Towards a resilient and cost-competitive clean hydrogen economy: the future is green

Abstract

Clean hydrogen is now clearly recognised as one of the key elements in achieving climate neutrality. However, the overall structure of the future clean hydrogen market is still subject to many uncertainties, particularly the geographical distribution of supply, potential trade routes, and associated investments including the transport infrastructure. To shed light on these issues, we develop a first-of-its-kind clean hydrogen supply and delivery optimisation model to identify the lowest-cost trajectories towards a global clean hydrogen market. Assuming an active role of clean hydrogen in decarbonisation of hard-to-abate sectors (notably heavy industries and heavy-duty transport), achieving climate neutrality by 2050 requires the development of a 170 MtH_2eq (hydrogen equivalent) clean hydrogen market by 2030, rising to nearly 600 MtH_2eq by 2050. Our findings show that supply should be dominated by renewable hydrogen from the outset (two-thirds of supply in 2030) and exceed 85% by 2050. Global trade plays a key role in minimising the costs, and should meet around one-fifth of the total demand between 2030 (32 MtH_2eq) and 2050 (nearly 110 MtH_2eq). It is dominated by hydrogen-derived molecules (ammonia, methanol and e-kerosene), which are easier to transport over long distances. We identify the main trade routes linking North Africa to Europe, the Middle East to India, Australia to China, and North America to Japan and Korea. We show that these routes are resilient to delays in the growth of hydrogen demand, boosting confidence in the investments to be made. Finally, we show that global trade is essential to facilitate the development of a cost-competitive and resilient clean hydrogen market.