalrawmaterialsupplychains.Greenhydrogenreliesoncriticalmaterialsattwostagesofthevaluechain:electricitygenerationviarenewablesandhydrogenproductionviaelectrolysis.•SolarPVandwindpoweraresomeofthemaindriversbehindtherisingdemandforcriticalmaterialsthroughthe2020s.51Solarconsumescopper(about2,850kg/MW),whilewindturbinesrequirecopper(about8,000kg/MWforoffshoreand2,900kg/MWforonshore),zinc(about5,500kg/MW),manganese(about780kg/MW),chromium(about500kg/MW),rareearths(about220kg/MWforoffshoreand40kg/MWforonshore),andmolybdenum(about115kg/MW).•Thedifferenttechnologiesofelectrolyzershavecomplementarycriticalmaterialrequirements(figure10).Thiscanofferprotectionagainstdisruptioninsupplyofsomecriticalmaterialsandcanputstrategicvalueontechnologydiversification.Todate,oneofthemostwidespreadtechnologiesisalkalineelectrolysis,largelyreliantonnickel,whichfacesnosignificantriskofreservedepletion.52•Overthepastdecade,economicallyviablereservesofcriticalmineralshaveincreaseddespitegrowingdemand.However,orequalityhasdeclined,raisingchallengesforextractionandprocessingcosts,CO2emissions,andwaterconsumption.53Accordingtospecialists,thesupplyfromexistingcapacitiesandprojectsunderconstructionwillbeinsufficienttomeettheexpecteddemandinthelongrun.Significantinvestmentsareneededtoavoidslowingdowngreentechnologydeployment.Additionally,geopoliticaltensionscouldarisefromtheincreasingmarketconcentrationofthesupplychain,promptinginquiriesaboutitsresilience.Chinadominatestheminingofrareearthsandgraphite,andtheprocessingofthecriticalmaterialrequiredbycleantechnologies:copper,lithium,nickel,cobalt,andrareearths.However,manywesterncountrieshavealsorealizedthesovereigntyrisksassociatedwithsuchasconcentration,andtheyareactivelyexpandingminesandprocessingfacilities.Fortunately,watersupplyislikelynotexpectedtobeastrongbarriertogreenhydrogen.Greenhydrogenproductionisbasedonwaterelectrolysis,withbetween9kgand11kgofwaterrequiredtoproduce1kgofhydrogen.54Therefore,about5.0to5.6billioncubicmetersofwatercouldbeconsumedannuallytohelpproducethe500MtofelectrolytichydrogenenvisagedinDeloitte’soutlookin2050,lessthanone-thirdofwhatthefossilfuelindustrycurrentlyconsumeseachyear.55Althoughgreenhydrogenproductionmaytriggerwaterconflictsinsomearidandinlandareas—especiallyintheMiddleEastandpartsofAfrica—desalinationtechnologiescouldmakeitpossibletorecoverseawaterforelectrolysisatalimitedcost.56ImplicationsfortradeopportunitiesInterregionaltradecanhelpreducethegeographicmismatchbetweendemandandlow-costsupply.Someofthelargestdemandcenters(primarilyEuropeancountries,Japan,andSouthKorea)maynotbeinapositiontoproducelow-costhydrogeninsufficientquantitiestofullymeetdemand.Bycontrast,regionswithhighrenewableendowmentandamplelandavailability—suchasAustraliaandpartsofAfricaandLatinAmerica—couldlikelyproducecost-competitivegreenhydrogeninquantitiesthatexceeddomesticneeds.Tradeopportunitiesandassociatedcostsavingsnaturallyarisefromsuchdiscrepancies,andseveralcountries(includingAustralia,Chile,Germany,andJapan)couldpositionthemselvesasfuturehydrogenimportersorexporters.SeveralpartnershipsormemorandumsofunderstandinghavealreadybeensignedtoharnesstheGlobalSouth’srenewableenergypotential.57Adiversifiedtransportinfrastructurecanbekeytohelpfacilitateglobaltrade.Figure10.CriticalmaterialcontentofkeyelectrolysistechnologiesTechnologyMineralContent(kg/MW)AlkalineNickel800to1,000Zirconium100PEMPlatinum0.3Iridium0.7Solidoxideelectrolysiscells(SOEC)Nickel150–200Zirconium40Lanthanum20Yttirum<5Source:InternationalEnergyAgency(2021).Thistableprovidestherawmaterialconsumptiontoinstall1MWofelectrolysis.Greenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain25•SaudiArabiabenefitsfromhighsolarirradiationandabundantavailableland.Deloitte’soutlookshowsthecountryproducing39Mtoflow-costgreenhydrogenin2050,fourtimesitsdomesticdemand.Thecountryisalreadyinvolvedinseveralinternationaltradeagreementstoexportgreenhydrogen,whichcouldbeoneofthebuildingblocksofitsstrategytodiversifyitseconomyawayfrompetroleum.58•Spain’shighlevelofsolarexposuremakesitoneofthebestEuropeancandidatesforgreenhydrogenproduction;thecountrycouldbeclosetoself-sufficiencyin2050.Yet,Spaincanexpectsignificantvolumesofimportsduetoitsgeographicalpositionasagatewaytoproximatedemandclusters—notablyGermany—minimizingtransportcostsbyleveragingitspipelineconnectiontoMoroccoandthepan-Europeantransportinfrastructure,includinga$2.6billionBarcelona-MarseillehydrogenpipelineannouncedinDecember2022.59•TheUnitedKingdomcancountonsignificantwindpowerendowmentandcanmobilizeitsfullcompetitivepotential,producingsome7.5MtofgreenhydrogenbasedonDeloitte’soutlook.Yet,asupdatestotheUKHydrogenStrategysuggest,theforecastedstrongincreaseindemand60inthe2030s(reachingupto12Mtby2050inDeloitte’soutlook)islikelytopromptimports.•Japanmaybeconstrainedbyacombinationoflimitedrenewableenergypotentialsandhighpopulationdensityalongitscoastlines,withhigheconomicindustrializationboostingdomesticdemandlevels.InDeloitte’soutlook,Japanisoneoftheprimaryimportingcountries.ItisworthmentioningthatadditionalconstraintsapplyforlargecountriessuchastheUnitedStatesandChina.Notably,theremotenessofsomeavailablelandsuitedforproduction(forexample,desertareas)fromconsumptionorexporthubscouldentailahightransportcost—andatechnicalchallengetodeployinternaltransportinfrastructureoverlongdistances—thereforelimitingthepotentialforcompetitivesupply.IdentifyingpotentialgreenhydrogenimportersandexportersThediversityofrenewableenergyendowmentsandlandavailabilityacrosscountriescancreatesignificantdifferencesinachievablegreenhydrogenproductioncostsandquantities.Acountry’sconsumptionprofiledependsonpopulationsize,industrialstructure,andeconomicdevelopment,withinternationaltradeshapedbydivergencesinconsumptionprofilesandproductionpotentials.Supply-constrainedcountriescanattempttolowertheirprocurementcostbyprocuringallorpartoftheirneedsfrominternationalmarkets;countrieswithamplelow-costproductionpotentialmayseektomaximizerevenuesthroughexports.0255002550Localsupplypotentialbelow1.5USD/kg(Mt)MoroccoChileUKJapanSpainSaudiArabiaHigherexportingpotentialHigherexposuretoimportConsumption(Mt)Source:DeloitteanalysisAsillustratedinthisfigure,Chile,Morocco,SaudiArabia,Spain,theUnitedKingdom,andJapanoccupydifferentpositionsontheimporter-exporterspectrum.•NorthernChilehassomeoftheworld’shighestsolarirradiationlevels,boostingthecountry’sexportpotentialforrenewableenergy.•Moroccohasaccesstooutstandingsolarandwindresources,whichiscompatiblewithahighlycompetitivelarge-scaleproductionindustryleveragingitsproximitytotheEuropeanUnion.Energysecurityandeconomicdevelopmentarelikelyinterrelatedcomponentsofaresilienthydrogeneconomy.Tohelplimittheriskofstrongdependenciesonlimitednumberofexporters,importersshouldseektodiversifytheirmixofsuppliers,includingbydevelopingbilateralrelationships,promotingscientificandindustrialcooperation,andinvestingintheappropriateproductionandtransportassets.61TheparticipationoftheGlobalSouthinthehydrogeneconomycanhelpimproveenergysecurityforall,whileprovidingtheGlobalSouthwithsignificantdevelopmentopportunities.62Inaddition,climatechangeisaglobalconcern,suchthatthedecarbonizationofsomecountriesshouldnotbeperformedattheexpenseoftheeffortsofothers.Thus,tomeetclimateneutralitytargetsinlinewithSustainableDevelopmentGoals(SDGs),developingandemergingmarketsshouldtaketheirfairshareoftheglobalvaluechainandassociatedco-benefits:jobs,knowledgeaccumulation,stablerevenues,andmore.TheimportanceoftransportinfrastructureThetransportofhydrogencanbetechnicallychallengingandhasthereforeimportantimplicationsforthestructureoftheglobalmarket(figure11).Undernormalconditions,hydrogenisavolatileandhighlyflammablegas;contactwithaircantriggeranexplosivereaction.63Consequently,purehydrogenmaybecostlytotransportinindustrialvolumescomparedtoothermolecules,asareitsderivatives.Whenpossible,itshouldbeproducedascloseaspossibletotheconsumptioncenters.64Apartfrompipelines,twosolutionscurrentlyexistforthesafeandaffordabletransportationofpurehydrogen:compressionand/orliquefactioninacontrolledenvironmenttohelpincreasevolumetricdensity,andconversionintoamorecontainablecarrierwithareconversionsteppriortofinaluseforlongdistances.•Formediumdistances—upto3,000km—compressionandpipelinetransportarecompetitiveoptionscomparedtotruck,rail,orship.65Intheshortrun,hydrogencouldbeblendedwithnaturalgasinexistingpipelinenetworks,withopportunitiesofjointconsumption(with,granted,limitedenvironmentalbenefits)orseparationpriortofinaluse,atechnicallychallengingandexpensiveprocess.Nevertheless,themostpromisingoptionformedium-rangetransportcomesfromdedicatedpipelinesconnectingdemandcenterstoclose-byproductionsitesorimportterminals.Thiswilllikelyrequireextensiveregionalandnationalplanning,pipelinesbeinglong-lastingassetswithlargeupfrontinvestmentneeds.Inthatrespect,repurposingformernaturalgaspipelinescancarryrealvalue.Withinthelimitsofexistinginfrastructure(upto7,500km),thiswould,forinstance,reducetransportcostsinEurope55-68%66comparedtobuildingnewpipelines.Forshortdistances,liquidhydrogenshippingcouldappearasanichesolution.67•Forlongdistances—orwherecross-borderpipelineprojectsmaybeinfeasible—hydrogenshouldbeconvertedtoanothercarrierbeforebeingshipped.Conversiontoammonia,forwhichadedicatedtransportinfrastructurealreadyexists,orembeddingitwithinliquidorganichydrogencarriers(subjecttosuccessfulR&Ddevelopment)aresomeofthefrontrunningoptions,butmethanolandmetalhydridesmayalsobepromisingpotentialcarriers.Alloftheseoptionsentailcostlyconversionandreconversionprocesses,makingthemviableatscaleonlyintheabsenceofalternativesorforlong-distancetrade.Whilepartoftheexistingammoniatransportsupplychaincouldbereused,newinvestmentsinportinfrastructureandfleetsareinevitable.Themostpromisingoptionformedium-rangetransportcomesfromdedicatedpipelinesconnectingdemandcenterstoclose-byproductionsitesorimportterminals.Greenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain27globalmarketandassociatedtechnologies,regulation,andtransportinfrastructurecanbeleveragedtobuildacleanhydrogen/ammoniamarket.However,significantnewinvestmentsthroughoutthevaluechainarenecessarytokeeppacewithdemandgrowth.Inaddition,clearingthewayforlarge-scaledevelopmentmayrequireaddressingsecurityconcerns—inparticular,healthandenvironmentalhazardsofmishandledammonia.Liquidorganichydrogencarriers(LOHC)areorganiccompoundsbasedonfossilfuelscapableofabsorbingandthenpotentiallyreleasingdi-hydrogenmolecules.However,thehightemperatureandpressureconditionsrequiredfortheabsorptionchemicalreactionscanbeatechnicalchallenge(150-200°Cand30-50bars),andtheprocessmayrequireexpensivecatalysts.Oncehydrogenhasbeenabsorbed,LOHCspresentthehighlyvaluableadvantagetobestorableandtransportableundernormaltemperatureandpressureconditions.Thus,potentiallyallowingtheuseofexistingoilinfrastructure.HydrogencanberecoveredfromLOHCsthroughdehydrogenation,causingmostoftheenergyloss(25%to35%)oftheprocessandrequiringfurtherpurification.Afterdehydrogenation,theorganiccompoundsshouldbereturnedforanothershippingcycle.Inaddition,transportingthesemoleculescanpresentsecurityconcerns,sincetheycanbetoxic,corrosive,andhighlyflammableifmishandled.Overall,LOHCtransporttendstobemoderatelycapital-intensivebutrequireslargeoperationalcostsduetoenergyconsumptionwhichcanhamperitscompetitiveness.Finally,thistechnologyisstillexperimentalandnotyetavailableforlarge-scaledeployment.OptionsfortransportingpurehydrogenoverlongdistancesUndernormaltemperatureandpressureconditions,hydrogenisaflammablegaswithlowvolumetricdensityandhighvolatility.Short-tomedium-rangetransportofthemoleculecanbedoneviapipelinesatareasonablecost.However,suchinfrastructurecanbehighlycapital-intensiveandsubjecttogeopoliticaltensionsandgeophysicalobstacles(forexample,seatrenches)thatcanmakethemunsuitableforlong-distancetransport.Therefore,hydrogenmustbeeitherliquefiedorconvertedintoacarrierwithmorefavorablechemicalpropertiesbeforereconversiontopurehydrogen.Variouscost-benefitstudies68haveidentifiedliquefiedhydrogen,ammoniacarrier,andliquidorganichydrogencarriersassomeofthemostpromisingoptions.Liquefiedhydrogenhasamuchhighervolumetricdensitythangaseoushydrogen(71.1KgH2/m3vs0.08375KgH2/m3),requiringlessspacetotransportthesamequantity.However,thehydrogenliquefactionprocessrequiredtoreachandmaintainaverylowtemperature(-253°C,just20°Caboveabsolutezero)incurssignificantenergyconsumptionandfinancialcost.Theregasificationofhydrogenisinexpensiveandrequiresnopurificationorchemicalreaction.Overall,theliquefactionprocesscausesenergylossesof30%to36%.Comparedtothecost-competitivenessofpipelinetransportandammoniashipping,liquifiedhydrogenappearstodateasanicheoption.Ammoniaisachemicalproduct(NH3)thatisalreadywidelyusedinthefertilizerindustry,andmorebroadlyinthechemicalindustry.Cleangaseoushydrogencanbecombinedwithgaseousnitrogentoproduceammonia(Haber-Boschprocess),achemicalreactionthatcomeswithenergylossesintherangeof12%to26%.69Theobtainedammoniaisacarbon-freecarrier,whichhasagreatervolumetrichydrogencontent(107.7kgH2/m3).Comparedtohydrogen,theliquefactioncanbeachievedatasignificantlyhighertemperature(-33°C),greatlyfacilitatingcontainmentandloweringtheresultingtransportlosses.Reconversiontopurehydrogenispossiblethroughcracking,whichincursanother13%to34%energyloss,andmightrequireadditionalpurificationafterward.Todate,ammoniaisoneofthemostmatureandoneofthelowestcostoptionsforlong-distancetradeofhydrogen:20MtNH3(4MtH2e)ofammoniaarealreadytradedinternationallyeachyearwithin120dedicatedterminals.TheexistingHydrogenderivativescanbeeasiertocontainandtransportthanthepuremolecule.Furtherconversiontoanothercarrierislikelyunnecessaryforhydrogenderivatives(ammonia,methanol,orSAF),suchthatimports,evenfromverylongdistances,canbemorecompetitivethandomesticsupply,fromlocalorimportedpurehydrogen.Asaresult,someofthemostcompetitivesuppliersaremorelikelytosourcehydrogenderivativesasfinalproducts.Transportcostsbycommoditycandependontechnicalrequirements(forinstance,ammoniashouldbetransportedinrefrigeratedtankers),mass,volumetricdensity,anddistance.Foragivendistance,theleastexpensivecommoditytotransportisSAF,followedbymethanolandammonia.Thelowerthetransportcosts,themoreproducersshouldbeabletoleveragetheircomparativecostadvantagetohelpcapturehighermarketshares.MarketconcentrationcouldthusbehigherforSAFandmethanolratherthanammoniaandpurehydrogen.0123a)HydrogenProductioncostConversioncostTransportcostReconversioncostLocalconsumptionGermanyAustraliaMoroccoPipelineshippingMarineshipping0123b)Ammonia0123c)Methanol0123d)SAFFigure11.IndicativecomparisonofsourcingoptionsforGermanyin2050Source:DeloitteanalysisNote:InGermany,importsarehighlycompetitivethoughdifferentroutesmayprevailforthedifferentcommodities.Forpurehydrogen,importsbypipelinesaremorecompetitivethandomesticsupplyonaverage.Forallofthehydrogenderivatives(ammonia,methanolandSAF),seaborneimportsarecompetitiveoptionsindependentlyondistance.Greenhydrogen:EnergizingthepathtonetzeroPart2.Developingthecleanhydrogenvaluechain29Part3.TheemergenceofaglobalcleanhydrogenmarketGreenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket30ThisoutlookharnessesDeloitte’sHydrogenPathwayExplorer(HyPE),astate-of-the-artmodelofglobalcleanhydrogentrade.HyPEisaglobalcleanhydrogenproductionandtrademodellayingoutcost-efficientsupplypathwaysaccountingforacomprehensivesetofproductionsites(morethan38,000cells),productiontechnologiesandtheirdetailedcosts,andtransportoptionsandtheirassociatedcosts.InlinewiththeInternationalEnergyAgency’sNet-ZeroEmissionpathway,70itdifferentiatespurehydrogenfromitsmainderivatives:ammonia,methanol,andSAF.Theobtainedquantitativeresultsoffergranularanddata-driveninsightsonthestructuringoftheglobalcleanhydrogenmarket,complementedbyadiversesetofkeyeconomicindicatorssuchassupplyclusters’revenuesandfinancingneeds.TheHyPEmodelHyPEisadetailedsimulationmodelthatminimizesthetotalhydrogensupplyanddeliverychaincost(productionandtransporttotheconsumptionpoint)tosatisfyglobalcleanhydrogendemandintheperiodto2050.Demandisrepresentedonanationallevelwhilesupplydrawsonawiderangeofproductionsites,technologies,transportroutes,alongwithtechnicalandeconomicdata(seedetailsinAppendix).•Ontheproductionside,HyPEincludesahighlydetailedrepresentationoflocalrenewablegenerationcapacitiesaccountingforsolarirradiationandwindspeedformorethan38,000geographicalunits(cells).Thisgreenhydrogenproductioncapacityisobtainedatagranularscaleandcompeteswithbluehydrogenpotential,basedonnaturalgasavailabilityfor30producingcountries.•Internationaltraderoutesareatthecoreoftheoptimization,considering15internationalpipelines,95portterminals,andmorethan1,500maritimeshippingroutes.Foreachoftheconsideredcommodities(purehydrogen,ammonia,methanol,andSAF)inaspecificregion,themostcompetitivesupplysolutionisobtained,tradingoffdomesticproductionagainsttheavailableimportalternatives,includingtransport,conversion,and,whennecessary,reconversioncosts.Basedoncost-efficientselectionofcleanhydrogensupplypathways,HyPEprovidesinsightsintovariousmarketdynamicsandbusinesschallenges—forinstance,optimalinfrastructuresizing,investmentneeds,andlevelizedcostofhydrogenaswellastechnologychoiceforhydrogenproductionandtransport.Greenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket31AmarketsetforfastgrowthInachievingclimateneutralityworldwidebythemiddleofthiscentury,Deloitte’soutlookshowsthecleanhydrogenmarketgrowinginseveralstagesoverthecomingdecades:•Intheperiodto2030:Themarketramp-upislikelyunderpinnedbyreplacingcurrentgreyhydrogenproductionwithcleanhydrogen.Projectsinitiallydependonpublicsupporttobreakeven,asillustratedbyprogramssuchastheUSInflationReductionActandInfrastructureInvestmentandJobsAct,theAustralianCleanEnergyFinanceCorporationandregionalstrategies,theEUFit-for-55packageandHydrogenIPCEIprogram,andJapanesedemand-sideR&DsupportschemessuchasGreenInnovationFund.InDeloitte’soutlook,internationaltradeplaysavitalrole,servingsome30MtH2eqin2030,almostone-fifthoftotaldemand.Tradeflowsemergewithinregionalclusters,betweensupplyanddemandhubsinproximity,mostlythroughammoniashipping.Long-termcontractsarecrucialtohelpmitigatequantityrisksandprovidepricestability.•Duringthe2030s:Themarketscalesup,followingtheincreaseindemandasnewendusesofhydrogenmakeinroads.Thedevelopmentofanewtransportinfrastructurebasedondedicatedpipelines,portterminals,andstoragefacilitiesunlocksthepotentialoflong-distancetrade:nearly75MtH2eqin2040.Greenhydrogentechnologieslikelybecomeincreasinglyimportanttotheaccelerationinmarketgrowth.Leveragingeconomiesofscale,theycontinuouslycatchuponcostterms.Morebroadly,inthisperiodcleanhydrogenprojectsbecomelessdependentonpublicsupport.Increasingmarketsizecanalsohelpimproveliquidity,withlong-termcontractsgraduallycomplementedbyspotmarkets.Thosecontractsplayacrucialroleinsecuringstrategicvolumesasoilandgasmarketsmaygraduallydecline.•By2050:Theinternationalhydrogenmarkethasreachedmaturity.Ascostscontinuetofall,supplycapacitiesmassivelyscaleupingreenhydrogentohelpkeeppacewithdemandgrowthoverthe2040s.Majortradehubsareincreasinglyinterconnectedastransportroutesexpand,exchangingalmost110MtH2eqin2050.Oneofthemosttradedcommoditiesisseaborneammonia,morethanhalfofwhichisusedasatemporarycarrierforpurehydrogensupply.However,inrelativeterms,90%ofpurehydrogencouldstillbeproduceddomestically,althoughtherearelargeregionaldifferences.SAFandmethanolaresomeofthemostglobalizedmarkets,withtradecoveringrespectivelyabout44%and30%ofdemandby2050.Newend-usesgainmomentum,andthemarketsizesignificantlygrowstomeetthisdemand,whichcanimproveliquidityandallowsspotmarketstodominatepriceformation.Greenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket32GreenhydrogendominatesthemarketfromthebeginningInthismodel,greenhydrogendominatesthesupplymixfromthestarttoputtheworldontracktowardclimateneutralitybymid-century.Deloitte’soutlookseesglobalproductionofgreenhydrogensoaringfrom115MtH2eqin2030to506MtH2eqin2050,experiencinganaverageannualgrowthrateof7.7%.Withcontinuedcostreductionforsolarpanels,solar-generatedhydrogensupplyshouldbecomemorecompetitiveandis,by2050,thebiggestsourceofcleanhydrogenproduction.Itsshareintotalcleanhydrogenproductiongrowsfromapproximately40%in2030toover60%in2050,comparedto25%and22%forwind-basedhydrogen.Thedeploymentofnewcapacitiesforcleanhydrogenproductioncanbeamajorindustrialchallenge.Cleanhydrogenproductionrequires2,050GWofdedicatedrenewablecapacitytobedeployedin2030,and9,200GWin2050.Solarpowerdominates,with1,600GWand7,900GWdeployedin2030and2050mainlyinChina,NorthAmerica,theMiddleEast,Australia,andNorthAfrica.WindpowerprevailsinNorthAmerica,Europe,andAsia,with450GWand1,300GWdeployedin2030and2050.Thechallengemaybeobviouswhenlookingatthegrowthinrenewableinstalledcapacityobservedworldwidebetween2000and2020,fromlessthan20GWto1,480GW(figure13).AchievingclimateneutralityFigure12.Cleanhydrogensupplybytechnology,2030to2050Source:DeloitteanalysisbasedontheHyPEmodel.010020030040050060020502045204020352030Hydrogenproduction(MtH2eq)BluehydrogenGreenhydrogen(solar)Greenhydrogen(wind)12399731185744711869710328137313392119YearWindPVTotalTotalWindandsolarcapacityinIEA'snet-zeroscenarioWindPV0500010000150002000025000205020402030202020102000Capacitiesinstalled(GW)YearPowersectorProjectionsforcleanH2production18GW220GW1478GW2057GW5018GW9175GWFigure13.Globalrenewablescapacitiesinstalled,2000to2020(historyforthepowersector),2030to2050(cleanhydrogenproduction)Source:Deloitteanalysisandnet-zeroemissionsscenariofromtheInternationalEnergyAgency’s2022WorldEnergyOutlookreport.Greenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket33couldalsoentaildeploymentofrenewablesoutsideofthehydrogenvaluechain:In2050,installedcapacitiesdedicatedtocleanhydrogeninDeloitte’soutlookrepresentonlyabout40%ofthepowersector’sneedsintheInternationalEnergyAgency’snet-zeroemissionspathway.71Theseassetspoweraglobalinstalledelectrolysiscapacityof1,700GWin2030and7,500GWin2050.Thiscanalsobeanenormouschallengewhenconsideringthe1.4GWinstalledcapacityin202272andthe8GW/yearmanufacturingcapacityin2021(todate,electrolyzersareusedmostlyinthechlor-alkaliindustry).Investmentsingiga-factoriesmaybeneededtoquicklysafeguardtherapidgrowthingreenhydrogenproduction.Greenhydrogen,however,canalsocreatesynergieswiththedecarbonizationoftheglobalenergymix.Leveragingonstorageandpowergenerationtechnologies(includingfuelcellsandhydrogen-firedgasturbines),greenhydrogencanhelpintegraterenewablesintothepowersystembyimprovingflexibilityandmitigatingcongestion.73Inaddition,simplifyingpermittingprocessesandloweringthemanufacturingcostsforsolarpanelsandwindturbinescanaidthejointdeploymentofrenewablesforelectrification.Bluehydrogencanbeausefultransitiontechnologytohelpbuildupdemandduringtheramp-upphaseofthehydrogeneconomy.ThiscouldbethecaseforregionswithnaturalgasreservessuchastheMiddleEast,NorthAfrica,NorthAmerica,andAustralia.Thisroleintheramp-upiscontingentonnaturalgasavailabilityandthecomplianceofindustrieswithsomeofthemoststringentenvironmentalstandards,viahighcarboncaptureratesandmassivemethaneemissionreduction.Bluehydrogenproductionpeaksin2040atalmost125MtH2eq,nearlyone-thirdofglobalhydrogenproduction.Asanewinvestmentcyclebeginsinthe2040sandgreenhydrogenbecomescheaper,thebusinesscaseforbluehydrogenmayweaken.Meanwhile,tighteningenvironmentalstandards(regardingunabatedCO2emissionsandupstreammethaneleakages)candiminishitsenvironmentalcase.Itsmarketsharefallsprogressivelybackto15%in2050,correspondingtoaproductionjustabove90MtH2eq.Toavoidbeingstranded,investmentsinbluehydrogenshouldconsiderthewholetransitiondynamics,includingthelifetimeofequipment,environmentalstandards,andtheneedforawidespreaduseofgreenhydrogendevelopmentinthelongrun.GlobaltradeismostlyaboutderivativesGlobaltrade74betweenmajorregionsrepresentsalmostone-fifthofthecleanhydrogenmarketinDeloitte’soutlookperiod,reachingabout110MtH2eqby2050.Thisbreakdowncanbecomparabletothecurrentnaturalgasmarket,inwhichinter-regionalexportsrepresentedjustunderone-quarteroftheworld’sconsumptionbetween2010and2020.75Globaltraderevolvesaroundhydrogenderivatives,whichcanbeeasiertotransportoverlongdistances(figure14).Ammoniadominatesglobaltradethroughouttheoutlookperiod.Thedecarbonizationofexistinghydrogenusesunderpinstradeformation:InDeloitte’soutlook,124Mtofammoniaareexchangedbetweenregionsin2030,accountingfor70%oftradedvolumesinhydrogen-equivalentterms.Asdemandforpurehydrogenscalesup,ammoniacanalsobecomeamoreprevalentlong-distanceshippingoption.Withalmost320Mt,thiscommoditycouldaccountforjustoverhalfof2050globaltradeinhydrogen-equivalentterms.Atthisdate,exportsofammoniaaredominatedbyNorthAfricaandtheMiddleEast,producing168Mtand96Mt,respectively,andaccountingformorethanone-thirdoftotalammoniasupply.MethanolandSAFarenaturallyglobalmarkets.Between2030and2050,aboutone-thirdofmethanolandalmosthalfofSAFaretradedbetweenmajorregions(NorthAfrica,MiddleEast,NorthAmerica,Australia,Europe,etc.),with38Mtofmethanolandnearly60MtofSAFbeingtradedin2050.Likeammonia,methanolandSAFaremucheasiertotransportoverlongdistancethanpurehydrogen,insofarastheydonotrequirereconversionandcanleveragelarge-scaleinternationaltradeinfrastructures.Whenpossible,purehydrogenshouldbeproduceddomestically(over90%ofglobalconsumptionthroughouttheoutlookperiod)orimportedviapipelinesfromneighboringregions—onlyupto2%,duetolimitedcapacities.Still,seabornetradefromhighlycompetitiveregionsviaconversiontoammoniarepresentssignificantvolumesandgrowsfromnearly5.5Mtinhydrogen-equivalenttermsin2030(6%ofsupply)to31Mtin2050(8%).Itcontributestotheprevalenceofammoniainglobaltradeatthisdate(54%ofglobaltradein2050),whichrepresentsoneofthemostconvenient,mature,andcompetitiveshippingoptions.Greenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket34Figure14.Breakdownofthecleanhydrogenmarketbycommoditiesin2050Source:DeloitteanalysisbasedontheHyPEmodel.a)Totalproductionandtradeb)Compositionofglobaltrade7%,purehydrogenviapipeline(7MtH2eq)29%,purehydrogenviaammonia(175MtNH3)25%,ammonia(143MtNH3)33%,SAF(59MtSAF)7%,methanol(38MtMethanol)389MtH2eqPurehydrogen104MtH2eqAmmonia80MtH2eqSAF30MtH2eqGloballytradedviaammonia35MtH2eqGloballytraded25MtH2eqMethanol26MtH2eqGloballytraded7MtH2eqGloballytradedviapipeline7MtH2eqGloballytradedGreenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket35GlobaltradeconnectskeyexportingandimportinghubsHydrogenanditsderivativescanbetradedbetweeninterconnectedhubs.Overall,importingregionsfocusontheclosestcompetitivesupplierstominimizecosts,butalsoseektodiversifytheirmixofsupplierstoenhanceenergysecurity,leveragingonretrofittedandnewgaspipelines(purehydrogen)complementedbycoastalterminals(ammonia,methanol,andSAF).Thedynamicsofdemandgrowth,supplyramp-up,andtransportinfrastructuredevelopmentimplythatthesehubsmaydevelopandconnectatdifferentrates.By2030,cleanhydrogentradebetweenmajorregionsaccountsforover30MtH2eq(19%ofglobalconsumption),mostlydrivenbythedecarbonizationofexistingammoniademand(figure15).Asthecapacityofthetransportinfrastructureremainslimitedatfirstduetoleadtimes,earlytrademostlytakesplacebetweenneighboringregions.•InDeloitte’soutlook,theMiddleEast,NorthAfrica,andAustraliaquicklyharnesstheirexcesslow-costsupplytobecomesomeofthekeyplayersintheglobalhydrogenmarket.TheMiddleEast,historicallythelargestoilandsecond-largestgasexportingregion,leadsglobaltradeinitsearlyyearsandexportsmorethan13MtH2eqby2030,halfofitsdomesticproduction.ItisfollowedbyNorthAfricaandAustralia(7.5MtH2eqofexporteach),benefitingfromsignificantcost-competitivegreenhydrogenpotential.Thesethreebigexportersconcentratenearly90%ofglobalhydrogentradebytheendofthisdecade.Ontopoftheirsignificantcleanhydrogensupplypotential,theseregionsaregeographicallywell-placedtoservethegrowingdemandofmajorclose-bydemandhubs:China,Europe,Japan,andKorea.NorthAfricaisideallyplacedtohelpservethegrowingEuropeandemand,leveragingonexistingbilateralenergyrelations,exceptionalsolarirradiationconditions,existingexportinfrastructures(includingportterminals),andnewpipelineconnectionprojectsforthe2030s,with12MtH2ofpipelinecapacityavailabilityfrom2035on.RegionssuchasNorthAmericashouldaddressdomesticmarketsfirstbeforeturningmoreextensivelytowardexports.InDeloitte’soutlook,theMiddleEast,NorthAfrica,andAustraliaquicklyharnesstheirexcesslow-costsupplytobecomesomeofthekeyplayersintheglobalhydrogenmarket.Greenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket36Figure15.Globalhydrogentradeamongkeyregions,2030a)Worldmapoftradeb)BreakdownoftradebycommoditiesExporters(shareofsupplyexportedinbrackets)Importers(shareofdemandimportedinbrackets)ImporterShareofnetexportsindomesticconsumptionSeabornetransportTradeﬂows>7MtTradeﬂows>2.5MtTradeﬂows>1MtTradeﬂows>0.3MtPipelinetransportExporterSelf-suﬃciency100500400300200HydrogenAmmoniaSustainableaviationfuelsAustralia7.5Mt–(82%)MiddleEast13Mt–(50%)NorthAmerica2Mt–(7%)Restoftheworld0.3Mt–(5%)NorthAfrica7.5Mt–(64%)SouthAmerica0.02Mt–(4%)Sub-SaharanAfrica1Mt–(19%)Restoftheworld0.2Mt–(2%)China13Mt–(28%)JapanandKorea7.5Mt–(87%)India1Mt–(7%)Europe10Mt–(37%)MiddleEast–0.2MtNorthAmerica–0.1MtSouthAmerica0.5Mt(9%)AustraliaChinaEurasiaSub-SaharanAfricaSouthAmericaNorthAmericaIndiaOtherAsiaJapanandKoreaMiddleEastEuropeNorthAfricaSource:DeloitteanalysisbasedontheHyPEmodel.Greenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket37•InDeloitte'soutlook,China,Europe,Japan,andKoreaaresomeofthelargestimportersduringthemarketramp-up.WhileChinadoesnotfacethesamelandavailabilitylimitationsasJapanandKoreaorevenEurope,itsstrongramp-upofcleanhydrogendemandby2030outstripsitsdomesticproductioncapacity,makingChinathebiggestimportersin2030(13MtH2eq).Europeimportsnearly10MtH2eq(37%ofitsdemand),mostlyintheformofammoniaandfromNorthAfrica(morethan70%ofEuropeanimports).Duetoseverelandconstraints,JapanandKoreaholdthehighestimport-to-demandratio,importingnearly90%oftheirinternaldemand(morethan7MtH2eq).Thisstructuralconstraintimpliesthatbothcountriesremainheavilyreliantonglobaltradethroughouttheoutlookperiod.Together,thesefourregionsimportnearly30MtH2eqofcleanhydrogenandderivatives,accountingfornearly95%ofglobalimports.Duetoaslowerdemanduptakeprofile,Indiaremainsamarginalimporterinthecomingdecade.By2050,thevolumeoftradecouldincreasebymorethanthreefoldtoreach110MtH2eq,andrelationsbetweenregionalhubssolidifytohelpformaglobalmarket(figure16).Thestructuringofamorecomprehensivetransportandconversioninfrastructureallowsexportinghubstoexploitthefullpotentialofsupply.Hydrogentradealsodiversifies,includingmethanolandSAFaswellaspipelineandseabornehydrogentradeviaammonia.•Inthesecondhalfoftheoutlookperiodmodeled,NorthAfricaandAustraliahavethegreatestexportpotentialcomparedtotheirdomesticconsumptionandshipabout70%theirdomesticproduction(44MtH2eqand16MtH2eqrespectively).NorthAmericaandtheMiddleEastalsoappearasexportleaders(24MtH2eqand13MtH2eq)despiteheavyinternaldemandthattakesaround80%ofdomesticproduction.NorthAmericaemergesasthesecond-largestexporterduetoitshighrenewablepotentialanditsabilitytoshipbluehydrogenfollowingtheadoptionofbestavailabletechnologiesformethaneleakageabatement.Altogether,thesefourregionsaccountforsome45%ofglobalhydrogenproductionandabout90%ofitsinterregionaltrade.Theyalsoconcentratealmosttheentireammoniatradevolume(nearly60%foronlyNorthAfrica)andnearly90%ofSAFtrade(over30MtH2eq).SouthAmericaandsub-SaharanAfricancountriesalsoactivelytakepartinglobaltrade,withalmost10%oftradedvolumes,nearlyentirelyintheformofSAFandmethanol.•TheParis-aligneddecarbonizationscenariothatismodelledinthisreportresultsinEurope,Japan,Korea,andIndia,accountingformorethan80%ofglobaltrade.WhileJapanandKorearemainhighlydependentonimports,thesituationismorebalancedinEuropeandIndia,whichimport43%(41MtH2eq)and30%(22MtH2eq)oftheirconsumptionofhydrogenandderivativesrespectively.NorthAfricaisstillEurope’smainsupplier—providingtwo-thirdsofitsimportsin2050—asthesetworegionspartiallyrepurposetheirexistingnaturalgaspipelinesforhydrogentransport,withmorethan20MtH2ofavailableannualcapacityfrom2040onwards.TheinterplaybetweendemandandsupplyforhydrogenisstarkinthecaseofIndiaandisbasedontheassumptionthatIndiawillundertakeaccelerateddecarbonizationofitsindustrialandtransportationsectorsusinghydrogen.ThemodelledscenarioisthusfarmoreambitiousthanIndia’sdeclaredtargetofachieving5MtH2eqofgreenhydrogenproductioncapacityby2030.Inthescenariomodelledinthisreport,Indiaisunabletosatisfyitscleanhydrogenneedsbydomesticproductionalone.Tobeself-sufficient,Indiawillneedtosuperscalegreenhydrogenproductionsignificantlyinadditiontomeetingitsstatedambitionsofrenewabledeploymentforthepowersector.Conversely,initiallyanetimporter,Chinaalmostreachesself-sufficiencyby2050asitsdomesticgreenhydrogenproductionfinallycatchesupwithdomesticdemand.Nevertheless,evenafterbecomingtheworld’slargestcleanhydrogenproducer(129MtH2eq),Chinaimportsabout10MtH2eqin2050.Thisaccountsforaround7%ofthecountry’sdemandversus30%in2030.Morebroadly,mostoftheimportingregionsstillproducesubstantialamountsofhydrogen—in2050,forexample,EuropeandIndiaproduceabout55MtH2eqeach.Greenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket38Figure16.Globalhydrogentradeamongthekeyregions,2050a)Worldmapoftradeb)BreakdownoftradebycommoditiesExporters(shareofsupplyexportedinbrackets)Importers(shareofdemandimportedinbrackets)ImporterShareofnetexportsindomesticconsumptionSeabornetransportTradeﬂows>15MtTradeﬂows>10MtTradeﬂows>5MtTradeﬂows>1MtPipelinetransportExporterSelf-suﬃciency10050150200250300350HydrogenAmmoniaSustainableaviationfuelsMethanolAustralia16Mt–(68%)MiddleEast13Mt–(21%)NorthAmerica24Mt–(19%)Restoftheworld0.3Mt–(1%)NorthAfrica44Mt–(74%)SouthAmerica5Mt–(23%)Sub-SaharanAfrica4.5Mt–(24%)Restoftheworld3.8Mt–(14%)China10.5Mt–(8%)JapanandKorea26Mt–(91%)India22Mt–(30%)Europe41Mt–(43%)MiddleEast1.3Mt(3%)NorthAmerica0.1Mt(0%)SouthAmerica2Mt(11%)AustraliaChinaEurasiaSub-SaharanAfricaSouthAmericaNorthAmericaIndiaOtherAsiaJapanandKoreaMiddleEastEuropeNorthAfricaSource:DeloitteanalysisbasedontheHyPEmodel.Greenhydrogen:EnergizingthepathtonetzeroPart3.Theemergenceofaglobalcleanhydrogenmarket39Part4.Onenewmarket,multiplebenefitsGreenhydrogen:EnergizingthepathtonetzeroPart4.Onenewmarket,multiplebenefits40Globalcleanhydrogentradecantriggersignificantgainsintermsofeconomicdevelopment,competitionandefficiency,andoverallenergysecurity.BasedonDeloitte’soutlook,theglobalhydrogenmarketreachesUS$1.4trillionin2050,includingsomeUS$280billionofinterregionaltrade.Theintegrationwithinacapital-intensiveglobalsupplychainfosterslocalactivity,knowledgeacquisition,andtechnologicalprogress.Almost70%ofitbenefitsdevelopingandemergingmarkets,withsignificantco-benefitsforsustainablegrowth.Freeanddiversifiedtradespurseconomicdevelopmentwhilereducingoverallsystemcostupto25%.Additionally,thehydrogenindustry’sscale-upfacilitatesthedeploymentofrenewables,contributingtomeetingelectrificationanddecarbonizationtargets.Finally,Deloitte’spathwayshowcaseshowlarge-scalegreenhydrogenadoption,bydiversifyingthemixofsuppliers,enhancesenergysystems’resiliencetogeopoliticalshocks.EconomicdevelopmentWithcleanhydrogendrivinggrowth,theoverallmarketcangrowsubstantially,fromUS$160billion76in2022—entirelycarbon-intensivehydrogen—tomorethanUS$640billionin2030andUS$1.4trillionin2050.77Themassivescale-upofgreenhydrogenlowerscosts,meaningthatbetween2030and2040,marketsizeincreaseslessinvalue(lessthan1%ofconstantannualgrowth)thaninvolume(9%ofconstantannualgrowth).Asproductivitygainsslowbetween2040and2050,marketgrowthlikelybecomesbalanced.ConsistentwithDeloitte’sregionaldemandoutlook,themarketpotentialislargelylocatedinAsia:Thecontinentcaptures55%ofthevaluein2030,drivenbyskyrocketingdemandinChina(oneoftheworld’slargestproducersthroughouttheoutlookperiod),India,andIndonesia(figure17).AsdemandexpandsinEurope,NorthAmerica,78andtheMiddleEast,themarketdiversifiesby2050,withAsia’sshareshrinkingto46%.Thedevelopmentoftheassociatedglobalvaluechainfosterslocalactivities,createsvalue,andsupportsgreenjobswhilefacilitatingretrainingduringtheenergytransition.Theintegrationwithinacapital-intensivesupplychaincanbeacatalystforeconomicgrowth,withthescale-upofmanufacturing(ofelectrolyzers,solarpanels,windturbines,andmore),production,andtransportcapacitiesboostinglocalactivity.Deloitte'sanalysissuggeststhatthecleanhydrogeneconomycouldsupportuptoonemillionnewjobsperyearby2030,anddoublethatpaceoverthefollowingtwodecades.79Thehydrogeneconomycanbeamajorpartofthebroaderrecompositingoftheenergysector,withcleantechnologiescreatingupto14millionjobsby2030andanother16milliontransferredfromthefossilfuelindustry.80Sincecleanenergyjobstendtobemorelabor-intensivethanfossilfueljobs,81energyemploymentgrowsalongtheenergytransition.82Besides,thecleanhydrogeneconomymayofferaprivilegedconversionpathwayforthefossilfuelindustry’smanytransferableskills—forexample,hydrogentransportandstorage,renewableenergydeployment,andlargeprojectengineering.Alsofosteringproductivitygrowth:thefactthatmuchemploymentincleanenergyishigh-skilled,with60%ofcreatedjobsrequiringapost-secondarydegree,morethandoubletheeconomywideaverage.ChinaSouthAsiaNorthAmericaEuropeSoutheastAsiaMiddleEastAsiaPaciﬁcEurasiaLatinAmericaAfrica2552172652471991941411259163374611015216679618052263946618651265427232030$642billion2040$980billion2050$1,408billion14Figure17.Cleanhydrogenmarketsize(US$billionperyear),2030to2050Source:DeloitteanalysisbasedontheHyPEmodel.Greenhydrogen:EnergizingthepathtonetzeroPart4.Onenewmarket,multiplebenefits41Forexporters,hydrogentradecangeneratesignificantrevenues—aboutUS$280billionin2050inDeloitte’spathway,morethanhalfgoingtodevelopingcountries—withrippleeffectsoneconomicgrowth.Exportrevenues(figure18)mirrorNorthAfrica’sdominantpositioninexportvolumes(US$110billionin2050),followedbyNorthAmerica(US$63billion),Australia(US$39billion),andtheMiddleEast(US$34billion).Thesefourregionscouldaccountformorethan80%oftheexportmarketin2050.NorthAfricaalonecapturesalmost40%oftraderevenuesatthisdate,morethan10timesitsshareintotalmarketsize.WhiletheMiddleEastandAustraliaconcentratemorethan75%ofannualexportrevenuesin2030,leveragingexistinginfrastructurecompatiblewithbluehydrogen,theirmarketsharefallstolessthan15%eachin2050,roughlyonparwithNorthAmerica,asgreenhydrogengraduallytakesover.Alloftheseregionsappeartodirectlybenefitfromaddressingawidermarketaccessthantheirdomesticeconomy.InclusivetradecanspureconomicdevelopmentintheGlobalSouthbysupportinglocalactivity,improvingtradebalance,andfacilitatingtheglobalenergytransition.InDeloitte’spathway,developingcountriescouldaccountforalmost70%ofexportrevenuesin2050,supportingupto1.5millionjobsperyearbetween2030and2050.Globaltradesignificantlyimprovestradebalance—forinstance,inChile(whereitrepresentsmorethan7%ofcurrentGDP83),AlgeriaandMorocco(morethan10%)orEgypt(morethan21%)84—whileprovidingaccesstostrongcurrencies.ThegreenhydrogeneconomycanalsobolstertheenergytransitionintheGlobalSouth,whichisendowedwithrenewableenergyresourcesbutfacesthechallengeofprovidingaccesstomodernenergytogrowingpopulations.85Thefallingcostsofcarbon-neutraltechnologiescanofferdevelopingeconomiesauniqueopportunitytoleapfrogfossilfuelsintheirdevelopmentpath.86Inaddition,greenhydrogencouldimprovecleanandaffordableelectricityaccessbyfacilitatingthedeploymentofrenewablesandimprovinggridbalancing.ThisopportunityisparticularlypressinginAfrica,87where,asof2023,greenhydrogenorammoniaprojectshavealreadybeenannouncedinEgypt,Mauritania,Morocco,Namibia,andSouthAfrica.However,theenergytransitionindevelopingcountriesmaystillbehamperedbyalackofinfrastructureandlimitedaccesstoaffordablefinancing.Internationalcooperationislikelynecessarytochannelresources,sharetechnologiesandknowledge(capacity-building),andeaseaccesstofinancialmarkets.88NorthAfricaNorthAmericaAustraliaMiddleEastEurasiaSouthAmericaSub-SaharanAfricaSouthandSoutheastAsiaEurope2311063392019141310495038613651830.51332030$174billion2040$210billion2050$280billion1121Figure18.Annualexportrevenues(US$billion),2030to2050Source:DeloitteanalysisbasedontheHyPEmodel.Greenhydrogen:EnergizingthepathtonetzeroPart4.Onenewmarket,multiplebenefits42EfficiencygainsfromfreetradeDeloitte’spathwayshowcasesahighlycompetitiveglobalhydrogenmarket.Unlikeoilornaturalgas,thesupplycurveforpurehydrogenin2050—includingeveryproductionrouteandassociatedtransportcosts—couldappearratherflat(figure19).Resultsshowthatin2050,two-thirdsofthedemandforpurehydrogen(260MtH2)couldbeaddressedatasupplycost(thatis,includingproduction,conversion,transport,andreconversioncosts)belowUS$1.6perkgH2eq.Interregionalexchangesappearessentialforsomeland-constrainedregions.ThesupplycurveobtainedforpurehydrogenshowsthecostcompetitivenessandabundantvolumesoftheMiddleEast,NorthAfrica,NorthAmerica,andEastAsia.89Conversely,somedenselypopulatedandindustrializedcountries,suchasIndia,relyonimportstohelpfulfilltheircleanhydrogendemandatacompetitiveprice.Withoutimports,demandcouldonlybemeteitheratahigherdomesticproductioncost(steeperpartofthesupplycurve),orbyusingfossil-basedtechnologies.Freetradecanhelplowertheenergytransition’scost.Historyhasshownthevalueoffreetradeandcompetitiontodeliversignificantwelfaregains.90Bymaximizingresourceuseattheglobalscale,freetradecanlowerthetotalcostofthehydrogensupplychaincomparedtoaprotectionistpathwaywithinterregionalvolumeslimitedtoaquarteroftheiroptimallevel.•TheannualgainsfromglobaltradecouldrangebetweenUS$180andUS$350billion91in2050,upto25%oftotalmarketvalue.ThisiscalculatedbycontrastingDeloitte’spathwaywithanalternativescenario,inwhichleadingcountriesadoptaprotectionistmindsetandunderinvestintransportinfrastructure,resultinginfourtimeslowerglobaltradevolumes.92Inthecaseofpurehydrogen(figure19),theseefficiencygainscanbevisualizedbytheareabetweenthesupplycurvesobtainedforbothscenarios.•Curbingglobaltradebyintroducingtariffsorunderinvestingintransportcanaddsignificantcostsforsupply-constrainedcountries,potentiallydelayingtheglobalenergytransition.Inaddition,tradebarrierscouldincentivizehydrogen-intensiveindustriessuchassteelorammonia-basedfertilizerstorelocatetosomeofthemostcompetitiveregions.Figure19.Globallandedcostcurveforpurehydrogendemandperconsumingregions,2050Levelizedsupplycost(USD/kgH2)Demand(MtH2)Volumesofhydrogenthatcanbesuppliedatgivencosttoageographicalarea(here:Europe)ShapeofthecostcurveinalimitedtradescenarioDemanddestructioninalimitedtradescenario003321WorldregionsforthecentraloutlookEastAsiaEurasiaEuropeLatinAmericaMENANorthAmericaPaciﬁcSub-saharanAfricaLimitedtradesensitivitySupplycurveUnsatisﬁeddemand0400300200100389MtPureH2demandin2050Source:DeloitteanalysisbasedontheHyPEmodel;Thesupplycurveunderlimitedtradecorrespondstoanalternativescenariowhereglobaltradeisreducedfour-foldinvolumes(protectionistmindsetandunderinvestintransportinfrastructure).Theresidualdemand(i.e.,thedemandthatcouldnotbesatisfieddomesticallyduetolimitedtrade)ispricedatthehighestsupplycostobtained(aboutUS$5USD/kgH2).Theareabetweentheoptimalandtrade-constrainedsupplycurves(includingunmatcheddemand)materializesthelatteradditionalsystemcost.ThePacificregionincludesAustraliaIndonesiaandMalaysia.Greenhydrogen:EnergizingthepathtonetzeroPart4.Onenewmarket,multiplebenefits43EnhancedenergysecurityInDeloitte’spathway,greenhydrogen’simportoptionalityandlarge-scaleadoptionhelpimproveoverallenergysecurityandresiliencetogeopoliticalshocks.•Competitiveanddiversified,thecleanhydrogeneconomydiffersnotablyfromtoday’soilandgasmarkets.Thefossilfuelsindustryisanextractiveactivitycharacterizedbymarketconcentration,highmargins,andcartelformation;therecentinternationalturmoilinenergymarketshighlightssomeoftheeconomicvulnerabilitiesthatmayarisefromdependenceonunreliablesuppliers.93Duetogrowingandoverabundantavailabilityofrenewableenergy,greenhydrogenislikelytobealessconcentratedmarket.Themarket’slowentrybarrierscanhelpenhancecompetitionandlimitexcessiveprofits.•Unlikebluehydrogen,greenhydrogenpriceshavenodirectcorrelationwithnaturalgasprices,providingprotectionagainstthevolatilityrecentlyobservedinEuropeandAsia.Therefore,countriescouldgaintheflexibilitytocontrolimports,includingbyselectingtradepartnersbasedonpoliticalalliancestopreventtheuseofhydrogenexportstoexertpoliticalpressure.•InDeloitte’soutlook,thesupplymixofmainhydrogenimportersaremorediversifiedin2050thanwhatcanbeseenintheEuropeanandAsiannaturalgasmarkettoday(figure20).By2050,thetopthreecleanhydrogenexporterstoEuropeandIndiaaccountforaboutone-quarterofthetotalconsumptionintheseregions,comparedtomorethan50%and40%,respectively,fornaturalgasin2021.Besides,bothregionscouldsignificantlyincreasetheirdomesticsupply,from34%fornaturalgasin2021toalmost60%forcleanhydrogenin2050inEurope,andfrom46%to70%inIndia.WhileJapanandKorearelyontheUnitedStatesandCanadatoimport70%oftheircombineddemand,bothcountriessimultaneouslyreducetheirexternalenergyneedsbymorethan40%(670TWh),andcouldeasilyswitchhydrogensupplierstodiversifythemix.Again,internationalcoordinationiscritical—withoutit,someoftoday’smajoroilandgasproducerscouldplayamoreactiveroleinstructuringthemarketbypromotingbluehydrogen,potentiallyimpairingcompetition,globalenergysecurity,andtheenergytransition.Thefossilfuelindustrycanleverageestablishedproductionfacilities,askilledlaborforce,existingenergytraderelations,andnaturalgasreserves.GovernmentsdelayinginvestmentinnewtransportinfrastructureandholdingbackinternationaleffortstochannelresourcestotheGlobalSouthcouldfurtherreinforcethecurrentcentralpositionofoilandgas.•Noncooperationcouldentailriskofmarketconcentration.Insuchanalternativescenario,94someoftoday’smajoroilandgasproducersinitiallydominatetheglobalhydrogentrade.TheMiddleEastwouldaccountforhalfofvolumesin2030,followedbyNorthAmericaandAustralia(20%each).ExportopportunitiesfortheGlobalSouthcouldbedelayedbymorethanadecade,underminingtheirdevelopmentandenergytransitionpathways.Globaltradegraduallydiversifiesthrough2050,NorthAfricaalsobecomingoneofthemajorexportingregions.Yet,marketconcentrationsignificantlyincreasescomparedtoDeloitte’smainoutlook.JapanandKoreamayrelyonAustraliaandtheUnitedStates(75%and20%ofimportsvolumes,respectively).ThesituationcouldbesimilarforIndiaandEurope,with80%and50%ofimportsfromSaudiArabiaandtheUnitedStates.Suchexcessivemarketconcentrationcouldreproducesomepitfallsoftheoilandgasmarketwithhighermargins,greaterpricevolatility,anddepreciatedoverallenergysecurityattheexpenseofimportingcountries,aswiththeenergycrisessparkedbytheRussia-Ukraineconflict.95•Excessiverelianceonbluehydrogencouldincreasetheriskoftechnologicallock-insanddelaytheenergytransition.TheshareofbluehydrogenmaybesignificantlyhigherinDeloitte’ssensitivityscenariowithlimitedcooperation:Quantitiesarealmostone-quarterhigherin2030(70MtH2eq)andtwo-thirdshigherin2050(150MtH2eq).Theresultinghigherresidualandindirectemissions(50MtCO2eqofannualemissionsin2050,aboutthesameastheHungarianCO2emissionsin202196)weakencleanhydrogen’scontributionintacklingglobalwarming.Besides,unlikegreenhydrogen,investmentinbluehydrogeninfrastructure—reformers,CCS,naturalgassupply—likelyhasnostimulatingeffectsonrenewableenergydeploymentandcouldactuallyextendrelianceonunabatednaturalgas,whichisincompatiblewithlong-runclimateneutrality.Suchtechnologicallock-incouldbedetrimentaltogreenhydrogenandmayincreasetheriskofstrandedassets.Yet,bluehydrogeneventuallyfadesawayinanycase,asthetechnology’senvironmentalcaseandbusinesscasebothdiminish.Greenhydrogen:EnergizingthepathtonetzeroPart4.Onenewmarket,multiplebenefits44Figure20.Suppliermixinkeyimportingregionsfornaturalgas(2021)andhydrogen(2050)01000200030004000Naturalgas2021HydrogenNoncooperativesensitivity,2050HydrogenDeloitte’scentraloutlook,2050NaturalgasandhydrogenconsumptioninTWh10%9%7%6%5%24%57%22%9%8%3356%36%11%5%4%10%34%3,181TWh3,971TWh3,181TWhRussiaEgyptAlgeriaMoroccoTurkeyMexicoUSQatarOtherimportsLocalProduction0300600900120015001800Naturalgas2021HydrogenNoncooperativesensitivity,2050HydrogenDeloitte’scentraloutlook,2050NaturalgasandhydrogenconsumptioninTWhUSAustraliaChileEgyptCanadaSouthAfricaMalaysiaQatarRussiaOtherimportsLocalProduction38%32%9%49%68%17%6%9%30%17%13%12%8%20%1,624TWh953TWh953TWhNaturalgas2021HydrogenNoncooperativesensitivity,2050HydrogenDeloitte’scentraloutlook,2050NaturalgasandhydrogenconsumptioninTWhEgyptSaudiArabiaIranTurkeySouthAfricaUAEAustraliaQatarUSOtherimportsLocalProduction0500100015002000250018%5%2%270%24%3%2%69%22%9%815%46%a)Europeb)JapanandKoreac)IndiaSource:DeloitteanalysisbasedontheHyPEmodelandBP,StatisticalReviewofWorldEnergy.Note:Hydrogeninenergytermsisrepresentedinitslowheatingvalue(LHV).Thehydrogennoncooperativescenariodeviatesfromthiscentraloutlookbyadelayinnewtransportinfrastructure,theearlierworldwideadoptionofBestAvailableTechnologies(BAT)forbluehydrogen(2030vs.2040inthiscentralpathway),theabsenceoffinancialsupporttodevelopingandemergingmarkets(currentlevelsofWACCassumed),andthelackofdiversificationstrategyfromthemainimportingregions.Greenhydrogen:EnergizingthepathtonetzeroPart4.Onenewmarket,multiplebenefits45Part5.OverUS$9trillionofinvestmentneededGreenhydrogen:EnergizingthepathtonetzeroPart5.OverUS$9trillionofinvestmentneeded46InvestmentsshouldhappengloballyDeloitteestimatesanoverallglobalinvestmentneedofUS$9.4trillionintheglobalhydrogensupplychainby2050incumulativeterms,withUS$3.1trilliongoingtowarddevelopingeconomies(figure21).Thesefiguresmayseemhigh,butconsiderablylesssowhenspreadout:RaisingUS$9.4trillioninfinancingovera25-yearperiodcorrespondsto23timesglobalinvestmentinoilandgasproductionoftheyear2022.97Thisendeavorislikelymanageableifthedeclineinspendingonoilandgascanbechanneledtocleanhydrogen—somethingthatinternationaloilandgascompanieshavestarteddoing.Assomeofthemainconsumptionregions,China,Europe,andNorthAmericarequireexpenditureofUS$2trillion,US$1.2trillion,andUS$1trillion,respectively.Significantfundingshouldalsoberaisedindevelopingcountriesforexportpurposes(includingalmostUS$900billioninNorthAfrica,nearlyUS$400billioninSouthAmerica,andnearlyUS$300billionineachofSub-SaharanAfricaandCentralAmerica),posingsignificantchallenges.Thehydrogeneconomy’semergencecanbeauniqueopportunitytoattractforeigninvestmentintheGlobalSouth,atrendthatmaybealreadyunderway—the€250millionGermanPtXDevelopmentFundisanexampleofit.AccordingtoDeloitte’soutlook,greenhydrogenproductionaccountsforthebulkofinvestmentswithover75%oftotalrequirements(US$7.2trillion),posingindustrialanddeploymentchallenges(figure22).Capitalspendingforthistechnologyislikelyneededbothinpowergeneration(withUS$3.1trillionandUS$1.5trilliondedicatedto,respectively,themanufacturingandinstallationof7,900GWofPVand1,300GWofwindcapacity)andelectrolyzers(US$2.6trillionfor7,500GW).Rampingupthegreenhydrogenvaluechainrequiresthetimelyscale-upofequipmentmanufacturingandaseamlessdeploymentofrenewableenergyassets.Bluehydrogencapitalexpenditures(US$600billion)areconcentratedinthefirsthalfofDeloitte’soutlookperiod,asthistechnologyhelpstosupportmarketramp-upbeforepeakingaround2040.Figure21.Cumulativeinvestmentsinthecleanhydrogensupplychain(US$billion),20501,0328822596591,1888961,987369111435852280367Source:DeloitteanalysisbasedontheHyPEmodel.Greenhydrogen:EnergizingthepathtonetzeroPart5.OverUS$9trillionofinvestmentneeded47Figure22.Cumulativeinvestmentsinthehydrogenvaluechain(US$trillion),2050$9.4trillionofcumulativeinvestmentsinthehydrogenvaluechainSolarPV33%$3.1TWindpower16%$1.5TElectrolyzers27%$2.6TReformersandCCS6%$0.5TConversion6%$0.6TTransport12%$1.2TSource:DeloitteanalysisbasedontheHyPEmodel.Greenhydrogen:EnergizingthepathtonetzeroPart5.OverUS$9trillionofinvestmentneeded48TransportandconversionassetsshouldnotbeneglectedInterregionaltradeunderpinningthegreenhydrogeneconomylikelycannothappenwithoutthedevelopmentofalarge-scaletransportinfrastructurededicatedtohydrogencommodities.AgainstthebackdropofstronggrowthincleanhydrogentradeinDeloitte’soutlook,majordevelopmentsoftransportnetworksshouldbebroughtonline,includinginlandtransportation,conversionunits,storagefacilities,exportandimportterminals,andmore.Althoughfirstimportprojectscanleverageonexistinginfrastructure,newinstallationsarelikelyneeded,sincethosecurrentlyinusemaynotnecessarilybelocatedwherethebulkofthegreenammoniadevelopmentishappening.Tohelpbuildtheinternationalcleanhydrogenmarket,investmentsshouldbechanneledtowardsanewtransportnetworkconsistentwithworldwidecost-efficientproduction,benefitingbothimportersandexporters.Aboutone-fifthoftotalinvestmentneeds(US$1.7trillion)shouldbededicatedtoconversionandtransportassetstoavoidcostlybottlenecks.•Pipelinetransport,thoughhighlycapital-intensive,isoneofthemostattractiveoptionsforpurehydrogenandcouldrequiremorethanUS$1trillionincumulativeinvestmentterms.Intra-andinter-regionalnetworkscanbeessentialtohelpconnectdemandcenterswithproductionsitesandportterminals.Upto750,000kmofdedicatedpipelinesmaybeneededby2050tohelpconnectthemainindustrialclusters.Theretrofitofexistingnaturalgaspipelinenetworkscanreduceinvestmentrequirements,requiringfivetimeslesscapitalspending.98•Theconstructionofmaritimeinfrastructure(uptoUS$100billion)cansupporttheresilienceoftheglobalhydrogenvaluechain.Long-distanceshippingcandeliversignificantcostsavingswhilefosteringmarketresilience.Unlikebilateralpipelineconnections,maritimeimportterminalscanreceiveexportfromanywhere,providingimportantflexibilitytoswitchsuppliers,ifneedbe.ThesubstitutionofRussiannaturalgasimportsviapipelinestoEuropewithliquefiedgasfromseverallocationsisacaseinpoint.InDeloitte’spathway,about100tankers,mainlydedicatedtoammoniashipping,couldbeneededby2030,withthatfleetfurthertriplingintheperiodto2050.Themaintraderoutesin2050connectNorthAfricatoIndia(70vessels),NorthAmericatoJapanandSouthKorea(around50),andAustraliatoJapanandSouthKorea(around30).•Conversionandreconversionunitsconstituteanothercrucialpartofthecleanhydrogensupplychain(US$500billion).Tohelpfostereconomiesofscale,theseassetsshouldbepreferablylocatedwithinexportingorimportinghubs—thatis,convergingpointsforhydrogenflows—forbothdomesticdemandandexports.TankerfleetrequirementHydrogenderivativescanbeshippedbytankers:specializedvesselsdesignedtocarryliquidsinbulk.Thesizeoftheglobalfleetcoulddependonseveralfactorssuchasdistancetraveled,sailingspeed,andvessels’averagesizeandturnaroundtime.InDeloitte’soutlook,thefleetincreasesovertime,commensuratewithgrowthintrade.About100tankersmaybeneededin2030and300in2050.Ammoniavesselsdominatethefleet,giventhedominanceofthisderivativeininternationaltrade.However,fleetsharefallsfrom95%in2030tojustover80%in2050withrapidgrowthofmethanolandSAFtradefromthelate2030sonward.Deloitteassumesafleetofonlyverylargegascarriers,eachwithcapacityof80,000m3,thelargestcommonsizeforliquidpetroleumgasorammoniashipping,correspondingto53,000deadweighttonnage(dwt)ofammonia,62,000dwtofmethanol,or63,000dwtofSAF.Thedemandfortankerscouldbesatisfiedbypartialrepurposingofexistingfleetsofoilandchemicalstankers(4,887largeandverylargetankersasof2020)andLNGtankers(961largeandverylargetankers).990100200300203020402050AmmoniaSyntheticfuelsMethanol2411399352473817YearNumberofneededvesselsforshippinghydrogenderivativeSource:DeloitteanalysisGreenhydrogen:EnergizingthepathtonetzeroPart5.OverUS$9trillionofinvestmentneeded49InvestmentsshouldtakeplacenowFixedassetsshouldbeplannedwithalong-termview.Investmentinproductionassetsshouldconsideratleasta20-yearlifetimeforthereformersandelectrolyzers,100witha25-yearlifetimeforrenewableassetssuchaswindandsolarpower.101Investmentsinthetransportinfrastructurecanbreakevenina20-yearperiod.102Long-termplanningisthereforecrucialtohelpavoidlock-ineffects,especiallyregardingbluehydrogen.Theplanningshouldprioritizeproductioninfrastructureandtraderoutesthatwithstandtechnological,geopolitical,anddeploymentuncertainties.Forbluehydrogeninparticular,aneconomiclifetimeoftwodecadesimpliesawindowofopportunityfocusedonthetransition’searlydecades.Allenergysectorstakeholders,includingcountries,companies,andotherplayers,shouldworktoeliminatemethaneleakageandresidualemissionsfromCCSshouldbeavoidedbythesecondhalfofthiscentury.Thereplacementofcurrentgreyhydrogenproduction(nearly95MtH2eqin2021103)withcleanhydrogenrepresentsasubstantialno-regretinvestment.Evenifa10-yeardelayweretohindercleanhydrogendemand,no-regretearlyinvestmentcouldbemadeinsomeofthefrontrunnerregionssuchasNorthAmerica,theMiddleEast,NorthAfrica,andAustralia,whichcouldstillproduce16MtH2eq,9MtH2eq,7.5MtH2eq,and3MtH2eq,respectively,in2030(figure23),including2.1MtH2eq,2.2MtH2eq,4.4MtH2eq,and2.4MtH2eqforexports.Insuchascenario,globaltradecouldstillaccountforalmost15MtH2eqin2030.Basedonregionalneeds,fourrobusttraderoutescanbeidentified:NorthAfricatoEurope,AustraliatoAsia(China),NorthAmericatoAsia(JapanandKorea),andtheMiddleEasttoIndia.Therefore,afirstwaveofbothpublicandprivateinvestmentscanandshouldtakeplacenow,ontheserobustproductionandtraderoutes.Someofthemainexporthubsandtraderoutesshouldberobustthrough2050,helpingwiththebankabilityofassociatedprojects.Witha10-yeardelayindemanduptake,globalhydrogentradecouldremainthrough2050:above75MtH2eq,accountingformorethan70%ofthevolumesobtainedinthecentralpathway.Someofthekeyexportingregionsarelikelyunchanged:NorthAfrica(31MtH2eq),Australia(10MtH2eq),NorthAmerica(5.5MtH2eq),andtheMiddleEast(4MtH2eq)concentratemorethan65%ofinterregionaltrade.Thetraderoutesidentifiedfor2030remainresilientin2050aswell:NorthAfricatoEurope,AustraliatoAsia(JapanandKorea),NorthAmericatoAsia(JapanandKorea),andtheMiddleEasttoIndia.Long-termplanningiscrucialtohelpavoidlock-ineffects,especiallyregardingbluehydrogen.Theplanningshouldprioritizeproductioninfrastructureandtraderoutes.Greenhydrogen:EnergizingthepathtonetzeroPart5.OverUS$9trillionofinvestmentneeded50Deloitte’scentraloutlookDelayeddemandsensitivityAnnualtrade(MtH2eq),2030Annualtrade(MtH2eq),2050NorthAfricaEuropeNorthAfricaAsia(China)NorthAmericaAsia(JapaandKorea)MiddleEastIndiaNorthAfricaEuropeNorthAmericaAsia(JapaandKorea)AustraliaAsia(JapaandKorea)MiddleEastIndia421.511.72.122.53.57279122757Figure23.Someofthemostresilienttraderoutes,2030and2050Source:DeloitteanalysisbasedontheHyPEmodel.Greenhydrogen:EnergizingthepathtonetzeroPart5.OverUS$9trillionofinvestmentneeded51Part6.AcallforactionGreenhydrogen:EnergizingthepathtonetzeroPart6.Acallforaction52Helplaythefoundationsforaclimate-orientedmarketToreiterate,achievingclimateneutralitytolimitglobalwarmingisthekeydriverfortheramp-upofthehydrogeneconomyatlocal,regional,andgloballevels.ItentailstheglobalcommitmenttorobustandaccountableclimatetargetsbasedontheParisAgreement.Atamoremicrolevel,sectoralclimate-relatedtargets(in,forexample,thesteelindustryorthetransportsector)canplayacrucialroleintherolloutofhydrogenapplications.Beyondthesettingofcleartargets,thedevelopmentoftransparent,accountable,andpredictabledecarbonizationpathwaysisoneofthekeyenablersofthehydrogeneconomy.Evenifmostofthefundamentaltechnologies—suchaselectrolysis,someindustrialapplications,andfuelcells—arealreadyavailable,scalingupahydrogenmarketlikelyneedsconsiderableinnovationefforts.Ontheonehand,costreductionsandindustrializationshouldbesecuredforexistingtechnologies.Ontheother,thedevelopmentandupscalingofsystemsrequiredtocompletethecleanhydrogenvaluechainarestilltobeachieved,especiallyregardinglong-distancetransportandconversionandreconversionassets.Nationalandregionalhydrogenstrategiescanmakeasignificantcontributiontoallstakeholdersofthehydrogeneconomybyprovidingvisibilityandcredibilityondevelopmentprospectsinproduction,transport,andenduses.However,insuchanascentmarket,uncertaintiesaboutmarketoutlookcanholdbackprivateinvestmentneededtosecureeconomiesofscale.Policysupporttogivevisibilityonopportunitiesthroughoutthevaluechaincouldhelpunlockthemarketramp-up.Thecombinationofaclearvision,ambitioustargets,andacomprehensivesupporttoolkitcanstimulatethepipelineofprojects.ThecurrentEuropeanandUSprogramsandstrategiesnotedpreviouslyarecasesinpoint.Internationalcooperationcanhelpfacilitatefreetradeandmitigatepoliticalfrictionthateconomictransformationgenerates.Thedevelopmentofhydrogenapplicationsindeedcreatesincentivestoshiftsomeactivitiesandmanufacturing—forexample,steelandammonia-basedfertilizer—toregionswithlowestproductioncosts.Politicaleffortstopreventsuchadjustmentscoulddelaytheenergytransition,strengthenhydrogen-intensiveindustries’incentivestorelocate,andgloballyraiseoverallcosts.Incontrast,takingintoaccountregionalspecificitiesinnationalstrategiesandfosteringinternationaldialoguecanhelptoidentifyandsolvethepotentialconflicts.Robustandaccountablecertificationofcleanhydrogenisanotherprerequisiteforthemarketramp-up.Thisrequiresbothclearandtransparentmethodsandacomprehensivetechnicalinfrastructuretohelpenablerobusttrackingandavoiddoublecounting.Theentirecertificationprocesslikelyneedsinternationallyharmonizedapproaches.Asapragmaticapproachandtemporarysolution,systemsofmutualrecognitionofcertificationswouldbeofhighimportanceandurgencygiventhevaryinglevelsofprogressanddifferentrelatedjurisdictions.However,certificationshouldnotonlyfocusonGHGemissionsbutincludeothersustainabilitycriteriasuchasgovernanceandsocialstandards.InviewoftheactiveroleoftheGlobalSouthinthefutureglobalhydrogeneconomy,astrongerinvolvementofactorsfromthesecountriesinthedevelopmentofthesenormsislikelyneededtohelpensureaneconomicandenvironmentallevelplayingfield.Globalalliancestofacilitatethetransferofknow-howandbestpractice,andtoestablishlocalvaluechainsarelikelyneededaswelltohelpbolstertheramp-upandrapidestablishmentofinternationalhydrogenmarkets.Hydrogenproductionandapplicationsystemsbeingpredominantlyhigh-skilltechnologies,internationalcollaborationshouldencompassallstakeholders,includingacademia,industry,andregulators.Nationalandregionalhydrogenstrategiescanmakeasignificantcontributiontoallstakeholdersofthehydrogeneconomybyprovidingvisibilityandcredibilityondevelopmentprospects.Greenhydrogen:EnergizingthepathtonetzeroPart6.Acallforaction53CreateabusinesscaseTounlocktheramp-upofthegreenhydrogeneconomy,itisnecessarytobridgetheexistingcostgapbetweengreyandcleanhydrogenandbetweenconventionalandhydrogen-basedapplications.Oneofthefirsttoolshereiscarbonpricing,whichservestoincreasethecostofGHG-emittingoptionsandhelpreducethisgap.CarbonpriceshouldincludealloftheexternalitiescausedbytherelatedGHGemissions,orbecomplementedbyotherpolicyinstruments.BeyondsupportforR&Dordemonstratorpilotprojects,governmentscanimplementawiderangeofpolicyinstrumentssuchasremovingbarrierstomarketentry,directsubsidies,fiscalincentives,publicguarantees,carbonpricingorcarboncontractsfordifference,orcreatinggreenpilotmarketsforhydrogen-basedproductssuchasgreensteelorgreenchemicals.Oneofthekeychallengesinthiscontextistomaintainconsistencybetweenthepolicysupportmechanismsfortheproductionandtheuseofcleanhydrogentoavoidefficiencylosses,potentiallyhighwindfallprofits,andconsequentlyinsufficientmarketramp-updynamic.Inmanyapplications,thewidespreadadoptionofnewtechnologiesisnecessary.Manyhydrogenapplicationsarenotjustaboutreplacingconventionalenergysourcesorfeedstockswithcleanhydrogencommodities—theycouldalsoentailfulltechnologyswitchesorcapital-intensiverepurposingofassetssuchasgreensteelproduction,ammoniaandmethanoluseinthemaritimetransport,oradoptionofhydrogenfuel-cellelectricvehicles.Addressingthesetechnologychallengesinalloftheircomponents—forexample,coststructures,qualificationneeds,andhabitpersistence—isoneofthekeysuccessfactorsforthedevelopmentofnewbusinessmodels,bothforpolicymakersandfortheindustry.Robustbusinessmodelsforboththeproductionanduseofcleanhydrogenanditsderivativescandeveloponlyifthenecessaryinfrastructureisavailablewithsufficientleadtime.Earlyplanningandrapidcreationoftransportandstorageinfrastructure(includingconversionandreconversionassets)shouldthereforebeacentralcomponentofanyambitioushydrogenpolicy.Thiscanincludesmartmodels,tocompensatefortherisksassociatedwiththetemporaryunderutilizationoftheseinfrastructureduringmarketramp-up.Governmentsandregulatorsalsohaveakeyroletoplaytohelpguidinginvestorstowardsmorereliableinvestmentroutes.Long-termcontractsareexpectedtoplayaprominentrole,especiallyduringmarketramp-up,forinfrastructureinvestorsandoperatorsaswellasforproducersandusers.Reducingrevenuerisksmayrequirelong-termcontractsandassociatedhedgingstrategies,includingpublic-backedguarantees.Suchcontractscanbenecessarytohelpensureinvestments’bankabilityintheearlyphasesofthehydrogenmarketdevelopmentandcouldmitigatepricevolatility,notonlyfordomesticmarketsbutforinternationaltrade.Poolingofhydrogenprocurementorregionalcooperationapproachescanalsoplayanimportantrole.Thedevelopmentofcontractualandmarketinfrastructures—forexample,tradingplatformsandspotmarkets,hedgingproductsandfuturemarkets—shouldbeprerequisitesforviable,lastingbusinessmodels.Whilethecleanhydrogenmarketshouldleverageexistingconventionalcommoditymarkets,newdevelopmentsmayalsoberequiredtohelpaccountforthespecificitiesofthehydrogeneconomysuchascertification.Publicsupportandindustryinvolvementduringmarketramp-upshouldaddressthesedimensionstohelpfacilitatethesemarkets’timelydevelopment.Robustbusinessmodelsforboththeproductionanduseofcleanhydrogenanditsderivativescandeveloponlyifthenecessaryinfrastructureisavailablewithsufficientleadtime.Greenhydrogen:EnergizingthepathtonetzeroPart6.Acallforaction54Ensurelong-termresilienceNationalstrategiesshouldfocusonsupplydiversificationtargets,especiallyintheramp-upphase.Theresilienceofenergyandrawmaterialssupplycouldbecrucialtohelpavoidbottlenecksduringthehydrogeneconomy’sscale-up.Ontheconsumerside,resilientcleanhydrogensupplystructuresshouldbesecuredaswell;marketconcentrationshouldbeavoidedtohelpstrengthenenergysecurity,improvecompetition,andfosterresilience.Bothpublicsupportandcorporatestrategiesshouldexplicitlyfosterallianceswithfutureproductioncountriesandencompassdiversifiedinfrastructure—suchasgigafactoriesforelectrolyzersandrenewables—acrossthevaluechainduringthemarketstructuring.Thehighlycompetitivetransportofhydrogenviapipelinescouldrequirepoliticalsupport,especiallyforthecross-borderinfrastructure.Inafiercelycompetitiveenvironmentandwithheightenedgeopoliticaltensionsinmanypartsoftheworld,pipelinepoliciesshouldbecarefullydesignedandstriketherightbalancebetweenforeignpolicy,energypolicy,andhumanrights.Governmentsshouldputsafeguardsinplacetohelpcopewiththepotentialunderutilizationofpipelines,especiallyintheramp-upphase.Marinetransportationisacrucialflexibilityoptionforthefuturecleanhydrogenmarket.Thetimelycommissioningofexportandimportterminals,aswellastankerfleets’availability,canbeanimportantfacetofaresilience-orientedhydrogenramp-up.Publicsupporttohedgeagainstdefaultrisks—forexample,publicguarantees—onboththeproductionanddemandsidescanhelptochannelinvestmentflows.Repurposingexistingassetscanprovideasignificantshareofthetransportinfrastructure,withtheresultingtransformationplansmitigatingtherisksassociatedwithstrandedassetsinthefossilfuelindustryandfacilitatingtheenergytransition.Morebroadly,Deloitte’soutlookenvisionsthatthehydrogeneconomycouldbeoneofthemajorcomponentsofthetransitionoftheenergysector,includingjobretraining.Ensuringaresilienthydrogensupplyalsoentailstheadoptionofminimumstandardsforstrategichydrogenreservesorotherstockpilingconcepts.Governmentsshouldaddresstechnicalandregulatoryprerequisitesfromthemarket’searlystages,tohelpcopewithpossibletensionsbetweeninitiallyscarcesupplyvolumesduringtheramp-upstage.Aswithoilandnaturalgasstockpiling,governmentsshouldreachinternationalagreementsassoonaspossible.Thehydrogeneconomy’sdirectandindirectcontributionstolocalandregionalvaluecreationcanhelpfostereconomicgrowthandpoliticalstability.Inparticular,hydrogencanhelptoincreasethestabilityandresilienceofexistingandnewtraderoutes,especiallywithfutureproductioncenters.Itshouldthereforealsobesystematicallyincorporatedintodevelopmenttargetsandpolicies.BalancingcompetitionandcooperationInternationalcooperationwilllikelybecrucialtohelpfosterthetimelygrowthofthecleanhydrogenmarket—andtohelpensurealevelplayingfieldacrossglobalregionsandeconomies.Theramp-upofthehydrogeneconomyislikelytoremainastrategicbattlefieldofinternationalcompetitionamongcompanies,regions,andcountriesduringtheentireoutlookperiodtoward2050.Thecurrentcostdifferencebetweencleanandgreytechnologiesmeansthatgovernmentsmayneedtooffersupporttoinitiatemarketramp-up.Thiscouldencouragesomecountriestoengageinaraceforeconomiesofscalestodominatethefuturemarket.Inviewofcleanhydrogen’sroleintheenergytransition,internationalcooperationshouldbesoughtasearlyaspossible.Throughappropriateinternationalagreements,standardsharmonization,andindustrialpolicycoordination,governmentscanleveragesynergiesforclimateandenergypoliciestohelpdeliverasound,growingmarketbenefitingall.Governmentsshouldaddresstechnicalandregulatoryprerequisitesfromthemarket’searlystages,tohelpcopewithpossibletensionsbetweeninitiallyscarcesupplyvolumesduringtheramp-upstage.Greenhydrogen:EnergizingthepathtonetzeroPart6.Acallforaction55Appendix:TheHydrogenPathwayExploration(HyPE)modelGreenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model56Deloitte’sHyPEmodelisadynamicoptimizationmodelfocusingonglobalcleanhydrogensupply.Itprovidescost-optimalproductionandtraderoutesforcleanhydrogen,consideringallpotentialproductionsitesandpossibletransportoptions.HyPErepresentsinadetailedmannerthevaluechainforcleanhydrogenanditsderivatives,fromproductionuntilthepointoffinalconsumption(figure24).Theapproachbuildsonalinearprogrammingmodelchoosingtheleastexpensivewaytosupplyglobalhydrogendemand,representedindifferentdemandclusters,consideringdifferentupstreamoptions(e.g.,greenhydrogenfromrenewables,bluehydrogenfromnaturalgas),transportmodalities(trailers,pipelines,bunkers),physicalmedia(gaseousorliquefiedhydrogen,ammonia),andend-usecommodities(purehydrogen,ammonia,methanol,andsyntheticaviationfuels).Theresultingcoststructure,whiledrivenbyproductioncosts,alsoincludestransportcostsaswellasconversionandreconversioncostsdependingonthetransportoptionandend-userequirement.Theoptimizationcanbeperformedinaglobalway,minimizingtheoverallcostofthehydrogensupplyandtradefrom2025upto2060.Upstreamrepresentation:hydrogenproductionGreenhydrogenInHyPE,greenhydrogencanbeproducedeitherviaelectrolysisofvariablerenewableenergysources(windandsolarpower)orfromprocessesbasedonbiomass(biomassreformation,bio-pyrolysis),whichcaninsomecasesallownegativeemissions.Fromasystem-leveloptimizationperspective,greenhydrogenfrombiomasscanbeproducedtooffsettheresidualemissionslinkedtosomeprocessessuchasbluehydrogenproduction.Withoutthisoffsetopportunity,greenhydrogenproductionfrombiomass(providingnegativeemissions)cannotbeaneconomicallyviableoption,asitissignificantlymoreexpensivethanothercleanhydrogensupplyoptions.Thisstudyfocusesonacleanhydrogenmarketwithoutconstraintsonemissionoffsetting.Therefore,currentanalysisfocusesmainlyongreenhydrogenproductionviaelectrolysis;biomass-basedhydrogenproductionisoutofthescope.TheproductionofgreenhydrogenfromvariablerenewableenergiesdependsonlocalfactorssuchaswindspeedandsolarirradiationaswellastheavailabilityofsuitablelandandwaterFigure24.Hydrogenimportsvaluechain104Source:DeloitteanalysisHydrogenproduction(Insitu)UpstreamMidstreamNationalinlandtransportsandlogisticsInternationaltransportandlogisticsLCOH(Insitu)$/kgH2FOBLCOH$/kgH2CIFLCOH(Supplycost)$/kgH2ExportingpointImportingpointConversion1(Insitu)DomestictransportConversion2(Exportpoint)InternationaltransportReconversion(ifneeded)Greenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model57access.ThemethodologydevelopedforHyPEfortheestimationoffeasiblesolarandwindresourcestoproducegreenhydrogenisbasedonmultiplestudies,105asisthefixedandvariablecostsofrenewableenergyplantsandelectrolyzers.106HyPEcalculatestheavailablewindandsolarpotentialforgreenhydrogenproductionviamappingtheworldwithanadjustablegridfrom0.5°to2.5°cellsthatareprojectedontheselectedcountriesaroundtheglobe,foratotalofupto38,000cells.Foreachcell,bothanannualwindspeedtimeseriesandanannualsolarirradiationtimeseries107areusedtocalculatethesolarandwindcapacityfactorsatthecentroidlocationofthatcell.Assuch,hourlyhydrogenyieldscanbederivedfromtheweatherdatafortheyear2016.Foronshorewindturbines,ahubheightof130metersandacorrespondingpowercurvewereconsideredtoobtainthehourlywindyieldateverycell.Themodelconsidersfixedground-mountedPVsystemswithoptimizedtiltangles(asafunctionofthecelllatitude)torepresentsolarpowerplants.Themaximumavailablelandoneachcellforwindandsolarinstallationshelpstolaythegroundworkforidentifyingthegreenhydrogensupplypotential.Thisavailablelandincludestotalsurfaceofthecell,excludingthelandcoveredwithwaterbodies,forests,naturalparks,andcities,aswellaslandthatiscurrentlyinuse(orplannedtobe)foreconomicactivitysuchasindustryoragriculture.Theserenewablepotentialswereusedtodeterminethepotentialofgreenhydrogensupplyateachcell(figure25).UsingtheENSPRESOdatabaseassumptions,108windturbinesandsolarpanelscanpotentiallybedeployedononly5%and1.5%oftheavailableland.Thecapacitythatcanbeinstalledoveragivensurfacecanbecalculatedusingpowerdensityofsolarandwindpowertechnologies.Thisreportconsiders85MW/km2ofpowerdensityforsolarpowerand10MW/km2foronshorewindpower.109Renewableenergysourcesshouldnotbeinstalledatanyrate,andannualgrowthintherenewableinstalledcapacitiesislikelyconstrainedviatechnology-andcountry-specificdeploymentrates.Thesedeploymentratesaresettomimicindustrialandregulatoryrigiditiesthatpreventtheindustryfrombeingdevelopedovernight.Figure25.Determinationofthemaximumavailablespacefortheinstallationofrenewableenergiesusingland-usedataSource:DeloitteanalysisGreenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model58⎪⎪⎪⎪⎪𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿��,�,��=𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶��,�+∑𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂��,��1+𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊��,�,��∑𝐸𝐸��,��1+𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊��,�,��𝐸𝐸��,��=�𝐶𝐶𝐶𝐶�,��,��×1𝜂𝜂𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒GreenhydrogencostcalculationFigure26.Hydrogenproductiontechnologycostdataincludinginvestmentandoperationandmaintenance(O&M)costsTechnologyEfficiency(%)Lifetime(years)Overnightcost(US$/kW)FixedO&Mcosts(US$/kW)VariableO&Mcosts(US$/kWh)1102030205020302050203020502030205020302050SMR75.875.8252593493444440.8–1.471.68–2.11SMR+CCS72.272.220201397131442390.47–1.180.67–1.22GHR+CCS83.383.3202087087027270.48–1.130.46–0.85ATR+CCS73.573.5152081281224240.50–1.200.48–0.92Pyrolysis57.157.12020231223121041040.2–1.090.14–0.71Alkalineelectrolysis69752020447295740.610.61PEMelectrolysis64.5807958544017130.610.61Source:Deloittecalculations,basedonIEA,111Secketal.112andSchmidt.113CAPEXtech,y—InitialinvestmentsforagivenproductiontechnologytechonyearyOPEXtech,y—MaintenanceandoperationalcostsforagiventechandyearyWACCtech,y,country—WeightedAverageCostofCapitalinthecountryandyearypertechEtech,cell—AnnualenergyoutputpertechonaproductioncellinkilogramsofhydrogenCFh,tech,cell—CapacityFactor:energyproducedoutofonekWofcapacityinstalled,inkWh,perhourh,techonaproductioncellηelectrolysis—Consumptionofelectricityoftheelectrolyzerinkg/kWhlttech—LifetimeoftheproductiontechnologytechconsideredGreenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model59Low-carbonhydrogenfromnaturalgasDeloittehasassessedthedomesticconsumptiontrajectoriesofnaturalgas-producingcountriesandtheircommercialbalancefornaturalgasfollowingtheInternationalEnergyAgency(IEA)’snet-zeropathwayinits2022WorldEnergyOutlook.114Allproducingcountrieswithapositiveexportbalanceandthemainproducingcountrieswithnegativebalance(notablyChina,theUnitedKingdom,andtheUnitedArabEmirates)wereconsidered.Giventhatthesecountrieshavewell-developednaturalgasinfrastructure,productionfacilitiesareassumedtobeinstallednearthelocationofthecurrentexitpointsfornaturalgastrade(pipelineand/orterminal)toavoidadditionalinlandtransportcosts.Thefiguresofnaturalgasproduction,commercialbalanceofnaturalgas,andreservesavailableforeachconsideredcountryhavebeenextractedfromBP’smostrecentStatisticalReviewofWorldEnergy.115TheevolutionofthesefiguresareadjustedtobeinlinewiththeIEA'snet-zeropathway,116assumingnonewinvestmentsinexplorationactivities.Bluehydrogenisconsideredtofollowstrictenvironmentalstandardstobecomeavailableforglobaltrade.Thisreasoningfollowsthedefinitionofsustainableorlow-carbonhydrogenthathasappearedrecentlyonpolicymakers’agendassuchastheEuropeanUnion(EUTaxonomy117),UnitedKingdom(LowCarbonHydrogenStandard118),andUnitedStates(CleanHydrogenProductionStandard119)forthecreationofsustainabilitystandards.Todate,oneofthemoststringentregardingtheGHGfootprintistheUnitedKingdom’s,requiringbluehydrogen’sGHGfootprintin2025tobesmallerthan2.4kgCO2eq/kgH2,coveringdirectemissionsalongwithmethaneemissionsassociatedwithnaturalgassupply.Tohelpidentifythebluehydrogenthatcanbetradedovertheoutlookperiod,Deloitteextrapolatedthismoststringentstandardof2.4kgCO2eq/kgH2in2025tobringittozerointhesecondhalfofthiscentury,asreachingtonet-zeromeansalsoafullScope3emissionreductionintheupstreamaswellasthedownstream(figure27).Asbluehydrogencanneverreachcompletecarbonneutrality—itisimpossibletoabatealloftheupstreamnaturalgasemissionsandtocapturealloftheCO2releasedonthereformation—thisimpliesatotalphase-outofbluehydrogenby2070.Suchaconstraintimpliesthatbluehydrogensupplyshouldpeaknolaterthan2040,asthenewinvestmentsinthereformationplantsshouldbeavoidedfromthisdateontoavoidstrandedassets,assumingaplantlifetimeof30yearsforreformerswithCCS.Twosetsofnaturalgas-basedlow-carbonhydrogensupplytechnologieswithcorrespondingtechnicalandeconomicassumptionsinfigure26areassessed:•ReformerswithCCS:steammethanereforming(SMR),autothermalreforming(ATR),andgas-heatedreforming(GHR),allcoupledwithcarboncaptureandstorage(CCS).ThecalculationoftheaveragecostofCO2transportandstorage120followstheassumptionthatdepletedoilandgasfieldsandrockformationsareavailablewithinareasonabledistancearoundtheproductionsites.121•Methanepyrolysis,includingcarbonblackby-productrevenues,isassumedtobecommerciallyavailablefrom2030onward.Thecostofnaturalgassupplyforlow-carbonhydrogenproductionfollowsregionalnaturalgaspricesofIEA'snet-zeroscenario,whichwerealsoreassessedandfact-checkedbycalculationofwellheadnaturalgaslevelizedsupplycostforeachregion.Thewellheadnaturalgaspriceswereverifiedbybenchmarkingthemagainsttypicalaveragewellheadcostofbasinsofsimilartypeforeachregion:onshore,deep,shallow,orultra-deep.TheestimatedpricesstronglyconvergewithIEA’sregionalnaturalgasprices,asthisstudyfollowsIEA’slogicofnonewinvestmentsinoilandgasexplorationandproductioninanet-zeroworld.Calculatednaturalgaspricesincludenotax;nevertheless,thisstudyaccountsforthecompensationforunabatedCO2emissions(forreformerswithCCS)aswellasupstreammethaneemissionsbyassumingIEA’snet-zerocarbonpricevaluesforeachconsideredregion.122CapturerateofCCSunitsareassumedtobe90%inthebeginningoftheoutlookperiod,increasinglinearlyto95%by2050whichisconsideredtobethemaximalcarboncapturerate123.Foreachcountry,theclimatefootprintofbluehydrogensupplycanbecalculatedviasummingitsresidualCO2emissions(uncapturedCO2withCCS)anditsupstreammethaneemissions(emissionsassociatedwithoilandgasexplorationandproduction,gasgatheringandboosting,andgasprocessing)fromnaturalgasproductionuntilbluehydrogenproduction.Thesevaluesaregatheredfromthecountry-specificscientificpublications,124Figure27.Sustainabilitythresholdthatnaturalgas-basedlow-carbonhydrogenshouldcomplyasaglobaltradabilityprerequisiteSustainabilitythresholdforbluehydrogen(kgCO2eq/kgH2)Year0.00.51.01.52.02.52070205020302.11.3~0Source:Deloitteanalysisbasedontheexistingstandardsandglobalemission-reductiontargets.Greenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model60emissionsreportedtoUnitedNationsFrameworkConventiononClimateChange(UNFCCC),andIEA’sMethaneTrackerDatabase.125Then,theseupstreammethaneemissionvaluesareconvertedtoCO2-equivalent(CO2eq)termsconsideringaglobalwarmingpotential126(GWP)of20years;GWP20ofmethaneisequalto82.5CO2eq.127Deloitteassumestheadoptionofbestavailabletechnologiesinmethaneabatementstartingfrom2040andmaturingby2050,followingdifferenttechnologies’abatementpotentialinIEA’sMethaneTrackerDatabase.128CommodityrepresentationThisstudyconsidersthesupplyofpurehydrogenanditsmainderivativesascommoditiesthatcansatisfythedemandforcleanhydrogen:ammonia(NH3),methanol(CH3OH),andsyntheticaviationfuels(e-kerosene,followingtheC12H26formula).Thecorrespondingconversioncostsfromhydrogenandthespecifictransportcostsforeachcommodityarecalculatedandfollowalinearoptimizationlogic.Theconstraintsontheproductioncapacitiesaresharedforthedifferentcommodities,leadingtoanoptimalchoiceofthecommodityproducedoneachcell,tominimizethetotalcostofhydrogenanditsderivatives’supplyanddeliverycost.MidstreamtransportrepresentationDependingonthedistancebetweenproductionanddeliverypoints,severaltransportationpathsarecurrentlyenvisagedandintegratedintothemodelingframeworkinaccordancewiththeoveralltechnology-neutralapproach.NationaltransportofhydrogenFornationalinlandtransports,multipleoptionsareconsidered:hydrogentrucks(eitherwithcompressedhydrogenorammoniatrucks)andwhenavailableinthecountry,domestichydrogen-repurposedgaspipelines.Forthegreenhydrogensupply,alsooffsiteproductionofhydrogenviaelectricgrid(mainlyforregionswithadvancedpowergridsuchasEurope)isconsideredasanindirecthydrogentransportoption.Thismeansthatgreenhydrogenisproducedintheconsumptionpoints,viatransportingrenewablegenerationtotheelectrolyzerslocatedintheconsumptionsites,viapowergrid.Hydrogenderivatives(ammonia,methanol,andSAF)areconvertedonlyattheconsumptionlocationforthedomesticuse,andattheexportsiteforexportpurposes.InternationaltransportofhydrogenThemainhydrogentransportoptionsacrosscountriesarepipelinesandmaritimeroutesviatankers,transportinghydrogenoroneofitsderivatives.Assumingthatcontinuouslyphasingoutnaturalgasisnecessarytoreachclimate-neutralitytargetsby2050,itisassumedthatnaturalgaspipelinescouldbepartiallyrepurposedforhydrogentransportby2040,orsoonerifaregionalroadmapexplicitlymentionsit.129Someofthesepipelinesareexpectedtobeunidirectional;otherscouldallowbidirectionalhydrogenflowsforanoptimaltradeallocation.ForcalculatingtheLCOHcomponentofhydrogentransmissionbypipeline,assumptionsontheinterconnectors,itsroute,length,andcapacityhavebeencollectedonGlobalEnergyMonitor’sGlobalGasInfrastructureTracker(figure28).130Itisassumedthatrepurposedpipelinescanenablethesamecapacityofthenaturalgaspipelinesbeforerepurposing.Hydrogeninjectiontothepipelinesislocatedaccordingtothegasnetworktopologyandexistingcompressionstations,whereonlyasingleinjectionandwithdrawalpointpercountryisconsidered.Shippingisoneofthemostconvenientoptionstotransporthydrogenaroundtheglobe.Theopportunitytodeveloptheappropriateterminalsformaritimetradehasbeenenabledforeverycountrygeographicallyeligible;landlockedcountriescanstillaccesstheportsoftheirneighboringcountries.Therefore,theHyPEmodelincludes95seaborneterminalsandmorethan1,500traderoutesbetweenthem.CorrespondingmaritimedistancesarecalculatedassumingthatthetankerscannavigatetheSuezCanalbutnotthePanamaCanal.Purehydrogencanbetransportedasliquefiedhydrogen,inLiquidOrganicHydrogenCarriers,orasconvertedammoniabeforereconversionattheimportterminal;thelastoptionistheleastexpensiveoverlongdistances.Hydrogenderivativescanalsobeconvertedbeforebeingexportedviashippingforreducedtransportcosts.Figures29and30presentthecostassumptionsforthetransportofhydrogenanditsderivatives.Greenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model61Figure28.ConsideredretrofittedpipelinesExportingcountryImportingcountryRepurposingyearMaxvolume(MtH2/year)Length(km)USCAN204015.13,848USMEX20405.57302IRNTUR20403.712,577NORBEL204014.21,150TUNITA20306.17155DZAITA20306.171,075DZAESP20403.10757DZAESP20403.10210DZAESP20404.801,082MARESP20404.8045TURGRE20403.07110RUSCHN204013.11,067UZBCHN20406.121,645KAZCHN20407.651,115TKMCHN204037.31,833Source:DeloitteanalysisbasedonGlobalGasInfrastructureTrackerdata.131Greenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model62Figure29.Grid,pipeline,androadtransportcostsforhydrogenandderivativesTransportoptionProductionConversion132(ifany)Transport133Reconversion(ifany)UnitElectricitytransportviathegridforhydrogenproductioninconsumptionpointFromallrenewableenergysourcesavailableinthecellGridInjectionpoint(Consumptionclusterorexportingterminal)US$/kgH2/1000km(2030)Cost=0.45D(2050)Cost=0.39DD:DistancePipelineFromallsourcesavailableinthecell—DependsonthetechnologyandresourcesavailableHydrogenpipelinesCost=0.13D+0.01D:DistanceRoadtrucksGasifiedtrucks(2030)Cost=3.02D+0.29(2050)Cost=2.92D+0.27D:DistanceHydrogentransportvialiquidammoniatrucksAmmoniasynthesisLiquidmethanoltrucks(2030)0.44(2050)0.35(2030)Cost=0.66D+0.05(2050)Cost=0.51D+0.03D:DistanceLiquidammoniatrucksAmmoniacatalyticcracking(2030)0.27(2050)0.22MethanoltrucksMethanolsynthesisLiquidmethanoltrucks(2030)1.60(2050)1.36(2030)Cost=0.51D+0.03(2050)Cost=0.39D+0.02D:DistanceSyntheticaviationfueltrucksSAFsynthesisLiquidSAFtrucks(2030)1.50(2050)1.26(2030)Cost=0.16D+0.01(2050)Cost=0.13D+0.01D:DistanceSource:TheHydrogen4EUproject.134Greenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model63Figure30.ShippingcostsforhydrogenandderivativesTransportoptionCommodityattheexporterportConversion135(Ifany)Transport136Reconversion(Ifany)CommodityattheimporterportUnitHydrogenshippingvialiquifiedhydrogenHydrogenNewdedicatedexportingterminalsincludingstorageLiquifiedhydrogenshippingImporterports:refurbisheddedicatedimportingterminalsHydrogenUS$/kgH2/1000km(2030)Cost=0.09D+0.88(2050)Cost=0.08D+0.68D:DistanceHydrogenshippingviaammoniaHydrogenAmmoniasynthesisLiquifiedammoniashippingAmmoniacatalyticcrackingHydrogen(2030)0.44(2050)0.35(2030)Cost=0.02D+0.09(2050)Cost=0.01D+0.07D:Distance(2030)0.27(2050)0.22AmmoniashippingHydrogenAmmoniasynthesisLiquifiedammoniashippingAmmonia(2030)0.44(2050)0.35Ammonia(2030)Cost=0.02D+0.09(2050)Cost=0.01D+0.07D:DistanceMethanolshippingHydrogenMethanolsynthesisLiquifiedMethanolshippingMethanol(2030)1.60(2050)1.36Methanol(2030)Cost=0.01D+0.08(2050)Cost=0.01D+0.06D:DistanceSyntheticAviationFuelsshippingHydrogenSAFsynthesisLiquidSAFshippingLiquifiedAmmoniashipping(2030)1.50(2050)1.26SAF(2030)Cost=0.01D+0.03(2050)Cost=0.01D+0.02D:DistanceSource:TheHydrogen4EUproject.137Greenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model64Calculationofcountry-specificcostofcapitalAsanyinvestment,thecostofcapitalofcleanhydrogenprojectsshouldreflecttheirriskprofile,includinglocalregulatoryandpoliticalrisks.ThiscanaffectLCOHcalculation.Inpractice,countriesaredividedintosevendifferentgroups,accordingtotheOrganizationforEconomicCo-OperationandDevelopment(OECD)countryriskclassificationforofficiallysupportedexportcredits.138ThelowerandupperboundofcurrentWACClevelsarederivedfromInternationalRenewableEnergyAgencycalculations,139whilefuturevaluesareextrapolatedtomatchtheexpectationsfoundintheliterature.Thismethodologyallowstoapproximateacountry-dependentrisk-adjustedweightedaveragecostofcapitalfortheLCOHcalculation.ThestudyconsidersarangeofWACCgoingfrom6%in2020,ineconomicallystableregionsandcountriessuchasWesternEurope,NorthAmerica,andAustralia,tomorethan12%incountriessuchasIranorArgentinathatfacelong-lastingpoliticalormonetaryinstability(figure31).140WACCtrajectoriesaredecreasing,asprogressiveadoptionofhydrogentechnologiesanduptakeindemandwilllikelylowerprojectsrisksandareconvergingacrosscountrygroups,whichmodelstheeffectsofcreatingfinancialrisktransfermechanismsorresortingtoconcessional(orinternational)finance.Figure31.Country-specificWACCusedinLCOHcomputations0.000.020.040.060.080.100.120.14Group7Group6Group5Group4Group3Group2Group12050204520402035203020252020Country-speciﬁcWACCvalue(%)YearSource:DeloitteestimatesbasedonOECDcountryriskclassification.Note:Groupsofcountriesandregionsaredefinedbythefollowingclassification.Group1:Europe,NorthAmerica,Australia,Chile.Group2:China,SaudiArabia,UnitedArabEmirates.Group3:India,Qatar,Mexico,Morocco.Group4:Colombia,SouthAfrica.Group5:Brazil,Egypt,Turkey.Group6:Namibia,Nigeria,Ukraine.Group7:Argentina,Iran,Tunisia.Greenhydrogen:EnergizingthepathtonetzeroAppendix:TheHydrogenPathwayExploration(HyPE)model65Endnotes1.UnitedNations,“TheParisAgreement,”accessedApril3,2023.2.MaxBearak,“Insidetheglobalracetoturnwaterintofuel,”NewYorkTimes,March11,2023.3.TarekHelmietal.,“Hydrogen:Pathwaystodecarbonization,”Deloitte,2023.4.NoamBoussidan,“Everythingyouneedtoknowabouthydrogeninthecleanenergytransition,”WorldEconomicForum,January12,2023.5.FabioBergamin,“Here’showfertilizercouldbeproducedmoresustainably,”WorldEconomicForum,January10,2023.6.ClimateActionTracker,“CATnetzerotargetevaluations,”accessedApril6,2023.7.H2Global,“H2GlobalStiftung,”accessedApril5,2023.8.IPCC,“SummaryforPolicymakers.In:GlobalWarmingof1.5°C.AnIPCCSpecialReportontheimpactsofglobalwarmingof1.5°Cabovepre-industriallevelsandrelatedglobalgreenhousegasemissionpathways,inthecontextofstrengtheningtheglobalresponsetothethreatofclimatechange,sustainabledevelopment,andeffortstoeradicatepoverty”,2018.9.HenriWaismanetal.,“Keytechnologicalenablersforambitiousclimategoals:insightsfromtheIPCCspecialreportonglobalwarmingof1.5°C”.EnvironmentalResearchLettersVol.14,Nocember2019.10.BehrangShirizadehandPhilippeQuirion,“Theimportanceofrenewablegasinachievingcarbon-neutrality:Insightsfromanenergysystemoptimizationmodel”EnergyVol.255,September2022.11.GondiaS.Secketal.,“HydrogenandthedecarbonizationoftheenergysysteminEuropein2050:Adetailedmodel-basedanalysis,”RenewableandSustainableEnergyReviewsVol.167,October2022.12.NationalRadioAstronomyObservatory,“Whichmoleculesaremostabundantintheuniverseaftermolecularhydrogen?”January2022.13.Ammonia(NH3)canbeproducedviathereactionbetweengaseousnitrogen(N2)andhydrogen(H2)viaHaber-BoschprocesswithnodirectCO2emissions.SeeCollinSmith,AlfredK.Hill,andLauraTorrente-Murciano,“CurrentandfutureroleofHaber-Boschammoniainacarbon-freeenergylandscape,”Energy&EnvironmentalScienceIssue2,December28,2019.14.Methanol(CH3OH)andsustainableaviationfuelcanbeproducedbythereactionbetweenhydrogenandcarbondioxide;seeP.GalindoCifreandOssamaBadr,“Renewablehydrogenutilisationfortheproductionofmethanol,”EnergyConversionandManagementVol.48,Issue2,February2007.Forthesederivativestobeconsideredcleanfromalife-cycleperspective,carbondioxideshouldbeclimate-neutral,eitherextractedfrombiomass(i.e.,originallyremovedfromtheatmospherebyphotosynthesisandmeanttoberemittednaturallyduetobiogenicdegradationprocesses)ordirectlycapturedfromtheairusingchemicalprocesses.15.InternationalRenewableEnergyAgencyinpartnershipwithAmmoniaEnergyAssociation,“Innovationoutlook:Renewableammonia,”May2022.16.InternationalEnergyAgency,“TheFutureofHydrogen,”June2019.17.InternationalRenewableEnergyAgency,“Greenhydrogensupply:Aguidetopolicymaking,”May2021.18.Hydrogen4EU,“Hydrogen4EU:Chartingpathwaystonetzero–2022edition,”December2022.19.NationalGrid,“Thehydrogencolourspectrum,”accessedApril6,2023.20.Inthisreport,theanalysisaggregatesthedemandsforhydrogenanditsderivatives(ammonia,methanol,andsustainableaviationfuel)usinghydrogenequivalent(H2eq)counterparts.Thisunitisdefinedasthemassofhydrogenneededtoproduceofthemassoftheconsideredmolecule.Forinstance,ammoniasynthesisviaHaber-Boschreactionrequires3molsofhydrogen(6g)and1molofnitrogen(28g)toproduce2molsofammonia(34g).Therefore,34gofammoniaisconsideredequivalentto6gofhydrogeninhydrogenequivalentterms:6gH2eq.Inthefollowing,wheneverthemassofhydrogenderivativesisnotexpressedinhydrogenequivalentterms(H2eq),itwillbeexpressedinregularmassunits.21.UKEnvironmentAgency,“Emergingteccniquesforhydrogenproductionwithcarboncapture,”February3,2023.22.InternationalRenewableEnergyAgency,“Greenhydrogensupply:Aguidetopolicymaking,”May2021.23.ThijsVandeGraafetal.,“Thenewoil?Thegeopoliticsandinternationalgovernanceofhydrogen,”EnergyResearchandSocialScienceVol.70,December2020.24.InternationalRenewableEnergyAgencyinpartnershipwithAmmoniaEnergyAssociation,“Innovationoutlook:Renewableammonia.”25.InternationalEnergyAgency,“Electricityconsumption,”accessedApril6,2023.26.InternationalEnergyAgency,“Fossilfuelsubsidiesincleanenergytransitions:Timeforanewapproach?”February2023.27.Ariadne,“SecuringhydrogenimportsforGermany:Importneeds,risksandstrategiesonthewaytoclimateneutrality,”February2022.28.FabianStöckl,Wolf-PeterSchill,andAlexanderZerrahn,“OptimalsupplychainsandpowersectorbenefitsofgreenhydrogenOptimalsupplychainsandpowersectorbenefitsofgreenhydrogen,”ScientificReportsVol.11,July9,2021.29.HaoLietal.,“Safetyofhydrogenstorageandtransportation:Anoverviewonmechanisms,techniques,andchallenges,”EnergyReportsVol.8,November2022.30.JanRosenow,“Isheatinghomeswithhydrogenallbutapipedream?Anevidencereview,”JouleVol.6,Issue10,September27,2022.31.InternationalRenewableEnergyAgencyinpartnershipwithAmmoniaEnergyAssociation,“Innovationoutlook:Renewableammonia.”32.VandeGraafetal.,“Thenewoil?Thegeopoliticsandinternationalgovernanceofhydrogen.”33.Ontheonehand,cleanhydrogenanditsderivativescanreplacecoal,oil,andnaturalgasbothasfeedstockandenergysource.Theavoidedemissionsinthecorrespondingsectorsareequaltothecarbonfootprintofthereplacedfossilinacounterfactualconsumptiontrajectory.Forinstance,inresidentialheating,1kJofhydrogenreplacing1kJofnaturalgasavoids7.28gCO2ofdirectCO2emissions(basedonLHVvaluesofhydrogenandmethanemolecules).Ontheotherhand,hydrogen-basedprocesscanreplacefossil-basedprocesses,withnodirectemissions.Inthiscase,abatedemissionsarecalculatedonacounterfactualsupplytrajectorybasedonthecarboncontentoffossil-basedproducts.Forinstance,insteelmaking,hydrogen-baseddirectreductionprocesscanreplacecoal,avoiding1.9kgCO2thatwouldhavebeenotherwiseemittedviaconventionalcoal-basedprocesstoproduce1kgsteel.Summingavoidedemissionsforeachsectorgiveshydrogen’soveralldecarbonizationpotential.Greenhydrogen:EnergizingthepathtonetzeroEndnotes6634.InternationalEnergyAgency.“ProjectedCostsofGeneratingElectricity2020,”December2020.35.InternationalRenewableEnergyAgency.“RenewablePowerGenerationCostsin2021,”July2022.36.IRENA(2022)GeopoliticsoftheEnergyTransformation:TheHydrogenFactor.InternationalRenewableEnergyAgency,AbuDhabi.VandeGraaf,T.etal.(2020)‘Thenewoil?Thegeopoliticsandinternationalgovernanceofhydrogen’,EnergyResearch&SocialScience,70,p.101667.37.ThisanalysisintegratesbluehydrogenproductionpathwaysformethanolandSAFforcomparisonpurposesevenif,inpractice,greenhydrogenislikelytobethedominanttechnology.Indeed,methanolandSAFproductionrelyingonbluehydrogenrequiresusingCO2asafeedstock,withanintermediatecarbonsequestrationstep.Thisprocesswouldbeequivalenttorelyingdirectlyonfossil-fueltechnologiescoupledwithcarbonsequestration(e.g.,directaircapture),apotentiallycheaperalternative.38.EuropeanCommission,“EUtaxonomynavigator,”accessedApril12,2023.39.UKDepartmentforBusiness,Energy&IndustrialStrategy,“DesigningaUKlowcarbonhydrogenstandard,”April8,2022.40.USOfficeofEnergyEfficiency&RenewableEnergy,“Cleanhydrogenproductionstandard,”September22,2022.41.EuropeanCommission,“Hydrogen,”accessedApril6,2023.42.InternationalRenewableEnergyAgency,“Greenhydrogensupply:Aguidetopolicymaking.”43.Thisstudyconsidersonlyoff-gridelectrolysis,consideredthemostcost-competitivecleanhydrogensupplyoptioninthelongrun.Indeed,electricitymustberenewableforhydrogentobecertifiedasgreen,andoff-gridinstalledcapacitiesthusallowsavingconnectioncosts.44.Capitalexpendituresonrenewableenergycapacitiesultimatelyaffectsthecostofelectricity,whichdoesnotexplicitlyappearinouroff-gridapproach.45.Alkalinetechnologyreliesonelectrodesoperatinginliquidelectrolytes.PEM(protonexchangemembrane)technologyusessolidion-conductinginstead.Bothtechnologiesarecurrentlythemostcompetitiveandaccountfor95%oftheinstalledcapacities.Theyhaveexperiencedsignificantcostreductionsinthepastfewyears,andthistrendisexpectedtocontinue.OthertechnologiessuchasSOEC(solidoxideelectrolysiscells)andanionexchangemembraneselectrolysisareunderdevelopment.46.DamianWatson,JamesT.Edwards,andRebeccaCui,“ConnectingESGassessmentsintothecreditportfolio,”Moody’s,2022.47.AfricanHydrogenPartnerships(2019).GreenAfricanHydrogenBonds,FinancingtheGreenAfricanHydrogenDeal48.Deloitteanalysisbasedonopen-sourceland-usedata,usingtheGeofabrikandMonte-Carlomethods.49.PaulBledsoeandElanSykes,“America’scleanenergytransitionrequirespermittingreform,”ProgressivePolicyInstitute,September2022.50.IEA(2022),“Electrolysers”,InternationalEnergyAgency,Paris.51.DolfGielen,“Criticalmaterialsfortheenergytransition,”InternationalRenewableEnergyAgency,May2021.52.SteffenKiemeletal.,“CriticalmaterialsforwaterelectrolysersattheexampleoftheenergytransitioninGermany,”InternationalJournalofEnergyResearchVol.45,Issue7,February11,2021.53.Tae-YoonKim,“Theroleofcriticalmineralsincleanenergytransitions,”InternationalEnergyAgency,March2022.54.MuhammadHaiderAliKhanetal.,“Anintegratedframeworkofopen-sourcetoolsfordesigningandevaluatinggreenhydrogenproductionopportunities,”CommunicationsEarth&Environment,December6,2022.55.Thefreshwaterconsumptionfromelectrolysiscouldalsobecomparedwiththecurrentglobalwaterconsumptionoftheagriculture(about2,800billioncubicmeters)orindustrial(about770billioncubicmeters)sectors.SeeInternationalRenewableEnergyAgency,“Geopoliticsoftheenergytransformation:Thehydrogenfactor,”2022.56.Khan,M.A.,Al-Attas,T.,Roy,S.,Rahman,M.M.,Ghaffour,N.,Thangadurai,V.,...&Kibria,M.G.(2021).Seawaterelectrolysisforhydrogenproduction:asolutionlookingforaproblem?.Energy&EnvironmentalScience,14(9),4831-4839.57.Japan,Korea,andsomeEuropeancountries(Germany,Belgium,andNetherlands)havebeenpioneersinestablishingbilateralrelationshipswithvariousdevelopingoremergingmarkets(e.g.,Chile,Morocco,Namibia,SouthAfrica,Tunisia,Uruguay)thatwerealreadyunderwayattheendof2021.Thismovementcontinues—forinstance,withthesigningofanEU-EgyptpartnershipinNovember2022.58.DawudAnsari,“ThehydrogenambitionsoftheGulfstates:Achievingeconomicdiversificationwhilemaintainingpower,”StiftungWissenschaftundPolitik,July2022.59.Reuters,“HydrogenpipelinebetweenSpainandFrancetocost$2.6bln.”60.UKDepartmentforBusiness,Energy&IndustrialStrategy,“Hydrogenstrategyupdatetothemarket:December2022,”December2022.61.Ariadne,“SecuringhydrogenimportsforGermany:Importneeds,risksandstrategiesonthewaytoclimateneutrality,”202262.InternationalRenewableEnergyAgency,“Geopoliticsoftheenergytransformation:Thehydrogenfactor,”202263.AliakseiPatoniaandRahmatPoudineh,“Globaltradeofhydrogen:Whatisthebestwaytotransferhydrogenoverlongdistances?”OxfordInstituteforEnergyStudies,August2022.64.Thisprovidesanincentiveforhydrogen-intensivebuteasilytransportablecommodities—e.g.,greensteel—torelocatenearthemostcompetitivecleanhydrogensupplyareas.65.IRENA(2022)GlobalHydrogenTradetoMeetthe1.5°CClimateGoal:TechnologyReviewofHydrogenCarriers.InternationalRenewableEnergyAgency,AbuDhabi.66.DeloitteanalysisbasedonEuropeanHydrogenBackbonedata;seeAnthonyWangetal.,“Analysingfuturedemand,supply,andtransportofhydrogen,”Guidehouse,June2021.“Analysingfuturedemand,supply,andtransportofhydrogen,”Guidehouse,June2021.67.InternationalRenewableEnergyAgency,“Globalhydrogentradetomeetthe1.5°Cclimategoal:Technologyreviewofhydrogencarriers,”April2022.68.MoritzRaab,SimonMaier,andRalph-UweDietrich,“Comparativetechno-economicassessmentofalarge-scalehydrogentransportvialiquidtransportmedia,”InternationalJournalofHydrogenEnergyVol.46,Issue21,March16,2021;InternationalRenewableEnergyAgency,“Globalhydrogentradetomeetthe1.5°Cclimategoal”;PatoniaandPoudineh,“Globaltradeofhydrogen.”69.InternationalRenewableEnergyAgency,“Globalhydrogentradetomeetthe1.5°Cclimategoal”;PatoniaandPoudineh,“Globaltradeofhydrogen.”70.StéphanieBouckaertetal.,“Netzeroby2050:Aroadmapfortheglobalenergysector,”InternationalEnergyAgency,May2021.71.InternationalEnergyAgency,“WorldEnergyOutlook,”October2022.72.InternationalEnergyAgency,“Netzeroby2050,”May2021.73.Withinsomeintegratedenergymarketswithahighshareofrenewables,greenhydrogencanalsohelptotacklenegativepriceissuesinbothEuropeandAfrica;seeJamesKneeboneandAndrisPiebalgs,“RedrawingtheEU’senergyrelations:GettingitrightwithAfricanrenewablehydrogen,”FlorenceSchoolofRegulation,September23,2022.AlsoseeHydrogen4EU,“HydrogenforEurope:Chartingpathwaystoenablenetzero,”2021.74.Inthisstudy,globaltradeismeasuredbyinter-regionaltradebetween12majorworldregions.Therefore,thismetriccanunderestimatetotalinternationaltradelevel.75.BP,StatisticalReviewofWorldEnergy,71stedition,2022.76.MarketsandMarkets,“Hydrogengenerationmarketbytechnology(SMR,POX,coalgasification,electrolysis),application(refinery,ammoniaproduction,methanolproduction,transportation,powergeneration),source(blue,green,gray),generationmode,region–forecastto2027,”August2022.77.Inthisstudy,allmonetaryfiguresarecomputedinconstant2020USdollars.Marketsizearecalculationsarebasedonthevolumesandcostsofsupplyobtainedineachcountry—thatis,themarginalcostofproduction,withadditionaltransport,conversion,andreconversioncostsforimportingcountries.78.WhilethedemandishigherinNorthAmericathaninEurope,theformerregionisanetexporter.Thedifferenceinthemarginalcostofsupplyexplainstheslightdifferenceinmarketsizes.Greenhydrogen:EnergizingthepathtonetzeroEndnotes6779.Jobcreationisexpressedinfull-timeequivalents.Calculationsrelyonseveralemploymentmultipliersgivenborrowedfromtheacademicliterature,includingdirectandindirecteffects,orcomputedfromexistingdata;seeHeidiGarrett-Peltier,“Greenversusbrown:Comparingtheemploymentimpactsofenergyefficiency,renewableenergy,andfossilfuelsusinganinput-outputmodel,”EconomicModellingVol.61,February2017.Thegeographicaldistributionofjobshasbeenadjustedtoaccountforthelocationofmanufacturingactivities(e.g.,supplyofelectrolyzers,PVpanels,windturbinesandreformers)basedontradedataandeducatedguesses.80.JoseM.Bermudez,StavroulaEvangelopoulou,andFrancescoPavan,“Electrolysers,”InternationalEnergyAgency,September2022.81.Garrett-Peltier,“Greenversusbrown.”82.By2030,thenumberofjobsintheenergysectorwouldbemorethan30%undera1.5°Cscenariothaninaplannedenergyscenario.SeeInternationalRenewableEnergyAgency,“Worldenergytransitionsoutlook1.5°Cpathway,”March2022.83.SeeWorldBank,“WorldBankopendata.”ThecomputationsarebasedonGDPandnettradeingoodsandservices,incurrentUSdollarsandfortheyear2020.84.InthecaseofEgyptandMorocco,cleanhydrogenexportrevenueswouldevenentirelyoffsetthetradebalancedeficitsobservedinthepastdecade.85.Africaishometoabout60%ofthemostcompetitivesolarresources.Yet600millionpeople(43%ofthetotalpopulation)lackedaccesstoelectricityin2021,mostofthemlocatedinsub-SaharanAfrica.SeeInternationalEnergyAssociation,“Africaenergyoutlook,”June2022.86.InternationalEnergyAssociation,“Africaenergyoutlook”;InternationalRenewableEnergyAgency,“Geopoliticsoftheenergytransformation:Thehydrogenfactor”;KneeboneandPiebalgs,“RedrawingtheEU’senergyrelations.”87.Africaaccountsforlessthan3%ofglobalCO2emissionsdespiteitsverylargepopulation(one-fifthofhumanity),owingtoacriticalaccesstoenergy.Indeed,Africahastheworld’slowestper-capitaenergydemand,acarbon-intensiveenergymix—excludingtraditionaluseofbiomass,80%oftotalprimaryenergywasfossil-basedin2020—andthefastestpopulationgrowth,withsub-SaharanAfricaexpectedtocontributetomorethanhalfofglobalpopulationgrowthby2050;seeUnitedNations,“Worldpopulationprospects2022:Summaryofresults,”2022.88.InternationalRenewableEnergyAgency,“Geopoliticsoftheenergytransformation:Thehydrogenfactor.”89.Chinaisendowedwithlargereservesofavailablelandsandrenewables,butsomeofthemareremotefromconsumptionandpotentialshippingcenters.Hence,thecountryisaslightnetimporterin2050.90.LorenzoCaliendoandFernandoParro,“EstimatesofthetradeandwelfareeffectsofNAFTA,”ReviewofEconomicStudiesVol.82,Issue1,January2015;MarcJ.MelitzandStephenJ.Redding,“Newtrademodels,newwelfareimplications,”AmericanEconomicReviewVol.105,Issue3,March2015;GeorgeAlessandria,HoragChoi,andKimJ.Ruhl,“Tradeadjustmentdynamicsandthewelfaregainsfromtrade,”JournalofInternationalEconomicsVol.131,July2021.91.Thisrangereflectsthechoiceofpricingtheresidualdemandresultingfromlimitedtrade,eitheratthehighestsupplycostobtainedforcleanhydrogen(aboutUS$5perkgH2),oratthecostofgreyhydrogenincludingitsfullenvironmentalimpact(aboutUS$9USDperkg).Todoso,thisanalysisreliesonasocialcostofcarbonofUS$610pertCO2inUSD2020,derivedfromDeliangChenetal.,“Climatechange2021:Thephysicalsciencebasis,”IPCC,August6,2021.Assuminga74%efficiencyrateforSMR,greyhydrogenreleases12kgCO2eqperkgH2asdirectcarbondioxideandupstreammethaneemissions,henceanenvironmentalcostofaroundUS$7.5perkgH2tobeaddedtotheaverageproductionofaboutUS$1.5perkgofgreyhydrogenin2050.92.Theanalysisdeliberatelydisregardsa“notrade”scenario,whichwouldnotonlybeunrealisticbutoverestimatethegainsfromtradeduetocountrieshighlyconstrainedintermsoflandavailability,andforwhichtheadditionalcostwithregardtothispathwaywouldbeveryhigh.93.BernhardLorentz,“Transformtoreact:Climatepolicyinthenewworldorder,”Deloitte,2022.94.Toassesstheimpactoflimitedcooperation,theanalysisdepartsfromthiscentraloutlookinfourways:(1)Investmentsinnewtransportinfrastructurearedelayeduntil2030,(2)theoilandgasindustrysucceedsinrapidlyimplementingBATforbluehydrogenbecomingavailableworldwidein2030(against2040inthiscentralpathway),(3)developingandemergingmarketsdonotbenefitfromfinancialsupportandraisefundsatcurrentlevelsofWACC,and(4)importersdonotactivelyseektodiversifytheirsuppliermix.95.See,forinstance,naturalgasimportsontheEuropeanNetworkofTransmissionSystemOperatorsforGaswebsite.96.SeeEmissionsDatabaseforGlobalAtmosphericResearch,“CO2emissionsofallworldcountries:2022report,”accessedApril12,2023.97.InternationalEnergyAgency,“Worldenergyinvestment2022,”2022.98.Wangetal.,“Analysingfuturedemand,supply,andtransportofhydrogen.”99.ElectronicQualityShippingInformationSystem,“The2020worldmerchantfleet,”2020.100.Hydrogen4EU,“HydrogenforEurope:Chartingpathwaystoenablenetzero.”101.InternationalEnergyAgency,“Innovationgaps,”May2019;InternationalEnergyAgency,“Solarenergy:Mappingtheroadahead,”October2019.102.InternationalEnergyAgency,“Thefutureofhydrogen:Seizingtoday’sopportunities,”June2019.103.JoseM.Bermudez,StavroulaEvangelopoulou,andFrancescoPavan,“Hydrogen:Energysystemoverview,”InternationalEnergyAgency,September2022.104.FOB:Freightonboard.CIF:Cost,insurance,andfreight.105.PabloRuizetal.,“ENSPRESO–anopen,EU-28wide,transparentandcoherentdatabaseofwind,solarandbiomassenergypotential,”EnergyStrategyReviewsVol.26,November2019;AneliaMilbrandtandMargaretMann,“PotentialforhydrogenproductionfromkeyrenewableresourcesintheUnitedStates,”NationalRenewableEnergyLaboratory,February2007.106.MarshallMiller,ArunS.K.Raju,andParthoSarothiRoy,“Lifecycledataforhydrogenfuelproductionanddelivery,”NationalCenterforSustainableTransportation,October2017;OliverSchmidtetal.,“Thefuturecostofelectricalenergystoragebasedonexperiencerates,”NatureEnergyVol.2,July10,2017.107.Copernicus,“ERA5hourlydataonsinglelevelsfrom1940topresent,”accessedApril13,2023.108.Ruizetal.,“ENSPRESO–anopen,EU-28wide,transparentandcoherentdatabaseofwind,solarandbiomassenergypotential.”109.TimTröndle,“Supply-sideoptionstoreducelandrequirementsoffullyrenewableelectricityinEurope.”PlosOne,August6,2020.110.Fornaturalgas-basedhydrogenproductiontechnologies(SMR,SMRwithCCS,ATRwithCCS,GHRwithCCSandpyrolysis)thevaluesvarybythelocalnaturalgaspriceandmethaneabatementprogress.111.InternationalEnergyAgency,“TheFutureofHydrogen,”June2019.112.GondiaS.Secketal.,“HydrogenandthedecarbonizationoftheenergysysteminEuropein2050:Adetailedmodel-basedanalysis,”RenewableandSustainableEnergyReviewsVol.167,October2022.113.OliverSchmidtetal.“Futurecostandperformanceofwaterelectrolysis:Anexpertelicitationstudy.”InternationaljournalofhydrogenenergyVol.42,December2017.114.InternationalEnergyAgency,“Worldenergyoutlook.”115.BP,StatisticalReviewofWorldEnergy.116.Bouckaertetal.,“Netzeroby2050.”117.EuropeanCommission,“EUtaxonomynavigator.”118.UKDepartmentforBusiness,Energy&IndustrialStrategy,“DesigningaUKlowcarbonhydrogenstandard.”119.USOfficeofEnergyEfficiency&RenewableEnergy,“Cleanhydrogenproductionstandard.”120.ItwasassumedthatCO2storagevolumesatthosesitesareatleast10MtCO2injectedperyear,whichwouldleadtotransportandstoragecostofaroundUS$12.5/metricton(afterconsideringeconomiesofscale)basedontheH21NorthofEnglandreport;seeThomasR.Sadler,SchuylerB.Bucher,andDiksshaSehgal,“Thedrivingforcesofenergy-relatedCO2emissionsintheUnitedStates:Adecompositionanalysis,”EnergyandEnvironmentResearchVol.12,No.2,2022.Greenhydrogen:EnergizingthepathtonetzeroEndnotes68121.IntergovernmentalPanelonClimateChange,“IPCCSpecialReportonCarbonDioxideCaptureandStorage,”2005.122.InternationalEnergyAgency,“Worldenergyoutlook.”123.UKEnvironmentAgency,“Emergingteccniquesforhydrogenproductionwithcarboncapture,”February3,2023.124.Forinstance,RamónAlvarezetal.,“AssessmentofmethaneemissionsfromtheU.S.oilandgassupplychain,”ScienceVol.361,No.6398,June21,2018;JingtingZhangetal.,“IncreasedgreenhousegasemissionsintensityofmajorcroplandsinChina:Implicationsforfoodsecurityandclimatechangemitigation,”GlobalChangeBiologyVol.26,Issue11,November2020.125.InternationalEnergyAgency,“Methanetracker,”February21,2023.126.Globalwarmingpotential(GWP)isoneofthemostwidelyusedclimatemetricstoassesstherelativepotencyofdifferentGHGemissions(suchasCH4),incomparisontothereferencegas:CO2.GWPcanbeestimatedoverachosentimeframe,20(GWP20)and100(GWP100)yearsbeingthemostcommontimeframes.Bothmetricshaveevolvedtobedefaultmetricsinthepolicyarena.Mostscientificliterature,assessingtheimpactsofgreenhousegasesonclimatechange,assesslongertimeeffects,usingGWP100.However,themostrecentIPCCassessmentreporthighlightsthatthemetricdependsontheconsideredcontextandtheperiodduringwhichtheCO2emissionsshouldbestabilizedintheatmosphere.127.AccordingtoSamAbernethyandRobertB.Jackson,“Globaltemperaturegoalsshoulddeterminethetimehorizonsforgreenhousegasemissionmetrics,”EnvironmentalResearchLettersVol.17,No.2,February9,2022,incaseofchoosingGWPasthemetric,theconsideredreferenceGWPperiodshouldincludetheperiodbetweentheassessmentyear(2023)andthemethaneconcentrationstabilizationyear(2045),thatisclosesttoGWP20.128.Moreprecisely,theHydrogen4EU,“HydrogenforEurope:Chartingpathwaystoenablenetzero,”BATadoptiontimelinehasbeenpostponedto2040toaccountforthisstudy’sglobalscope.129.TheEuropeanHydrogenBackboneprojectassumestheavailabilityofEuropeanhydrogentransmissionpipelineavailabilityby2030,andpartialrepurposingofnaturalgaspipelinesconnectingNorthAfricatoEuropefrom2040onward;seeWangetal.,“Analysingfuturedemand,supply,andtransportofhydrogen.”“Analysingfuturedemand,supply,andtransportofhydrogen.”130.FollowingtheEuropeanREPowerEUplan(inresponsetoRussia’sinvasionofUkraine),thecurrentstudyexcludespotentialcommoditytradesbetweenRussiaandtheOECDcountriesfromthetradeoptions.131.GlobalEnergyMonitor,“Globalgasinfrastructuretracker.”132.Conversionandreconversioncostsaccountfortheinvestmentcostsoftheconversionreactorsandelectricityconsumptionfortheprocesses.ElectricitypricesaremodeledandcalculatedseparatelyforeachcountryandvarybetweenUS$15/MWhandUS$150/MWhin2030andUS$20/MWhandUS$175/MWhin2050,dependingontheconsideredcountry.133.Transportcostsaccountfortheinvestmentsandoperationandmaintenancecostsoftheelectrictransmissionlinesandassociatedpowerelectronicsforthetransportviapowergrid,forinvestmentsinvehicles,compression,andfuelcostsfortransportviatrucksandfortherefurbishmentandcompressioncostsfortransportviarefurbishednaturalgaspipelines.Methanolandsyntheticaviationfuelscanbetransportedinthesametankersasammonia.Therefore,fixedandvariabletransportscostsofthesehydrogenderivativescanbederivedfromtheextrapolationoftransportscostsofammoniaviaastochiometricanalysisbasedontheirmassandvolumetricenergydensities.134.Hydrogen4EU,“Hydrogen4EU:Chartingpathwaystonetzero–2022edition,”December2022.135.Conversionandreconversioncostsaccountsfortheovernightcostsoftheconversionandreconversionreactors,fortheirannualoperationandmaintenancecostsandfortheelectricityconsumptionfortheconversionandreconversionprocesses.Thisanalysismodelsandcalculateselectricitypricesseparatelyforeachcountry;theyvarybetweenUS$15/MWhandUS$150/MWhin2030andUS$20/MWhandUS$175/MWhin2050,dependingonthecountry.136.Shippingcostscomprisetheinvestmentsandfixedoperationandmaintenancecostsoftheshipmentterminals,theovernightandannualoperationandinvestmentcostsofthetankersforshipping,andfuelcostsofthetankers,levelizedperkgofcommodityshipped.137.Hydrogen4EU,“Hydrogen4EU:Chartingpathwaystonetzero–2022edition,”December2022.138.OECD,“Countryriskclassification,”accessedApril13,2023.139.InternationalRenewableEnergyAgency,“Globalhydrogentradetomeetthe1.5°Cclimategoal.”140.Groupsofcountriesandregionsaredefinedbythefollowingclassification.Group1:Europe,NorthAmerica,Australia,Chile.Group2:China,SaudiArabia,UnitedArabEmirates.Group3:India,Qatar,Mexico,Morocco.Group4:Colombia,SouthAfrica.Group5:Brazil,Egypt,Turkey.Group6:Namibia,Nigeria,Ukraine.Group7:Argentina,Iran,Tunisia.Greenhydrogen:EnergizingthepathtonetzeroEndnotes69Prof.Dr.BernhardLorentzDeloitteCenterforSustainableProgress(DCSP)FoundingChairPartnerDeloitteGermany+4915114881437blorentz@deloitte.deDr.JohannesTrübyDeloitteEconomicsInstitutePartnerDeloitteFrance+33155616211jtruby@deloitte.frDr.PradeepPhilipDeloitteEconomicsInstitutePartnerDeloitteAustralia+61416214760pphilip@deloitte.com.auDr.FelixChr.MatthesÖko-Institut,InstituteforAppliedEcologyGermany+4930405085381f.matthes@oeko.deBernhardisManagingPartnerandtheFoundingChairoftheDeloitteCenterforSustainableProgress(DCSP).Hehasbeenworkingonclimatechange,energypolicyandtheconsequencesforpolitics,industry,andsocietysincethe1990s.Bernhardisarenownedpolicyadvisor,especiallyfocusingonglobalenergyanddecarbonizationstrategies.Inhisrole,heactsattheinterfacebetweengovernment,industryandacademia,advisingclientsintheautomotive,chemical,basicmaterialsandfinancialindustries.JohannesisaPartnerinEconomicAdvisoryatDeloitteFranceandaspecialistinenergymarkets.Hehasextensiveexperienceinissuesofenergysystemmodelingandprospectivesimulations.Johanneshasbeenadvisingclientsoncleanhydrogenoverthelastthreeyearsfocusingongovernmentroadmaps,industrydecarbonizationandhydrogenbusinessmodels.HejoinedDeloitteafterseveralyearsattheInternationalEnergyAgencywhereheworkedfortheWorldEnergyOutlook.PradeepPhilipisapartnerleadingDeloitteAccessEconomicsinAsiaPacific.Withdeepexpertiseineconomics,Pradeephasoperatedasaseniorgovernmentbureaucratatthehighestlevelofpublicpolicy.HeisanationalBoardmemberofCEDAandamemberoftheAdvisoryBoardoftheMelbourneSchoolofGovernmentattheUniversityofMelbourne.FelixChr.MatthesisresearchcoordinatorforenergyandclimatepolicyattheInstituteforAppliedEcology(Öko-Institut)inBerlin,Germany.HeservedasascientificmemberoftheGermanBundestag’sStudyCommissiononSustainableEnergyfrom2000to2003andwasappointedin2011asamemberoftheAdvisoryGrouptotheEuropeanCommissionontheEnergyRoadmap2050.Hisworkfocusesontheanalysisofdecarbonizationstrategiesandthedevelopmentofpolicyinstrumentsforaclimate-neutralfuture.AuthorsGreenhydrogen:EnergizingthepathtonetzeroAuthors70SébastienDouguetDeloitteEconomicsInstituteDirectorDeloitteFrance+33671130855sdouguet@deloitte.frDr.EmmanuelBovariDeloitteEconomicsInstituteManagerDeloitteFrance+33632017014ebovari@deloitte.frAugustinGuillonDeloitteEconomicsInstituteConsultantDeloitteFrance+33140881511aguillon@deloitte.frDr.BehrangShirizadehDeloitteEconomicsInstituteManagerDeloitteFrance+33670268419bshirizadeh@deloitte.frAurélienAilleretDeloitteEconomicsInstituteConsultantDeloitteFrance+33158379420aailleret@deloitte.frGreenhydrogen:EnergizingthepathtonetzeroAuthors71GlobalcontactsJenniferSteinmannGlobalSustainability&ClimatePracticeLeaderjsteinmann@deloitte.comTarekHelmiGlobalHydrogenLeaderthelmi@deloitte.nlStanleyPorterGlobalEnergy,Resources&IndustrialsLeadersporter@deloitte.comWillSymonsAsiaPacificSustainability&ClimateLeaderwsymons@deloitte.com.auDr.ThomasSchlaakGlobalPower,Utilities&RenewablesLeadertschlaak@deloitte.deMarkVictorAfricaSustainability&ClimateLeadermvictor@deloitte.co.zaAspecialthankstothefollowingindividualswhoprovidedthesupporttomakethisreportpossible:AshishGuptaBlytheAronowitzBradGoosenChaanahCrichtonCharbelBouIssaDavidGabrielDhairyaRajaFreedom-KaiPhillipsGrzegorzJurczyszynJuliaRutherfordLydiaMarinMattMcGrathMatthewBudmanMeredithMazzottaMichelleVarneyNazemElKhatibRichardBaileySueHarveyBrownTraceyMcQuearyUttkarshShardoolAsharWillSymonsGreenhydrogen:EnergizingthepathtonetzeroGlobalcontacts72DeloitteEconomicsInstituteThepaceandscaleofglobaleconomic,social,environmental,anddigitaldisruptionisrapid,andweallnowoperateinaworldthatwenolongerreadilyrecognize.Thiscreatesaneedtounderstandhowstructuraleconomicchangewillcontinuetoimpacteconomiesandthebusinessesinthem,andthelivelihoodsoftheworld’scitizens.Inpursuitofeconomicprosperity,progressiveorganizationsneedfuture-focused,trustedadviserstohelpthemnavigatecomplexityanddeliverpositiveimpact.TheDeloitteEconomicsInstitute(the“Institute”)combinesforesightwithsophisticatedanalysistoshapeandunlockeconomic,environmental,financial,andsocialvalue.Connectingleadingglobalinsightandlocalknowledgewithanindependentperspective,theInstituteilluminatesfutureopportunitiesanddrivesprogress.TheInstitute’seconomicrigorcomesfromitscutting-edgeanalytictools;experienceworkingwithbusinessesandgovernments;andtheexpertiseofDeloittefirmpractitionerswhohelpshapepublicpolicy,deliverbusinessinsights,andinforminvestmentstrategy.TheInstitutesharespracticalpolicy,industryknow-how,andevidence-basedinsightstohelpbusinessesandgovernmentstacklethemostcomplexeconomic,financial,andsocialchallenges.Withmorethan400economistspracticinginDeloittefirmsacrossAsiaPacific,theAmericas,andEurope,theinstitute’sdepthandbreadthofexperienceismatchedbyastrongunderstandingoftrendsinglobaleconomiesandtheireffectonbusiness.ItsdedicatedteamofeconomistsworkscloselywiththeDeloittenetwork’sindustryleadersacrosstheglobetoapplyeconomicthinkingandcommercialacumentoeverydaybusinessproblems.TheInstitutepridesitselfonrigorousqualitativeandquantitativeanalysisandissupportedbyproprietaryandspecialistmodelsrefinedovermanyyears.TheInstitute’shighlyqualifiedeconomistspracticinginDeloittefirmshaveastrongreputationforobjectivityandintegrity.AllclientservicesofferedbytheInstituteareperformedbypractitionersatDeloittefirms.FormoreinformationontheDeloitteEconomicsInstitute,pleasevisitthewebsite:https://www.deloitte.com/an/en/services/financial-advisory/services/economics-advisory.htmlGreenhydrogen:EnergizingthepathtonetzeroDeloitteEconomicsInstitute73DeloitteCenterforSustainableProgressTheDeloitteCenterforSustainableProgress(DCSP)isfocusedonaddressingchallengesandidentifyingopportunitiesinlinewithreachingthegoalsoftheParisAgreement,bydrivingadaptationandmitigationactivities,fosteringresilience,andinformingdecarbonizationpathways.Byassemblingeminentleadersandinnovatingthinkers,theDeloitteCenterforSustainableProgressexploreseffectiveandground-breakingsolutions—andcollaboratestoenableactiononthecrucialglobalchallengesfacinghumanity.Greenhydrogen:EnergizingthepathtonetzeroDeloitteCenterforSustainableProgress74AboutthisPublicationThiscommunicationcontainsgeneralinformationonly,andnoneofDeloitteToucheTohmatsuLimited(“DTTL”),itsglobalnetworkofmemberfirmsortheirrelatedentities(collectively,the“Deloitteorganization”)is,bymeansofthiscommunication,renderingprofessionaladviceorservices.Beforemakinganydecisionortakinganyactionthatmayaffectyourfinancesoryourbusiness,youshouldconsultaqualifiedprofessionaladviser.Norepresentations,warranties,orundertakings(expressorimplied)aregivenastotheaccuracyorcompletenessoftheinformationinthiscommunication,andnoneofDTTL,itsmemberfirms,relatedentities,employees,oragentsshallbeliableorresponsibleforanylossordamagewhatsoeverarisingdirectlyorindirectlyinconnectionwithanypersonrelyingonthiscommunication.DTTLandeachofitsmemberfirms,andtheirrelatedentities,arelegallyseparateandindependententities.AboutDeloitteDeloittereferstooneormoreofDeloitteToucheTohmatsuLimited(DTTL),itsglobalnetworkofmemberfirms,andtheirrelatedentities(collectively,the“Deloitteorganization”).DTTL(alsoreferredtoas“DeloitteGlobal”)andeachofitsmemberfirmsandrelatedentitiesarelegallyseparateandindependententities,whichcannotobligateorbindeachotherinrespectofthirdparties.DTTLandeachDTTLmemberfirmandrelatedentityisliableonlyforitsownactsandomissions,andnotthoseofeachother.DTTLdoesnotprovideservicestoclients.Pleaseseewww.deloitte.com/abouttolearnmore.©2023.Forinformation,contactDeloitteToucheTohmatsuLimited.DesignedbyCoReCreativeServices.RITM1374627

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