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The new Trump administration is not expected to slow the sectors momentum. By Michael Puttré .
Hydrogen as an alternative fuel and electricity source made substantial headway in 2024, with a number of significant projects coming to life on both the production and consumption sides. Analysts see the new year bringing more opportunities for the hydrogen industry, even under a potentially skeptical new Trump administration.
“There is uncertainty in the hydrogen space, but we are seeing continued optimism as hydrogen is ultimately supported by oil and gas,” said Kyle Hayes, partner and co-chair of the hydrogen practice at New York-based law firm Foley & Lardner. “So as an asset class, hydrogen continues to make sense under a Trump administration.”
In Hayes view, the tax incentives for hydrogen development put in place during the Biden administration should survive into the new one due to the aforementioned benefits to the fossil fuel industry, which predominantly benefit red states. At the same time, increased hydrogen production should also increase supply and reduce costs for alternative fuel applications.
According to the International Energy Agency (IEA), global hydrogen production reached 97 million metric tons per year (Mtpa) in 2023, of which less than 1% came from low-carbon (blue or green) sources. International agreements and national tax incentives are increasing the amount of low-carbon hydrogen produced. According to the IEA, low-emission hydrogen production could reach 38 Mtpa in 2030, if all announced projects are implemented.
According to a report by London-based market research firm Wood Mackenzie, blue hydrogen, which is produced from natural gas through steam reforming in which the byproduct carbon dioxide is captured and sequestered, will account for the dominant share of new projects that reach final investment decision in the United States. The company expects US blue production to reach 1.5 Mtpa by 2025, more than in any other country.
At the same time, green hydrogen production, which is made from water through electrolysis with energy supplied by renewable sources, is expected to weaken as blue projects dominate. Blue production is more attractive because it uses existing natural gas infrastructure.
However, the outlook for green production is not entirely bleak. While Western electrolyser manufacturers have dominated the North American and European markets, according to the report, Chinese electrolyser manufacturers are gaining ground in other regions of the world. Price competition could make green hydrogen production more attractive.
“Despite the challenges, we expect the momentum for gigascale green hydrogen projects to continue,” said Monica Trilho, a research analyst at Wood Mackenzie, referring to the power capacity of electrolyzers in certain projects.
Looking ahead to 2025, the report notes that emerging economies in South America, the Middle East, India and China are likely to lead new large-scale projects. These regions benefit from the low cost of renewable energy, access to low-cost Chinese electrolysers and supportive government initiatives. According to New York-based hydrogen startup Ecolectro, the global green hydrogen market was valued at $7 billion in 2023 and is projected to grow by 41.6% annually over the next ten years.
Despite the dominance of blue production methods, green hydrogen production continues to gain ground in Europe and North America. In November, Norway-based HydrogenPro, a manufacturer of electrolyser systems for green hydrogen production, signed an agreement with the German group J. Heinr.
Kramer Group, a German engineering and industrial construction company, to develop projects in Germany, Austria and the Benelux countries focused on 5 to 50 MW installations. A 10 MW electrolyzer is expected to produce about 4.8 metric tons of hydrogen per day, enough to refuel the hydrogen calls of more than 100 trucks.
New Jersey-based Avina Clean Hydrogen has just broken ground on a new plant in Vernon, California, that will produce green hydrogen to fuel trucks hauling goods from the nearby Port of Long Beach. The plant is expected to produce up to 4 metric tons of compressed hydrogen per day.
On the consumer side, California data center developer ECL opened its first facility in Mountain View in June, powered by hydrogen fuel cells and battery storage. In September, ECL announced it is building a 1 GW facility near Houston that will run on fuel cells and hydrogen extracted from the site’s pipelines.
According to the company, the first phase of the project will require 50 MW of power and is expected to be operational in the summer of 2025 at a cost of $450 million. Current plans are for the facility to have a capacity of 1 GW of on-site, off-grid power supplied by hydrogen fuel cells and battery storage at a cost of $8 billion. ECL is funding TerraSite-TX1 with its own funds and those of its financial partners.
Numerous industries, including airlines, energy suppliers and even spirits distilleries, have announced hydrogen projects for 2024 that should boost demand.
Interestingly, researchers around the world are searching for potentially huge amounts of natural hydrogen trapped in underground geological formations. While there are currently no reliable methods for extracting this natural hydrogen, the ability to harness it could provide a boost to the global hydrogen economy in the future. |
