Creating a viable hydrogen economy for carbon neutrality

Hydrogen energy demand

In the short term, hydrogen energy will be used first in the areas where society is eager to decarbonize - probably the areas closest to consumers. In the medium to long term, hydrogen energy may also lead the carbon reduction process for industrial feed and power replenishment, as well as other mobility applications and certain niches in the built environment. In the long term, the production of ammonia and synthetic fuels made from hydrogen energy will help the most difficult sectors to reduce emissions, such as shipping and aviation, to achieve decarbonisation targets.

China's hydrogen energy development measures appear in the document of major ministries and commissions, comprehensive relevant policies, the top-level design in the production, storage, transportation, processing, use of hydrogen energy has been laid out.

Hydrogen energy supply

Only when the cost of green hydrogen energy is reduced, hydrogen energy can be more widely used, and as renewable energy becomes more abundant, electrolyzers achieve cost reduction through economies of scale, hydrogen energy costs are expected to drop significantly. If costs remain high in the short term, blue hydrogen will be applied to prepare for a green hydrogen economy.

Hydrogen energy transportation

Hydrogen energy can be transported by pipeline, car and ship. Pipeline transportation is advantageous because of its ability to connect large-scale hydrogen storage and transportation to offshore areas, and for other coastal areas, pipelines connect to hydrogen supply and demand terminals. Since private hydrogen networks will not be as decentralized as current natural gas networks, vehicle transportation remains an important mode of hydrogen transportation.

Hydrogen energy policy environment

In the face of urgent decarbonization pressure, Europe will use the post-COVID-19 economic recovery policy to promote the development of the hydrogen energy sector, which will be for the manufacturing industry (e.g., electrolyzer, fuel cell, solar photovoltaic, automobile, tank truck manufacturing) in Asia, renewable energy exports in North America and the Middle East, and other regions. And the capitalization of cheap fossil fuels (blue hydrogen) in Australia, Canada and Russia creates opportunities.

Government support is necessary in the short term to achieve the goal of reducing the cost of electrolyzers (and fuel cells), but in the long term, hydrogen energy is likely to remain more expensive than fossil fuels, so government policy incentives (such as carbon taxes or subsidies) are needed to make hydrogen energy more competitive.

Lin Chenghong, Deloitte China Financial Advisory Hydrogen industry services Partner, said: In order to take advantage of the opportunities, companies need to make strategic investments, build an ecosystem, constantly explore and learn, and actively communicate with policymakers.

From the perspective of hydrogen energy companies, Deloitte recommends

On the demand side, the spotlight will be on large global companies seeking renewable alternatives for their non-electrified energy use in pursuit of their "green strategy" goals; On the supply side, the world's largest energy companies will drive the hydrogen market, given their scale (and ability to deliver future decarbonisation projects) and their demonstrated interest in hydrogen as their lifeline to a low-carbon world.