With their eyes on project expansion and infrastructure, experts anticipate the development of hydrogen as a viable fuel source, which could be expanded into a $15 trillion global investment opportunity by 2050.
Only 10% of hydrogen project proposals have reached FID
Daria Nochevnik, director for policy and partnerships at the Hydrogen Council
Texas, of course, is joining the push toward hydrogen development. In late 2022, ExxonMobil announced plans for a low-carbon hydrogen, ammonia and carbon capture facility in Baytown. The site is expected to produce 1 billion feet of low-carbon hydrogen per day while capturing more than 98% of related CO2 emissions.
Additionally, as many as 680 large-scale hydrogen project proposals have been proposed globally, with an estimated $240 billion in direct investment through 2030. However, only about 10% of those projects, or $22 billion, have reached a final investment decision.
According to Daria Nochevnik, director for policy and partnerships with Hydrogen Council, a global, CEO-led hydrogen initiative, this hesitation is partially due to an unclear perception of hydrogen’s demand potential as well as its impact on carbon reduction. In order for industry leaders to most efficiently maximize this opportunity, Nochevnik said it is crucial to synchronize coordination between governments and industry, particularly as it pertains to regulatory issues.
“We see that there are multiple, mature, good-quality projects out there. And we see that in the meantime, a number of governments have drawn their strategies and roadmaps. We need to bring those project proposals and strategies together to move from announcements into real implementation on the ground,” Nochevnik said during a Reuter’s webinar, “Financing Hydrogen: Moving from plans to bankable projects.”
Outlining a set of focus areas where policy makers and legislators “can really make a difference,” Nochevnik said it is essential to prioritize the visibility of hydrogen demand.
“This is absolutely crucial and can be done by putting in place some legally binding targets,” Nochevnik said. “These policies can create ripple effects throughout the value chain so they will not only support investment in hydrogen supply, but also in equipment manufacturing and construction. Securing demand and its enabling visibility is absolutely key and that would help the whole value chain develop as a consequence.”
The second element points to fast-tracking access to public funding for these crucial hydrogen projects, Nochevnik said.
“There is quite a bit of public funding that governments have committed to, and we know from past experiences with renewable power how important public support can really help in bringing the costs down, substantially,” Nochevnik continued, adding that international cooperation on standards and solutions for the industry is equally essential.
“This is absolutely key in enabling transparency and helping to build trust among consumers, making sure that they can signal their demand for different types of hydrogen and derivatives — and feel confident in the type of product they consume,” she said.
Nochevnik emphasized that this level of transparency and standardization also enables global, cross-border trade in hydrogen derivatives.
“We actually estimate that you can bring the cost of supply down by 25% and save up to $6 trillion U.S. in investments, thanks to efficient hydrogen supply and demand,” Nochevnik said.
“Governments across geographies” have the opportunity to join this process to shape hydrogen’s global standard, Nochevnik said.
“A number of governments are currently designing their own teams for hydrogen derivatives. It is key to ensure that we pursue mutual recognition and allow these teams to talk to each other,” Nochevnik concluded. “That’s the only way to ensure transparency and trustworthiness, and to ensure we can actually create cross-border trade in hydrogen derivatives.”
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