H2Tech Market Data 2023 - 6

within the mobility sector and around 5%-15% of the total
energy used in transportation.
H2
-based fuels are estimated to decarbonize the transportation
sector in the long term by up to 60% by 2050.
Heavy-duty trucks are growing as one of the biggest consumers
of clean H2
projected to require 110 MMtpy of H2
of H2
13 GT of CO2
in both the short and long term and are
by 2050 (around 60%
demand within mobility), while potentially abating
. H2-fueled powertrains will become cost-competitive
in most regions of the world and are estimated to
match diesel internal combustion engines with no additional
CO2
pricing by 2035.
Steelmaking and metallurgical application. The steel
industry is one of the largest CO2
emitting industries,
accounting for nearly 8% of annual emissions globally with
the use of coking coal in blast furnaces-this is one of the
hardest-to-abate sectors. Although requiring a large initial
investment to retrofit blast furnaces into H2
reduced iron)-based configuration, H2
DRI (direct
is the decarbonization
pathway for the steel industry. Steel is projected
to account for about 4% of H2
demand in 2030. By 2050,
steel decarbonization will demand 35 MMtpy of clean H2
and potentially abate 12 GT of emissions. With the significant
emissions of 1.85 t of CO2
/t of steel produced from
coking coal, H2-based steel production can be cost-effective
in several locations, with a carbon cost of less than
$50/t-$100/t. Current projects amount to less than 1
MMtpy of clean H2
for the iron and steel industry, which is
less than 7% of the projected 90 MMtpy green steel target.
Power generation applications. The power generation
sector is expected to grow at the highest CAGR through
2020-2030. H2
blending in natural gas turbines. About 20%-30% of H2
(by volume) is being used as a blending component in
gas turbines, thereby abating 5%-10% of CO2
emissions.
More tangible progress is expected in regional markets
with high renewable penetration in the grid and a strong
decarbonization strategy.
H2
fuel cell backup and remote generators will contribute
to a small share of demand by 2030. The cost of
fuel accounts for about 60%-80% of the cost of power
generation; therefore, carbon prices above $100/t will
be needed for clean H2
to become cost-competitive with
natural gas. As such, the long-term solution is adequate
expansion of capacity and stability of the renewable energy
grid. The short- and mid-term solutions require H2
to
close the gap by providing long-duration and intermittent
storage to support grid stability.
Blue and green H2
. The low-carbon H2
to grow. It will be dominated by green H2
market will continue
produced via electrolysis
employing renewable electricity and blue H2 from
fossil fuels in combination with carbon capture, storage and
utilization (CCS/CCUS) pathways (FIG. 4). At the time of this
publication, blue H2
costs are $2.4/kg, while green H2
cost
varies between $3/kg and $7/kg and even up to $11/kg-$12/
kg, depending on location. The cost of green H2
is projected
to fall up to 85% in the mid to long term by a combination
of cheaper electricity and electrolyzer capital investments,
in addition to increased efficiency and optimized operation
of electrolyzers. However, the cost of blue H2
remains plateaued
over the forecast period due to a limited scope of
technological innovation and manufacturing efficiency and
is driven primarily by the cost of feedstock (natural gas)
(FIG. 5). The strong policy support in favor of green H2
will
will be primarily employed in power
generation by either replacing fossil fuels with green
ammonia or blending with natural gas as a fuel. However,
it can also support the baseload in regions with scarce
renewable energy or carbon storage potential, serve as
longer-term power storage and power backup, emergency
and/or remote generators. Projected demand for H2
in power generation is 11 MMtpy in 2030. This demand is
driven by ammonia blending in coal-fired plants and H2
FIG. 4. Low-carbon H2
generation by production pathways. Source: bp's Energy Outlook, 2022.
6
MARKET DATA 2023 | H2-Tech.com
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H2Tech Market Data 2023

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