DNV’s report - 'Rising to the challenge of a hydrogen economy' draws on a survey of more than 1,100 senior energy professionals and in-depth interviews with industry executives, on emerging hydrogen value chains, from production to consumption.
hydrogen economy
It suggests that more than just ambitions, the hydrogen pledges, plans, and pilots of recent years have evolved into concrete commitments, investments, and full-scale projects.
Some 84% of senior energy professionals believe that hydrogen has the potential to be a major component of a global, low-carbon, energy system, while three quarters (73%) say Paris Agreement targets will not be possible without a large-scale hydrogen economy.
decarbonized energy system
In addition to energy efficiency gains, this will require greater renewable power generation and electrification"
“To meet the targets of the Paris Agreement, the world needs to transition faster to a deeply decarbonized energy system. In addition to energy efficiency gains, this will require greater renewable power generation and electrification, and the scaling of technologies to remove the carbon from fossil fuels. Hydrogen will be needed to connect and enable these paths,” said Ditlev Engel, CEO of Energy Systems at DNV.
involvement in hydrogen
A strong majority of energy companies (71%), only began their involvement with hydrogen within the past five years, while 55% only commenced within the past three years. For many in DNV’s survey (45%), hydrogen accounts for less than 1% of their organization’s revenue. By 2025, 44% of energy companies involved in hydrogen expect it to account for more than a tenth of their revenue, rising to 73% of companies by 2030. This is up significantly from just 8% of companies.
On the other side of this new energy value chain, 33% of hydrogen consumers expect hydrogen to represent more than a tenth of their organization’s energy and/or feedstock spending by 2025, rising to 57% by 2030. This is up from just 9%.
energy transition
Taking revenue earners and consumers together, a quarter (26%) of energy professionals expect hydrogen to account for half of their organization’s revenue/spending by 2030.
“Hydrogen has a new status in 2021 as an important, viable, and rapidly developing pillar of the energy transition. Yet ambitions and the rate of change in the hydrogen economy are demanding, and the industry needs to prepare,” said Ditlev Engel.
hydrogen economy
The energy industry is rising to this challenge, and increasingly pursuing hydrogen as a profitable business opportunity"
Three-quarters (74%) of energy professionals say that the outlook for a hydrogen economy improved significantly in the past 12 months, while two-thirds (67%) expect this will continue in the next 12 months.
“Just a year ago, in DNV’s Heading for Hydrogen research, we said that the challenge for the hydrogen economy is not in the ambition, but in changing the timeline: from hydrogen on the horizon to hydrogen in our homes, businesses, and transport systems. We see that the energy industry is rising to this challenge, and increasingly pursuing hydrogen as a profitable business opportunity,” adds Ditlev Engel.
challenges
Energy professionals are aware of the significant challenges involved. Some 71% believe current hydrogen ambitions tend to underestimate the practical limitations and barriers, while 43% believe that the majority of national and organizational hydrogen goals are realistic.
Profitable business opportunities are the biggest driver of involvement in hydrogen, while infrastructure and costs are two of the biggest hurdles.
Repurposing existing infrastructure has a key role to play, and the right regulations are deemed to be the most powerful enabler, followed by carbon pricing specifically. Some 80% say the hydrogen economy needs effective carbon-pricing regulations before it can scale up.
Hydrogen safety
Energy transitions take decades and there are still many open questions about the future hydrogen economy
Hydrogen safety is only the seventh highest risk among energy professionals. Work is already well underway to prove the safety case, perhaps explaining why safety is on the radar of energy professionals but not among the top risks and enablers.
Energy transitions take decades and there are still many open questions about the future hydrogen economy. Some commentators focus on competition between electrification and hydrogen.
green and blue hydrogen
However, 80% of energy professionals believe that hydrogen and electrification will work in synergy, helping both to scale up. In the debate between green and blue hydrogen, the majority of energy professionals (77%) believe that both blue and green hydrogen need to work in synergy to successfully scale the hydrogen economy.
Several challenging questions remain, with the view split inconclusively on whether hydrogen trade will become a fully globalized market (42%) or a regional market (52%), or whether hydrogen will be priced like oil and gas with free market forces (41%), or like electricity with a regulated or stable rate of return (43%).