Friday 22 September 2023

IEA: Hydrogen investment at risk due to policy delays and rising costs

Surging interest in hydrogen projects faces risk from delayed policy support, the International Energy Agency (IEA) has warned.

The IEA's Global Hydrogen Review 2023, released today, highlights the persistent growth in the number of announced projects for low emissions hydrogen.

More than 40 countries globally have formulated national hydrogen strategies.

Yet, actual installed capacity and production volumes remain "disappointingly low" as developers await government support before making substantial investments.

Currently, low emissions hydrogen accounts for less than 1% of overall hydrogen production and use, according to the report.

In the midst of a global energy crisis, soaring inflation, and supply chain disruptions, new projects are grappling with escalating costs, at least in the short term, that threaten their long term profitability.

Nevertheless, there are encouraging signs of progress, particularly in the deployment of electrolysers for hydrogen production.

By the close of 2022, electrolyser capacity had reached nearly 700MW.

Based on projects that have either reached a final investment decision or are under construction, total capacity could more than triple to 2GW by the end of 2023, with China leading the way, according to the IEA.

IEA Executive Director Fatih Birol said: "A challenging economic environment will now test the resolve of hydrogen developers and policymakers to follow through on planned projects.

"Greater progress is needed on technology, regulation and demand creation to ensure low-emissions hydrogen can realise its full potential."