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Germany is at the forefront of a group of countries planning on
consuming and producing hydrogen, analysis of government funding
shows.
UK consultancy Cornwall Insight has released an index ranking the countries
that have the strongest market potential for both
natural-gas-sourced blue and renewable-electricity-sourced green
hydrogen on 22 March.
The firm looked at state funding for hydrogen in 15 countries
which have pledged to become hydrogen market leaders. Its ranking
puts Germany in the lead, followed by South Korea, Spain, Japan,
and the UK.
The ranking is not strictly based upon countries' existing and
planned hydrogen production capacity. While Germany has 124
hydrogen production locations at various stages of completion,
Spain has 73, South Korea has 17, Japan has 19, and the UK has 79,
according to S&P Global Platts data.
The countries topping the ranking not only included European
states like France, but also Canada, the US, and Australia. The
sole South American country making the list, Chile, has an ambition to become a
major green hydrogen exporter based upon its potential for
1,700 GW of solar power.
With significantly higher investment than countries like the UK
and a new pledge to boost hydrogen targets to triple the speed of
emissions cuts, Germany is currently the global leader on hydrogen
policy, wrote Cornwall Insight's Lead Research Analyst Naomi
Potter.
Germany is also a hydrogen imports market for multiple
pipelines aiming to feed expected industrial demand as the
country tightens its decarbonization aims.
South Korea, Japan spend on hydrogen
South Korea plans to grow its hydrogen market using private
sector funding of at least $38 billion.
In February, the Ministry of Trade, Industry, and Energy said
companies including five domestic conglomerates—Hanwha,
Hyosung, Hyundai, SK Group, and POSCO—had committed to spend
this amount by 2030.
The country passed the Hydrogen Economy Act in
February. The act mainly deals with the expansion of hydrogen's use
in vehicle filling stations and fuel cells and provides for related
government subsidies.
The act backs a Hydrogen Economy Implementation Roadmap that
will see the country install 310 stations serving fuel cell
electric vehicles (FCEVs) by end-2022, and 1,200 stations serving
2.9 million fuel cell EVs by 2040 in addition to creating "hydrogen
cities."
Japan, on the other hand, wants hydrogen and ammonia to make up
1% of both the primary energy mix and the electricity supply mix by
2030, including through co-generation with coal and natural gas,
under a Strategic Energy Plan passed in October, according to law firm Allen
& Overy.
The government also plans to spend at least $3.4 billion to
accelerate research and marketing of hydrogen over the next decade,
aiming for annual hydrogen demand of 20 million tonnes by 2050.
Japan and South Korea have both pledged to reach net-zero GHG
emissions by 2050.
UK could accelerate hydrogen plans
Hydrogen will also help the UK reach its net-zero target. "With
Russia's invasion of Ukraine threatening energy supply and
increasing prices across Europe, investment in hydrogen will ...
help the UK move away from its reliance on unstable and costly
energy imports," said Potter.
The country's industrial sectors are set to use hydrogen to
decarbonize, for example in the chemicals and steel sectors.
The current UK administration included both carbon capture
technology used to produce blue hydrogen and electrolyzer
technology used to produce green hydrogen in the industrial decarbonization strategy
launched last year.
Separately, it aims to allocate £240 million ($317 million) in
government funding in the next few years through the Net Zero
Hydrogen Fund. Subsidies for both blue and green hydrogen
production offered from the fund between 2022 and 2025 will attract
private investment of £4 billion from the time they launch through
2030.
The UK aims to not only use hydrogen to decarbonize its energy
system, but also hopes to reap the competitive and economic
advantages of offering hydrogen industry jobs, one of the aims of
its oil and gas sector transition
strategy.
While the UK already targets 5 GW of blue and green hydrogen
production capacity by 2030, Cornwall's analyst believed it could
aim higher.
The UK's high renewables output especially from offshore wind,
its geographical advantages including salt caverns for carbon
capture, and skilled workforce are all promising for hydrogen. "It
is clear from our findings that the UK government needs to up its
game if it wants to become and remain a major player in the low
carbon hydrogen market," Potter said.
Posted 24 March 2022 by Cristina Brooks, Senior Journalist, Climate and Sustainability
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.