Global hydrogen investment to grow 25-fold by 2040, Bloomberg predicts
Global annual investments in hydrogen totalled $1.5bn between 2018 and 2020, but the average could be $38bn by 2040, a new Bloomberg Intelligence report claims.
Published this week to mark the launch of a new ‘Hydrogen Theme Basket’ and global dashboard on the topic for the Bloomberg Intelligence (BI) website, the report states that “a global climate push to decarbonise industries most in need of environmental remediation could turn hydrogen from a cottage sector into a behemoth with the help of government subsidies that attract investment to meet net-zero emissions targets”.
As such, hydrogen generation and related infrastructure and services could represent a $2.5trn global investment opportunity through to 2050. Sectors set to take a lion’s share include energy generation, chemical and metallurgic firms, with those already implementing low-carbon technologies set to benefit more than those lagging on decarbonisation.
Specifically, BI expects global annual investment in the hydrogen sector to average $38bn between 2020 and 2040, rising to $181bn between 2041 and 2070. The need for nations to meet net-zero targets is cited as a primary driver for scaling in this first timeframe, and the maturity of technologies and increasing energy demand cited as drivers post-2041.
Under BI’s projections, hydrogen will account for 10% of the world’s final energy consumption by 2050. The proportion will be higher in marine transport (50%), road transport (25%) and aviation (25%) than other sectors, with building heating behind the average at just 5%. Instead, ground and air-source heat pumps will be the primary technology.
While hydrogen is not presently a major sector, BI believes that some companies are poised to gain an ‘early mover advantage’. They include Shell, Orsted, Engie and Neste in the energy sector and Alstom and ITM power in the industrials and equipment sectors.
There is, however, the question of ensuring that growth is truly green. More than 90% of the hydrogen produced globally in 2020 used fossil-fuel-based processes, and criticism is mounting around ‘blue hydrogen’, which is produced using natural gas but co-located with carbon capture technologies.
BI predicts that new national legislation, including subsidies, will help to displace ‘grey’ hydrogen, but that questions about whether ‘green’ hydrogen will be the primary replacement remains. “Water supply constraints, costly components and relatively low energy density are key challenges for green hydrogen,” the report states. It forecasts that ‘grey’ hydrogen will account for less than half of global output by the mid-2030s and continue to decline steeply through to 2070.
The EU is named as a policy leader on green hydrogen. The bloc has a pledge to deliver at least 6W of green hydrogen capacity by 2030 – a feat which will take €150bn of investment, to derive from both public and private sources. Questions remain about whether ‘blue’ or ‘turquoise’ hydrogen generation will be included in accounting towards this target.
In the UK, the long-awaited Hydrogen Strategy is due imminently, following Covid-19-related delays. It will build on the Government’s initial £500m investment in the Ten Point Plan – dedicated to help deliver an ambition to host 5GW of electrolyser capacity by the end of the decade.
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