business plan for hydrogen production

Cookies on GOV.UK

We use some essential cookies to make this website work.

We’d like to set additional cookies to understand how you use GOV.UK, remember your settings and improve government services.

We also use cookies set by other sites to help us deliver content from their services.

You have accepted additional cookies. You can change your cookie settings at any time.

You have rejected additional cookies. You can change your cookie settings at any time.

• Environment
• Energy infrastructure
• Low carbon technologies

Hydrogen production business model

Updates on the hydrogen production business model, including the Low Carbon Hydrogen Agreement.

• Low Carbon Hydrogen Agreement: Standard Terms and Conditions

PDF , 6.45 MB

This file may not be suitable for users of assistive technology.

• Low Carbon Hydrogen Agreement: Front End Agreement

PDF , 342 KB , 23 pages

• Low Carbon Hydrogen Production Business Model: Heads of Terms

PDF , 992 KB , 59 pages

• Low Carbon Hydrogen Production Business Model: full contract drafting of the payment calculations

PDF , 555 KB , 34 pages

Low Carbon Hydrogen Production Business Model: Heads of Terms comparison with the indicative Heads of Terms published in April 2022

PDF , 1.64 MB , 70 pages

These documents provide details of the government’s design for a low carbon hydrogen business model.

Low Carbon Hydrogen Agreement (published August 2023)

The Low Carbon Hydrogen Agreement is the contract which underpins the hydrogen production business model.

The business model will provide revenue support to hydrogen producers to overcome the operating cost gap between low carbon hydrogen and high carbon fuels. It has been designed to incentivise investment in low carbon hydrogen production and use, and in doing so deliver the government’s ambition of up to 10GW of low carbon hydrogen production capacity by 2030.

The business model will be delivered through a private law contract (the Low Carbon Hydrogen Agreement) between a government appointed counterparty and a hydrogen producer.

The Low Carbon Hydrogen Agreement includes the following documents:

Heads of Terms for the Low Carbon Hydrogen Agreement (published December 2022)

The Heads of Terms for the Low Carbon Hydrogen Agreement sets out the government’s proposal for the final hydrogen production business model design. The Heads of Terms reflect the proposed business model design in December 2022. We have updated some of the policy proposals in the Low Carbon Hydrogen Agreement, published August 2023.

This set of documents includes:

• Low Carbon Hydrogen Production Business Model: Heads of Terms comparison with the indicative Heads of Terms (April 2022)

Consultation: design of a business model for low carbon hydrogen

For further information see the design of a business model for low carbon hydrogen consultation documents .

Updates to this page

Published the Low Carbon Hydrogen Agreement: Standard Terms and Conditions / Front End Agreement.

Updated Heads of Terms document to include explanatory diagrams. Added a comparison of Heads of Terms docs (April and December 2022 versions), and full contract draft of the HPBM payment calculations.

First published.

Sign up for emails or print this page

Related content, is this page useful.

• Yes this page is useful
• No this page is not useful

Help us improve GOV.UK

Don’t include personal or financial information like your National Insurance number or credit card details.

To help us improve GOV.UK, we’d like to know more about your visit today. Please fill in this survey (opens in a new tab) .

Popular Searches

Your previous searches, recently visited pages.

Content added to Red Folder

Removed from Red Folder

Business Opportunities in Low-Carbon Hydrogen

While the market for blue and green hydrogen takes shape, some companies are already climbing the experience curve.

By Aaron Denman, Søren Konnerup, Peter Meijer, and Brian Murphy

• June 22, 2021

At a Glance

• The supply of blue and green hydrogen is still small, but energy, natural resources, and industrial companies are beginning to explore how customers will use hydrogen.
• Economic feasibility will vary greatly depending on the availability of low-carbon alternatives, which will affect whether regions export or import blue and green hydrogen.
• Consortia of companies are forming around the opportunity to climb the experience curve and gain early-mover advantages.

This article is part of Bain's 2021 Energy and Natural Resources Report.

As climate change has risen to the top of the agenda for governments, investors, and companies, it’s becoming clear that traditional abatement strategies won’t get us to the goal of net-zero emissions, even with better energy efficiency and the introduction of vast amounts of renewable energy, biofuels, batteries, and carbon capture. Other innovations will be needed, and among the most promising is low-carbon hydrogen, which will help close the gap in industries that could prove hard to abate otherwise, including heavy-duty transportation, steel manufacturing, and production of fertilizer and methanol.

The current market for hydrogen is about 115 million metric tons, but Bain’s research estimates this could increase to 300 million metric tons by 2050, with the low-carbon component growing from virtually nonexistent to most of the supply. (For more on the developing market for hydrogen, see “ Five Imperatives to Thrive in a Hydrogen Future." ) Growth rates in green hydrogen (produced from zero-carbon sources) and blue hydrogen (produced from low-carbon sources) will outpace traditional energy markets, creating attractive opportunities along the value chain.

Hydrogen’s feasibility will vary across regions and industries, and many companies are already experimenting in consortia to expand hydrogen’s reach. Most are grappling with the same questions. What’s the best way to participate in the burgeoning hydrogen market? What are the most attractive opportunities, where should we play in the value chain, and how do we ensure we have the right capabilities to move forward?

Identifying opportunities

Much of the attention has focused on how to supply low-carbon hydrogen at prices competitive with gray hydrogen (made from fossil fuels) or other low-carbon energy sources, but customer demand will ultimately drive the market. Leaders start by developing a clear understanding of their customer’s needs, then figure out where hydrogen could make sense in filling them. This requires determining whether the cost of hydrogen can be competitive, given regional dynamics, regulatory incentives, and other low-carbon alternatives. Even when it cannot, some customers may be willing to pay more to meet their own sustainability goals.

Early projects show several different approaches, including some that are already feasible without subsidies, and others intended to develop new markets (see Figure 1). 

Hydrogen projects show a range of models; some are based on market economics and others depend on subsidies

For most applications, low-carbon hydrogen isn’t yet competitive with other low-carbon technologies, but there are a few exceptions, depending on location and other factors. Forklifts are one example. Because the refueling time is much faster than for a battery, and because a fuel cell’s output doesn’t wane at low-charge levels, forklifts powered with hydrogen fuel cells already present a competitive option with superior performance and flexibility. An electrolyzer running from grid-sourced renewable electricity can produce enough green hydrogen for a fleet of forklifts. Vehicles used in mining are another example where hydrogen could make sense as a tool for decarbonizing, given the similar uptime requirements. (For more analysis on timing for different use cases, see “ When Will Hydrogen Be Cost Competitive? ”)

When Less Carbon Means More Growth

Winning companies play both offense and defense for a full-potential carbon transformation.

Other applications make economic sense only in certain places with unique economics. To identify these opportunities, companies need to determine regional differences in the economics of hydrogen—in other words, they must “de-average” global costs. For example, at a global average, green hydrogen is about two to three times as expensive as gray hydrogen. But much of that cost difference lies between the renewable electricity used to generate green and the price of natural gas to produce gray, whose prices vary widely by region. Places endowed with rich renewable energy conditions (such as plenty of wind and sunshine) can offer far better economics for green hydrogen. In Chile, for example, few hydrogen projects are underway, but ample wind and solar could help it produce low-carbon hydrogen for less than $2 per kilogram by 2025. Understanding where below-average low-carbon hydrogen costs align with above-average alternative costs will lead to the earliest pairings of supply and demand.

In regions with excess renewable energy, hydrogen offers a low-cost way to use electricity that might otherwise be curtailed. 

In regions with excess renewable energy, hydrogen offers a low-cost way to use electricity that might otherwise be curtailed. For example, in the sunny southwestern US, zero-emission truck maker Nikola Motor Company secured a below-market rate for solar-generated electricity ($27 per megawatt hour) to produce more competitive hydrogen, some of which will refuel trucks for Anheuser-Busch’s shipping lane from Arizona to California. This agreement highlights how hydrogen can help companies meet their decarbonization commitments.

Smelting is another example of an application with long-term potential for hydrogen, but where unique economics and government subsidies enable early applications. ArcelorMittal, for example, has announced plans to retrofit two of its plants in Germany to make carbon-neutral (or green) steel. In Sweden, the steel manufacturer H 2 Green Steel provides yet another example. In this case, an abundance of renewable energy and iron ore makes green hydrogen an attractive route to produce low-carbon steel.

The pipeline for announced hydrogen projects grows nearly every day. Many of these involve consortia of companies teaming up to meet demands along the value chain, from development of facilities through production of hydrogen and consumption in the making of ammonia or methanol (see Figure 2). Although low-carbon hydrogen still costs more than gray hydrogen, these industrial companies are gaining experience that their competitors lack. At the North-C-Methanol project in Belgium, for example, hydrogen produced with renewable energy is consumed in methanol production along with captured CO₂, greening the process. Japan’s power sector represents another set of hydrogen customers with environmental, social and corporate governance commitments, high alternative fuel costs, and limited options to decarbonize.

Companies are collaborating in consortia across the value chain

Projects are also underway in regions with lots of wind and solar energy but limited domestic consumption of hydrogen. Neom, an experimental city of the future under development in northwestern Saudi Arabia, is one such location. A $5 billion collaboration between Neom, Air Products & Chemicals, and Saudi Arabia’s ACWA Power will produce green hydrogen with electricity generated by solar in the day and wind at night, to gain experience, develop the market, and scale production as demand rises to meet it. In the near term, this systems approach will produce hydrogen for use locally in Neom, with the long-term goal of scaling to support exports. Australian production follows a similar model and is the global leader in announced green hydrogen projects (see Figure 3).

The seven countries with the greatest green hydrogen capacity vary in their likely long-term roles

Finding your place in the value chain.

The market for low-carbon hydrogen is new and likely to remain in flux for a while. As players consolidate their views and experiment with business models, many are struggling to get started and find their focus. The most effective way to avoid dead-end experiments and to gain a leading position is to develop a clear view of the value chain, potential profit pools, and what it takes to win in these future profit pools.

As in any new market, companies should assess which current capabilities might give them a competitive edge in hydrogen (see Figure 4). A European manufacturer in the renewable energy space considered its strengths in engineering, procurement, and construction (EPC); electrical systems; power controls; and system integration. Geographically, it has a strong presence in several locations with potentially high demand. Executives decided that it could use these capabilities to design power-generating assets and production sites for low-cost hydrogen and help scale production in the electrolysis industry.

Different sectors have varied advantages in building an edge in the hydrogen economy

Closing capability gaps.

In the emerging hydrogen project consortia, companies are combining their strengths to complete the value chain. In many cases, oil and gas majors or utilities are taking on the role of project developer, with the output often used within refining, ammonia production, or blending into existing natural gas networks. Securing such offtake partnerships is critical for these early consortia, because a significant merchant market isn’t expected to develop before 2030. In the current project pipeline, some oil and gas companies are taking both the project developer and offtake roles.

Over time, the value chain is likely to consolidate as companies integrate forward or backward. For example, manufacturing and EPC companies in oil and gas or renewable energy could extend their core capabilities into optimizing electrolyzer production, taking out weight, applying a modular approach, and procuring components at lower cost. At the same time, these companies may need to close gaps in stack and electrolysis design, where there are many partnerships with electrolysis pure players.

New partnerships will be essential. Consider a renewable energy original equipment manufacturer (OEM) seeking a larger role in the value chain, which might include electrolysis design and access to end customers. It would make sense to seek out an electrolysis partner to combine capabilities to design and scale production. To cover its gaps in the gas and end-consumer markets, it could partner with strong midstream and downstream partners, such as oil and gas majors. That would help the OEM focus on taking market share and developing repeatable models that will enable it to expand to other geographies.

Moving forward to execute

The hydrogen market is moving quickly. A year ago, most executives were just beginning to consider where hydrogen would play a role in their industry’s value chain. Today, companies have started deploying strategies for using hydrogen, all while maintaining the flexibility to adjust as the market evolves and conditions change.

Winners in this market will be companies that can develop a keen understanding of hydrogen’s potential and economic feasibility, as well as a determination of their place on the value chain. Setting long-term strategic goals will be essential, with progress measured against short-term milestones.

Finally, no new program will gain much traction without strong support from senior management. Some companies will invest in hydrogen as a second engine of growth (see “ Engine 2: How to Grow a Sustainable New Business ”). Only by guaranteeing continued support, and securing the resources to make it happen, can companies ensure that their investments in hydrogen will have a chance to succeed in the developing energy economy.

Read the Next Chapter

How Energy and Natural Resource Companies Can Raise Productivity in Capital Projects

Read our 2021 Energy and Natural Resources Report

More from the report.

Two out of Three Won’t Do

Harnessing the Energy and Resource Transition

Net Zero: From Political Targets to Industry Action

Energy Is Only One Part of the Sustainability Transition

Redesigning Value Chains to Deliver More Sustainable Goods

Time for ESG Investors and Energy and Natural Resources Companies to Work Together

Raising Productivity in Energy and Natural Resources Capital Projects

Creating Resilience, Sustainability, and Accountability in Supply Chains

Engine 2: How to Grow a Sustainable New Business

Accelerating the Journey to Net Zero

Four Ways to Scale Digital in Energy and Natural Resources Companies

• Agribusiness
• Climate Change
• Energy & Natural Resources
• Energy and Natural Resources Report
• Oil & Gas
• Sustainability
• Utilities & Renewables

How We've Helped Clients

Performance improvement boosting a utility's workforce productivity, people and organization centralization boosts performance for an energy giant, sales and marketing revitalizing a utility's market position with customer loyalty, ready to talk.

We work with ambitious leaders who want to define the future, not hide from it. Together, we achieve extraordinary outcomes.

Contact Bain

How can we help you?

• Business inquiry
• Career information
• Press relations
• Partnership request
• Speaker request

Hydrogen Program

• Program Plans, Roadmaps, and Vision Documents

U.S. National Clean Hydrogen Strategy and Roadmap

The  U.S. National Clean Hydrogen Strategy and Roadmap  explores opportunities for clean hydrogen to contribute to national decarbonization goals across multiple sectors of the economy. It provides a snapshot of hydrogen production, transport, storage, and use in the United States today and presents a strategic framework for achieving large-scale production and use of clean hydrogen, examining scenarios for 2030, 2040, and 2050.

The  Strategy and Roadmap  also identifies needs for collaboration among federal government agencies, industry, academia, national laboratories, state, local, and Tribal communities, environmental and justice communities, labor unions, and numerous stakeholder groups to accelerate progress and market liftoff. This roadmap establishes concrete targets, market-driven metrics, and tangible actions to measure success across sectors. To help execute on the national hydrogen strategy, the Biden-Harris Administration launched the  Hydrogen Interagency Task Force  to further advance a whole-of-government approach to clean hydrogen.

The  Strategy and Roadmap  responds to legislative language set forth in section 40314 of the Infrastructure Investment and Jobs Act (Public Law 117-58), also known as the Bipartisan Infrastructure Law (BIL). This document was posted for in draft form for public comment in September 2022, and the final version of the report was informed by stakeholder feedback, further analysis on market liftoff, as well as engagement across several federal agencies and the White House Climate Policy Office. There will also be future opportunities for stakeholder feedback, as the report will be updated at least every three years as required by the BIL.

Strategy and Roadmap Downloads

U.S. National Clean Hydrogen Strategy and Roadmap (June 2023)

Strategy and Roadmap at a Glance (June 2023)

August 2023 Stakeholder Webinar

Video:  Watch leaders from the White House and multiple federal agencies discuss the National Strategy and Roadmap

Presentation slides:  Hydrogen Stakeholder Webinar: National Clean Hydrogen Strategy and Roadmap and Interagency Coordination

June 2023 Announcement

Video: Watch leaders from the Biden-Harris Administration launch the U.S. National Clean Hydrogen Strategy and Roadmap!

Press release: Biden-Harris Administration Releases First-Ever National Clean Hydrogen Strategy and Roadmap to Build a Clean Energy Future, Accelerate American Manufacturing Boom

Securing net zero success: Creating the business case for hydrogen

Transaction advisory.

• Business Case and Economics
• Regulation and Access
• ESG and Strategic Sustainability

At a glance

On this page.

De-risking hydrogen projects using in-depth business case development serves to prove the technical, environmental and financial value of hydrogen. We are seeing advances in global clean hydrogen projects across hard to abate sectors such as traditional refining, chemical and fertiliser production. Emergent heavy haul transportation, energy storage and export markets such as Europe and Asia are also expanding.

The success of such projects is built on developing a thorough and compelling business case. The concept and options for the project, return on investment, market and policy, risk and constraint considerations, multi-stakeholder requirements, and practical levers to achieve the investment objectives are critical.

As of May 2023, less than 10 percent of more than 1,000 globally announced projects have achieved Final Investment Decision (FID). GHD Advisory has supported many of these projects. This article provides guidance on best practice business case methodology and framework to get the right strategy for successful implementation of hydrogen projects.

1. Assessing the technical feasibility of the project

2. determining the financial viability, 3. applying the environmental attributes, 4. determining market need, desire and timing, 5. stakeholder engagement success, 6. identifying and addressing the key constraints, 7. strengthening through policy alignment, 8. de-risking delivery approach, creating optionality and embedding flexibility, ghd advisory’s guidance: your next steps.

• As hydrogen gains more momentum in the drive to net zero, the ultimate success and end-goal of your business case is to take the project forward and achieve the final investment decision.
• Prepare a hydrogen business case that thoroughly explores and creates optionality, business models, technical feasibility, financial viability, scalability to meet market demand, regulatory requirements and stakeholder buy-in so as to set the project up for success.
• Best practice sees business development efforts such as partnering, consortia forming, financing arrangements and offtake agreements receiving due consideration.
• Enable pathways to bring the hydrogen project stakeholders together in win-win scenarios. Conversations with government, Indigenous and local communities allow for both early engagement and discussions of risk and reward – for both their and your benefit of understanding. Multiple stakeholder buy-in is critical and the stakeholders need to take the step-forwards together.
• Thoroughly understand the constraints of the project, whether that be technical, regulatory, stakeholder, financing or other. Focus efforts that de-risk and create multiple opportunities to remove that constraint.
• A key part of hydrogen projects reaching FID is optionality. The business case needs to ensure options exist, are understood (technically and economically) in the project development phase, to de-risk the projects and optimise project configuration and outcomes.
• Leverage the business case to demonstrate the long-term opportunities and benefits including reduced emissions, improvements to air quality, job creation, and sustainable water use. Highlight these factors to your advantage in discussions with financiers, government agencies, potential partners or consortia, industry, vendors, and communities.
• Showcase how the project is advancing the energy industry through public and end-user awareness and knowledge. Highlight the benefits of being a pioneer in this space by gaining early access to funding and resources ahead of the expected surge in demand for hydrogen projects over the next decade.

We value your privacy

Use of cookies.

This website makes use of cookies to enhance your browsing experience and provide additional functionality, by either storing data on, or collecting data from, your computer.

We use necessary cookies to make our site work. Necessary cookies enable core functionality such as security, network management, and accessibility.

We also use information collected from cookies for various purposes, for example for analysis of website usage patterns. Information about the type, use and purpose of the cookies we use is detailed in our Cookies Policy .

GHD is committed to protecting your privacy. Please see our Privacy Policy   for more information.

Cookies, other than necessary cookies, will only be used with your consent. By clicking ‘Accept’ you give us consent to use all cookies. By clicking ‘Reject All’ only necessary cookies will be used. You may disable necessary cookies by changing your browser settings, but this may affect website functions.

Create an account

Create a free IEA account to download our reports or subcribe to a paid service.

The Future of Hydrogen

Seizing today’s opportunities

About this report

Online table of contents, 1.0 data and assumptions.

Read online

Hydrogen and energy have a long shared history – powering the first internal combustion engines over 200 years ago to becoming an integral part of the modern refining industry. It is light, storable, energy-dense, and produces no direct emissions of pollutants or greenhouse gases. But for hydrogen to make a significant contribution to clean energy transitions, it needs to be adopted in sectors where it is almost completely absent, such as transport, buildings and power generation.

The Future of Hydrogen provides an extensive and independent survey of hydrogen that lays out where things stand now; the ways in which hydrogen can help to achieve a clean, secure and affordable energy future; and how we can go about realising its potential.

Key findings

Demand for hydrogen.

Supplying hydrogen to industrial users is now a major business around the world. Demand for hydrogen, which has grown more than threefold since 1975, continues to rise – almost entirely supplied from fossil fuels, with 6% of global natural gas and 2% of global coal going to hydrogen production.

As a consequence, production of hydrogen is responsible for CO 2  emissions of around 830 million tonnes of carbon dioxide per year, equivalent to the CO 2  emissions of the United Kingdom and Indonesia combined.

Global demand for pure hydrogen, 1975-2018

Growing support.

The number of countries with polices that directly support investment in hydrogen technologies is increasing, along with the number of sectors they target.

There are around 50 targets, mandates and policy incentives in place today that direct support hydrogen, with the majority focused on transport.

Over the past few years, global spending on hydrogen energy research, development and demonstration by national governments has risen, although it remains lower than the peak in 2008.

Current policy support for hydrogen deployment, 2018

Hydrogen production.

Hydrogen can be extracted from fossil fuels and biomass, from water, or from a mix of both. Natural gas is currently the primary source of hydrogen production, accounting for around three quarters of the annual global dedicated hydrogen production of around 70 million tonnes. This accounts for about 6% of global natural gas use. Gas is followed by coal, due to its dominant role in China, and a small fraction is produced from from the use of oil and electricity.

The production cost of hydrogen from natural gas is influenced by a range of technical and economic factors, with gas prices and capital expenditures being the two most important.

Fuel costs are the largest cost component, accounting for between 45% and 75% of production costs. Low gas prices in the Middle East, Russia and North America give rise to some of the lowest hydrogen production costs. Gas importers like Japan, Korea, China and India have to contend with higher gas import prices, and that makes for higher hydrogen production costs.

Hydrogen production costs using natural gas in selected regions, 2018

While less than 0.1% of global dedicated hydrogen production today comes from water electrolysis, with declining costs for renewable electricity, in particular from solar PV and wind, there is growing interest in electrolytic hydrogen.

Keeping an eye on costs

Dedicated electricity generation from renewables or nuclear power offers an alternative to the use of grid electricity for hydrogen production.

With declining costs for renewable electricity, in particular from solar PV and wind, interest is growing in electrolytic hydrogen and there have been several demonstration projects in recent years. Producing all of today’s dedicated hydrogen output from electricity would result in an electricity demand of 3 600 TWh, more than the total annual electricity generation of the European Union.

Hydrogen production costs by production source, 2018

With declining costs for solar PV and wind generation, building electrolysers at locations with excellent renewable resource conditions could become a low-cost supply option for hydrogen, even after taking into account the transmission and distribution costs of transporting hydrogen from (often remote) renewables locations to the end-users.

Various uses for hydrogen

• Hydrogen use today is dominated by  industry , namely: oil refining, ammonia production, methanol production and steel production. Virtually all of this hydrogen is supplied using fossil fuels, so there is significant potential for emissions reductions from clean hydrogen.
• In  transport , the competitiveness of hydrogen fuel cell cars depends on fuel cell costs and refuelling stations while for trucks the priority is to reduce the delivered price of hydrogen. Shipping and aviation have limited low-carbon fuel options available and represent an opportunity for hydrogen-based fuels.
• In  buildings , hydrogen could be blended into existing natural gas networks, with the highest potential in multifamily and commercial buildings, particularly in dense cities while longer-term prospects could include the direct use of hydrogen in hydrogen boilers or fuel cells.
• In  power generation , hydrogen is one of the leading options for storing renewable energy, and hydrogen and ammonia can be used in gas turbines to increase power system flexibility. Ammonia could also be used in coal-fired power plants to reduce emissions.

Near term, practical opportunities for policy action

Hydrogen is already widely used in some industries, but it has not yet realised its potential to support clean energy transitions. Ambitious, targeted and near-term action is needed to further overcome barriers and reduce costs.

The IEA has identified four value chains that offer springboard opportunities to scale up hydrogen supply and demand, building on existing industries, infrastructure and policies. Governments and other stakeholders will be able to identify which of these offer the most near-term potential in their geographical, industrial and energy system contexts.

Regardless of which of these four key opportunities are pursued – or other value chains not listed here – the full policy package of five action areas listed above will be needed. Furthermore, governments – at regional, national or community levels – will benefit from international cooperation with others who are working to drive forward similar markets for hydrogen.

Executive summary

The time is right to tap into hydrogen’s potential to play a key role in a clean, secure and affordable energy future.  At the request of the government of Japan under its G20 presidency, the International Energy Agency (IEA) has produced this landmark report to analyse the current state of play for hydrogen and to offer guidance on its future development. The report finds that clean hydrogen is currently enjoying unprecedented political and business momentum, with the number of policies and projects around the world expanding rapidly. It concludes that now is the time to scale up technologies and bring down costs to allow hydrogen to become widely used. The pragmatic and actionable recommendations to governments and industry that are provided will make it possible to take full advantage of this increasing momentum.

Hydrogen can help tackle various critical energy challenges.  It offers ways to decarbonise a range of sectors – including long-haul transport, chemicals, and iron and steel – where it is proving difficult to meaningfully reduce emissions. It can also help improve air quality and strengthen energy security. Despite very ambitious international climate goals, global energy-related CO 2  emissions reached an all time high in 2018. Outdoor air pollution also remains a pressing problem, with around 3 million people dying prematurely each year.

Hydrogen is versatile.  Technologies already available today enable hydrogen to produce, store, move and use energy in different ways. A wide variety of fuels are able to produce hydrogen, including renewables, nuclear, natural gas, coal and oil. It can be transported as a gas by pipelines or in liquid form by ships, much like liquefied natural gas (LNG). It can be transformed into electricity and methane to power homes and feed industry, and into fuels for cars, trucks, ships and planes.

Hydrogen can enable renewables to provide an even greater contribution.  It has the potential to help with variable output from renewables, like solar photovoltaics (PV) and wind, whose availability is not always well matched with demand. Hydrogen is one of the leading options for storing energy from renewables and looks promising to be a lowest-cost option for storing electricity over days, weeks or even months. Hydrogen and hydrogen-based fuels can transport energy from renewables over long distances – from regions with abundant solar and wind resources, such as Australia or Latin America, to energy-hungry cities thousands of kilometres away.

There have been false starts for hydrogen in the past; this time could be different.  The recent successes of solar PV, wind, batteries and electric vehicles have shown that policy and technology innovation have the power to build global clean energy industries. With a global energy sector in flux, the versatility of hydrogen is attracting stronger interest from a diverse group of governments and companies. Support is coming from governments that both import and export energy as well as renewable electricity suppliers, industrial gas producers, electricity and gas utilities, automakers, oil and gas companies, major engineering firms, and cities. Investments in hydrogen can help foster new technological and industrial development in economies around the world, creating skilled jobs.

Hydrogen can be used much more widely.  Today, hydrogen is used mostly in oil refining and for the production of fertilisers. For it to make a significant contribution to clean energy transitions, it also needs to be adopted in sectors where it is almost completely absent at the moment, such as transport, buildings and power generation.

However, clean, widespread use of hydrogen in global energy transitions faces several challenges:

• Producing hydrogen from low-carbon energy is costly at the moment. IEA analysis finds that the cost of producing hydrogen from renewable electricity could fall 30% by 2030 as a result of declining costs of renewables and the scaling up of hydrogen production. Fuel cells, refuelling equipment and electrolysers (which produce hydrogen from electricity and water) can all benefit from mass manufacturing.
• The development of hydrogen infrastructure is slow and holding back widespread adoption.  Hydrogen prices for consumers are highly dependent on how many refuelling stations there are, how often they are used and how much hydrogen is delivered per day. Tackling this is likely to require planning and coordination that brings together national and local governments, industry and investors.
• Hydrogen is almost entirely supplied from natural gas and coal today.  Hydrogen is already with us at industrial scale all around the world, but its production is responsible for annual CO2 emissions equivalent to those of Indonesia and the United Kingdom combined. Harnessing this existing scale on the way to a clean energy future requires both the capture of CO2 from hydrogen production from fossil fuels and greater supplies of hydrogen from clean electricity.
• Regulations currently limit the development of a clean hydrogen industry.  Government and industry must work together to ensure existing regulations are not an unnecessary barrier to investment. Trade will benefit from common international standards for the safety of transporting and storing large volumes of hydrogen and for tracing the environmental impacts of different hydrogen supplies.

The IEA has identified four near-term opportunities to boost hydrogen on the path towards its clean, widespread use. Focusing on these real-world springboards could help hydrogen achieve the necessary scale to bring down costs and reduce risks for governments and the private sector. While each opportunity has a distinct purpose, all four also mutually reinforce one another.

• Make industrial ports the nerve centres for scaling up the use of clean hydrogen.  Today, much of the refining and chemicals production that uses hydrogen based on fossil fuels is already concentrated in coastal industrial zones around the world, such as the North Sea in Europe, the Gulf Coast in North America and southeastern China. Encouraging these plants to shift to cleaner hydrogen production would drive down overall costs. These large sources of hydrogen supply can also fuel ships and trucks serving the ports and power other nearby industrial facilities like steel plants.
• Build on existing infrastructure, such as millions of kilometres of natural gas pipelines.  Introducing clean hydrogen to replace just 5% of the volume of countries’ natural gas supplies would significantly boost demand for hydrogen and drive down costs.
• Expand hydrogen in transport through fleets, freight and corridors.  Powering high-mileage cars, trucks and buses to carry passengers and goods along popular routes can make fuel-cell vehicles more competitive.
• Launch the hydrogen trade’s first international shipping routes.  Lessons from the successful growth of the global LNG market can be leveraged. International hydrogen trade needs to start soon if it is to make an impact on the global energy system.

International co‑operation is vital to accelerate the growth of versatile, clean hydrogen around the world.  If governments work to scale up hydrogen in a co‑ordinated way, it can help to spur investments in factories and infrastructure that will bring down costs and enable the sharing of knowledge and best practices. Trade in hydrogen will benefit from common international standards. As the global energy organisation that covers all fuels and all technologies, the IEA will continue to provide rigorous analysis and policy advice to support international co‑operation and to conduct effective tracking of progress in the years ahead.

As a roadmap for the future, we are offering seven key recommendations to help governments, companies and others to seize this chance to enable clean hydrogen to fulfil its long-term potential.

The IEA’s 7 key recommendations to scale up hydrogen

• Establish a role for hydrogen in long-term energy strategies.  National, regional and city governments can guide future expectations. Companies should also have clear long-term goals. Key sectors include refining, chemicals, iron and steel, freight and long-distance transport, buildings, and power generation and storage.
• Stimulate commercial demand for clean hydrogen.  Clean hydrogen technogies are available but costs remain challenging. Policies that create sustainable markets for clean hydrogen, especially to reduce emissions from fossil fuel-based hydrogen, are needed to underpin investments by suppliers, distributors and users. By scaling up supply chains, these investments can drive cost reductions, whether from low‑carbon electricity or fossil fuels with carbon capture, utilisation and storage.
• Address investment risks of first-movers.  New applications for hydrogen, as well as clean hydrogen supply and infrastructure projects, stand at the riskiest point of the deployment curve. Targeted and time-limited loans, guarantees and other tools can help the private sector to invest, learn and share risks and rewards.
• Support R&D to bring down costs.  Alongside cost reductions from economies of scale, R&D is crucial to lower costs and improve performance, including for fuel cells, hydrogen-based fuels and electrolysers (the technology that produces hydrogen from water). Government actions, including use of public funds, are critical in setting the research agenda, taking risks and attracting private capital for innovation.
• Eliminate unnecessary regulatory barriers and harmonise standards.  Project developers face hurdles where regulations and permit requirements are unclear, unfit for new purposes, or inconsistent across sectors and countries. Sharing knowledge and harmonising standards is key, including for equipment, safety and certifying emissions from different sources. Hydrogen’s complex supply chains mean governments, companies, communities and civil society need to consult regularly.
• Engage internationally and track progress.  Enhanced international co‑operation is needed across the board but especially on standards, sharing of good practices and cross-border infrastructure. Hydrogen production and use need to be monitored and reported on a regular basis to keep track of progress towards long‑term goals.
• Focus on four key opportunities to further increase momentum over the next decade.  By building on current policies, infrastructure and skills, these mutually supportive opportunities can help to scale up infrastructure development, enhance investor confidence and lower costs:
• Make the most of existing industrial ports to turn them into hubs for lower‑cost, lower-carbon hydrogen.
• Use existing gas infrastructure to spur new clean hydrogen supplies.
• Support transport fleets, freight and corridors to make fuel-cell vehicles more competitive.
• Establish the first shipping routes to kick-start the international hydrogen trade. 

Related files

• Executive Summary Download "Executive Summary"

Cite report

IEA (2019), The Future of Hydrogen , IEA, Paris https://www.iea.org/reports/the-future-of-hydrogen, Licence: CC BY 4.0

Share this report

• Share on Twitter Twitter
• Share on Facebook Facebook
• Share on LinkedIn LinkedIn
• Share on Email Email
• Share on Print Print

Subscription successful

Thank you for subscribing. You can unsubscribe at any time by clicking the link at the bottom of any IEA newsletter.

This website uses cookies so that we can provide you with the best user experience possible. Our Cookie Notice is part of our Privacy Notice and explains in detail how and why we use cookies. To take full advantage of our website, we recommend that you click on “Accept All”. You can change these settings at any time via the button “Update Cookie Preferences” in our Cookie Notice .

Technical cookies are required for the site to function properly, to be legally compliant and secure. Session cookies only last for the duration of your visit and are deleted from your device when you close your internet browser. Persistent cookies, however, remain and continue functioning on repeat visits.

CMS does not use any cookie based Analytics or tracking on our websites; see details here .

Personalisation cookies collect information about your website browsing habits and offer you a personalised user experience based on past visits, your location or browser settings. They also allow you to log in to personalised areas and to access third party tools that may be embedded in our website. Some functionality will not work if you don’t accept these cookies.

Social Media cookies collect information about you sharing information from our website via social media tools, or analytics to understand your browsing between social media tools or our Social Media campaigns and our own websites. We do this to optimise the mix of channels to provide you with our content. Details concerning the tools in use are in our Privacy Notice .

How to bookmark a page on iPhone 

• Tap the Share button at the bottom of the Safari screen for the website you're on
• Tap the icon labelled 'Add to Home Screen'
• Tap the 'Add' button in the upper right corner
• Launch the website from your Home screen by tapping its icon.

How to bookmark a page on Android 

• Click on the 'menu' button.
• Click on the 'start' button and save as a bookmark.
• Click on the 'menu' button again and select "Bookmarks".
• Press and hold the LawNow icon and then click "Add to home screen".

How to bookmark a page on Windows 

• Click on the "..." icon in the bottom-right of the screen.
• Select "pin to start"
• A new tile linking to LawNow will now appear on the start menu

How to bookmark a page on Blackberry 

• Click on the BlackBerry 'menu' icon.
• Select "Add to Home Screen".
• In the "Add to Home Screen" dialog window, select the "add" button.

Search Filters

• Member log in

Jurisdiction / Region

Our combination of practice excellence and deep industry expertise provides a distinct competitive advantage to our clients, bringing together legal expertise, commercial insight and close professional support.

• Bosnia and Herzegovina
• Czech Republic
• Latin America
• Middle East
• Netherlands
• North Macedonia
• Saudi Arabia
• South Africa
• Switzerland
• United Arab Emirates
• United Kingdom
• Consumer Products (all)
• Consumer Products - fashion & luxury
• Consumer Products - FMCG
• Consumer Products - food & drink
• Consumer Products - retail
• Data Centres
• Energy (all)
• Energy - Conventional Power
• Energy - Nuclear
• Energy - Oil & Gas
• Energy - Power
• Energy - Renewables & Climate
• Energy - Water
• Higher Education
• Hotels & Leisure
• Infrastructure & Projects
• Life Sciences
• Manufacturing
• Private Equity
• Public Sector
• Real Estate & Construction
• Technology, Media and Communications

Our Expertise

• ADR/mediation
• Advertising & Marketing
• Agriculture
• Anti-bribery & Corruption
• Asset Finance
• Asset Management, Funds and Capital Investment Law
• Banking & Finance
• Class actions
• Commercial & General Business Issues
• Commercial Contracts
• Commercial Distribution
• Communications
• Competition/antitrust
• Construction
• Corporate Finance
• Corporate Law & Transactions
• Corporate Recovery & Insolvency
• Criminal Law
• Crypto, FinTech & Digital Assets
• Data Protection & Privacy
• Debt Capital Markets
• Derivatives & Structured Finance
• Directors' Issues
• Distribution and Franchising
• Employee Share Schemes
• Energy Disputes
• Environment
• Environment - Cleantech
• Environmental, Social and Governance (ESG)
• Equity Capital Markets
• EU Sales Law
• Financial Institutions Regulation
• Health and Safety
• Hotels - Financing
• Infrastructure
• Insolvency law & restructuring
• Insurance & Reinsurance
• Intellectual Property
• International Arbitration
• Investigations & Dawn Raids
• Investing in Europe
• Investment Arbitration
• Islamic finance
• IT Security Law
• Life Sciences - Healthcare
• Life Sciences - Regulation
• MBOs/MBIs & Private Equity
• Merger Control
• Mergers & Acquisitions
• Mining and Minerals
• Outsourcing
• Personal Injury
• Private Clients
• Procurement
• Product Liability
• Professional Indemnity/ Negligence
• Projects & Project Finance
• Real Estate
• Real Estate - Finance
• Sustainability
• Tax - Transfer Pricing
• US Securities

Hydrogen Business Models: details of the Low Carbon Hydrogen Agreement begin taking shape

In August 2021, as part of the UK Hydrogen strategy , the Department for Business, Energy & Industrial Strategy (“ BEIS ”) launched its first consultation on a business model establishing the financial support framework for low-carbon hydrogen (the “ Business Model Consultation ”). This consultation was published alongside a related consultation to define “low-carbon hydrogen” (“ Hydrogen ”) i.e. the Hydrogen which will be eligible for support under the business model (the “ Hydrogen Standard Consultation ”).

On 8 April 2022, BEIS published a raft of Hydrogen-related updates, including:

• its response to the Business Model Consultation (the “Business Model Response”);
• indicative heads of terms for the Hydrogen business model (the “LCHA Heads of Terms”); and
• its response to the Hydrogen Standard Consultation (the “Hydrogen Standard Response”) and associated draft guidance on greenhouse gas emissions and sustainability criteria (the “Draft Guidance”).

We summarise the key takeaways of the Business Model Response, LCHA Heads of Terms, Hydrogen Standard Response and Draft Guidance here. For our commentary on the Net Zero Hydrogen Fund (“ NZHF ”) Consultation Response and Funding Allocation Consultation, please see here .

Price support on offer

For the most part, BEIS intends to proceed with the minded-to positions set out in the Business Model Consultation i.e. to support new Hydrogen production capacity (of 5MW and above) through a combination of price support and volume support, being:

• (price support) payment of a variable premium (calculated as the difference between a “strike price” (to enable producers to cover costs) and a “reference price” (the higher of the actual price received by the producer and the natural gas price)) - see figure below; and
• (volume support) price support to be granted on a sliding scale whereby producers receive higher levels of price support during times of low offtake.

BEIS continues to favour a single business model to apply across different project types and sizes, building in flexibility e.g. around indexation and strike price and possibly running separate allocation processes for different project categories. What’s clear is that due to the way the support has been structured, blending of hydrogen onto the national gas network will not be compatible with the proposed payment structure.

Who can get support?

One change of tack is the proposed treatment of Hydrogen as a feedstock, which was previously not going to be supported. In light of stakeholder responses, BEIS, subject to compliance with subsidy control and public law principles, intends to allow Hydrogen producers to receive a subsidy for sales to feedstock users while continuing to develop additional measures to avoid possible distortions.

Additionally, BEIS is still considering how to accommodate “own consumption” projects, where there may be little or no commercial incentive for the producer to increase their achieved sales price, and sales to intermediaries, particularly where they intend to take ownership of the Hydrogen produced.

Due the nascent nature of the Hydrogen economy in comparison with the electricity market, BEIS considers that a different approach is needed to achieve the objectives of the Hydrogen business model in the absence of a Hydrogen price benchmark, however details of the anticipated direction of travel have not yet been provided.

Sources of funding

Likely to prove controversial is the confirmation that all Hydrogen produced should be levy funded by 2025. It is not clear if funding will come from an additional levy pot or within the existing subsidy budget.

In addition, BEIS does not see a compelling case for introducing a separate scheme for smaller scale projects (below 5MW) for business model support, but such projects will have the option to apply to ‘strand 2’ of the NZHF if they meet all other eligibility criteria (see our commentary on funding allocation here ).

Within the scope of funding, at least for the initial projects, BEIS is considering the extent to which transport and storage (“ T&S ”) networks supporting carbon capture, usage and storage (“ CCUS ”) enabled Hydrogen production should be supported via the business models, i.e the Low Carbon Hydrogen Agreement (“ LCHA ”). The concern is that insufficient T&S infrastructure represents a risk for hydrogen producers that will stymie their ability to develop projects. The government plans to publish their findings on T&S infrastructure requirements alongside either a call for evidence or a further consultation later this year.

What are the terms of the contract: LCHA Heads of Terms

The Hydrogen business model is heavily based on the principles of the low-carbon CfD. Accordingly, the heads of terms of the proposed LCHA echo the terms of the AR4 CfD, with little detail of how they may need to be adapted for hydrogen projects. However, there are some early key differences - most notably in the mechanism for determining support level and payment mechanism. Key terms and how they compare to the AR4 CfD are:

The publications provide further detail on BEIS’ thinking on business model support for Hydrogen that will be required to achieve the government’s recently updated goal of achieving 10GW of Hydrogen capacity by 2030 (see here for our commentary on the energy security strategy), as well as supporting deployment of Hydrogen at the levels that would support the UK’s aim to achieve net-zero by 2050.

While the LCHA Heads of Terms are helpful and have been welcomed by the industry, important elements around payment provisions and where the funding will come from remain to be developed. Given the wider pressures of rising energy prices and the impacts of this on businesses and electricity consumers overall, the scope of the levy and who it will apply to will be a point of careful consideration for government. What’s more given the failure of so many suppliers in the British market (more than half have exited the market in the last 2 years), the pressures on remaining electricity suppliers will need to be factored in when casting the “levy” net.

In addition, some in the industry may be disappointed that blending has not been included in the business model or that the government has not provided a separate support scheme for smaller projects. The decision for the levy funding is expected to need new primary legislation, which will impact the timeline for rendering government’s Hydrogen ambitions a reality. BEIS have confirmed that government intends to legislate subject to the availability of Parliamentary time. Further details of this are expected to be in the Queen’s Speech on 10 May 2022.

Other aspects, including how price support for own consumption projects and sales to intermediaries will operate, the absence of a Hydrogen price benchmark, indexation methods, and contract length, will also need to be answered so as to allow projects needing this clarity to proceed.

Investors looking at hydrogen projects in the UK as part of the European and global landscape will also need to understand how the UK’s Hydrogen Standard compares to those proposed in the EU and elsewhere, especially where such investors are supporting projects looking to export hydrogen around the world. It would be a disadvantage if the hydrogen standards in different countries led to the development of a fragmented hydrogen economy instead of all supporting the global achievement of the Paris Agreement goals.

BEIS aims to finalise the business model in 2022, enabling the first contracts to be allocated from 2023.

Overall, the government has set clear delivery aims through to 2035 in its 2035 hydrogen delivery plan (see figure below), which anticipates 2GW of hydrogen production in construction and operations. Clearly much of the hydrogen delivery also depends on the other strands that are promoting the development of CCUS clusters remaining on track.

Key contact

Dalia Majumder-Russell

Related content, king’s speech 2024: will labour get britain back building again, one year of belgian foreign direct investment screening: state of play, what we can expect from labour in relation to planning policies.

• Follow us on:
• LinkedIn  

© CMS Legal 2024

• Terms of Use
• Privacy Notice
• Cookie Notice

• Previous Article
• Next Article

Business model and planning approach for hydrogen energy systems at three application scenarios

• Article contents
• Figures & tables
• Supplementary Data
• Peer Review
• Reprints and Permissions
• Cite Icon Cite
• Search Site

Hong Zhang , Tiejiang Yuan , Jie Tan; Business model and planning approach for hydrogen energy systems at three application scenarios. J. Renewable Sustainable Energy 1 July 2021; 13 (4): 044101. https://doi.org/10.1063/5.0031594

Download citation file:

• Ris (Zotero)
• Reference Manager

Green hydrogen is used as fuel or raw material in power systems, transportation, and industry, which is expected to curb carbon emissions at the root. First, a unified energy system consisting of clean power generation systems, hydrogen energy systems (HESs), and transmission systems was proposed, and the characteristics of hydrogen load in different fields are analyzed. Possible business models for HESs in industry and transportation are then presented, cost and benefit functions for stakeholders of HES were created, and a business model with multi-party participation was modeled as a multi-objective optimization model. In a power system, the business model of combining two operating modes for hydrogen storage was proposed at the power generation side as well. Finally, three HESs were designed for a chemical plant with a hydrogen demand of 1000 Nm 3 /h, a hydrogen refueling station with a daily hydrogen load of 600 kg, and a 100% clean power generation system, respectively. The results of the case study show that one or more feasible business models (i.e., all stakeholders are profitable) can be found in both industrial and transportation by the HES planning approach proposed, while the internal rate of return of HES installed on the generation side is less than 5% due to high investment cost at this stage and low utilization rate; nonetheless, the profitable strategies are shown by 3D graphics.

Sign in via your Institution

Citing articles via, submit your article.

Sign up for alerts

• Online ISSN 1941-7012
• For Researchers
• For Librarians
• For Advertisers
• Our Publishing Partners  
• Physics Today
• Conference Proceedings
• Special Topics

pubs.aip.org

• Privacy Policy
• Terms of Use

Connect with AIP Publishing

This feature is available to subscribers only.

Sign In or Create an Account

Global Energy Perspective 2023: Hydrogen outlook

About the authors.

This article is a collaborative effort by Chiara Gulli, Bernd Heid , Jesse Noffsinger , Maurits Waardenburg, and Markus Wilthaner , representing views from McKinsey Energy Solutions.

The Global Energy Perspective 2023 models the outlook for demand and supply of energy commodities across a 1.5°C pathway, aligned with the Paris Agreement, and four bottom-up energy transition scenarios. These energy transition scenarios examine outcomes ranging from warming of 1.6°C to 2.9°C by 2100 (scenario descriptions outlined below in sidebar “About the Global Energy Perspective 2023”). These wide-ranging scenarios sketch a range of outcomes based on varying underlying assumptions—for example, about the pace of technological progress and the level of policy enforcement. The scenarios are shaped by more than 400 drivers across sectors, technologies, policies, costs, and fuels, and serve as a fact base to inform decision makers on the challenges to be overcome to enable the energy transition. In this article, we explore how hydrogen could contribute to decarbonizing the energy system, uncertainties around hydrogen’s future role, and what it would take to set up a global hydrogen economy by 2050.

Clean hydrogen demand is projected to increase to between 125 and 585 Mtpa by 2050

Hydrogen demand today is largely supplied by fossil fuel-based steam methane reforming and driven by fertilizer production and refining. These industries are expected to lead the uptake of blue and green hydrogen until 2030 in the slower scenarios, as they switch their hydrogen-based operations to clean hydrogen. In parallel, “new” emerging applications—for instance in steel, in the production of synthetic fuels, and in heavy road transport—may begin to emerge in the faster scenarios.

Nearly all hydrogen consumed today is grey hydrogen (approximately 90 million tons 1 Metric tons: 1 metric ton = 2,205 pounds. per annum [Mtpa]). However, demand for grey hydrogen is projected to decline as demand for clean hydrogen rises and costs of the green molecules eventually become more competitive. 2 Clean hydrogen includes both green hydrogen (hydrogen produced by the electrolysis of water using renewable energy as a power source) and blue hydrogen (hydrogen produced through steam reforming of natural gas or methane with carbon capture, utilization, and storage [CCUS]), and contrasts with grey hydrogen (hydrogen produced through the same process as blue hydrogen but without CCUS). By 2050, clean hydrogen demand could account for up to 73 to 100 percent (125 to 585 Mtpa) of total hydrogen demand, with only between less than 1 and 50 Mtpa of demand being met by grey hydrogen, depending on the scenario.

After 2025, nearly all new hydrogen production coming online is expected to be clean hydrogen. This coincides with the start of the expected phaseout of grey hydrogen, driven by the growing cost competitiveness of clean hydrogen and commitments to decarbonize. Until 2030, clean hydrogen uptake is projected to be driven by existing applications switching from grey to blue and green hydrogen, but between 2030 and 2040 the uptake of hydrogen in new applications without existing demand is expected to drive the increase in clean hydrogen demand.

After 2040, private and public sector commitments are projected to drive the uptake of clean hydrogen and hydrogen-based fuels in emerging applications in the Further Acceleration and Achieved Commitments scenarios. Potential mechanisms that would be required to support demand growth of hydrogen and hydrogen derivatives in these applications include the implementation of, or increase in, CO 2 pricing, quotas on sustainable fuels in aviation, or CO 2 -reduction targets in maritime transportation. On the other hand, in the Current Trajectory and Fading Momentum scenarios, hydrogen uptake is projected to be driven by a continuation of the current cost decline and the underlying growth in some of the fertilizer and chemicals markets that use hydrogen today, with limited new policy support.

Some geographies, such as the European Union and United Kingdom, are expected to fully phase out grey hydrogen by 2050 in all scenarios except Fading Momentum. Grey hydrogen will likely play a larger role in the Fading Momentum scenario than in the faster energy transition scenarios, due to slower uptake of clean hydrogen in new sectors. In these sectors, uptake of clean hydrogen is projected to be limited until 2050.

Industry is projected to drive the majority of clean hydrogen uptake until 2030, followed by a wider uptake in new applications by 2050

Applications with existing demand will likely account for the majority of clean hydrogen demand throughout the 2020s, potentially driving the increase in clean hydrogen’s share of total hydrogen demand from less than 1 percent today to around 30 percent by 2030 in the Further Acceleration scenario.

By 2040, clean hydrogen could play a larger role in new applications—especially in mobility, which is expected to be the largest “newcomer” for clean hydrogen demand by 2040 in the Further Acceleration scenario. Applications could range from fuel cell electric vehicles in long-haul, heavy-duty trucking to synthetic kerosene in aviation. The second largest newcomer is expected to be hydrogen used in (mainly industrial) heating, displacing natural gas. Combined, clean hydrogen uptake in existing applications and emerging applications could drive clean hydrogen’s share of total demand to 75 percent by 2040.

By 2050, in the Further Acceleration scenario, mobility applications are projected to remain the largest drivers for clean hydrogen uptake, with road transport accounting for around 80 Mtpa and aviation around 50 Mtpa, with the remaining 15 Mtpa coming from maritime. Existing industrial applications and heating are projected to drive further clean hydrogen uptake, potentially resulting in clean hydrogen accounting for 95 percent of total hydrogen demand in 2050.

However, uncertainties around demand growth remain. For example, power could drive an additional demand upside of between 60 and 70 Mtpa by 2050, on top of the projected demand in the Further Acceleration scenario. This could happen if hydrogen-fueled turbines or stationary fuel cells prove more competitive or have more public support than alternative technologies for the last-mile decarbonization of the energy system, such as long-duration energy storage technologies and carbon capture, utilization, and storage (CCUS).

In the Fading Momentum scenario, the already existing end use of hydrogen in fertilizer production is expected to drive consumption far beyond 2030 corresponding with the lower total growth.

The only sector that is not projected to see an increase in total hydrogen demand in 2050 compared to today is refining, with demand expected to peak in the late 2020s or early 2030s, depending on the scenario, driven by lower oil demand across scenarios.

Uptake in new applications depends on operating environment, infrastructure development, and relative competitiveness

Going forward, the decarbonization agendas of governments and companies are expected to drive hydrogen uptake in new applications, as well as the decarbonization of existing grey hydrogen applications. However, in most regions, there is significant uncertainty around projected hydrogen uptake in these new applications across scenarios.

The uncertainty surrounding hydrogen demand in emerging applications stems from a combination of factors, including lack of clarity in government support, the development of enabling infrastructure, and evolving competitive dynamics with other decarbonization technologies. For example, hydrogen’s role in decarbonizing aviation could depend on government support, as well as market dynamics and competition. First, sustainable aviation fuel (SAF) quotas are needed across geographies to drive a switch from fossil fuel-based kerosene to clean alternatives. Second, hydrogen-based synthetic fuels would have to prove competitive with the main SAF alternatives, for instance biokerosene, either based on costs or constraints in the availability of feedstock necessary to produce biokerosene.

Similarly, there is uncertainty about the switch from grey to clean hydrogen. Active mandates, such as CO 2 prices and subsidies, will likely be needed to facilitate the decarbonization of existing hydrogen demand, as the switch will likely not be attractive based on economics alone.

Infrastructure scale-up and technology advancements could be critical

In key sectors, the timely deployment of infrastructure across the whole supply chain is projected to be needed to meet clean hydrogen demand.

Several key enablers—mostly physical infrastructure—would have to be rolled out by 2050 to facilitate the future hydrogen economy. In the Achieved Commitments scenario, over 163,000 refueling stations for trucks would be needed globally, alongside a network of more than 40,000 kilometers of hydrogen pipelines in Europe alone.

Technological advancements may also be needed to ensure the uptake of hydrogen in sectors where hydrogen technology is not yet mature, such as the further development of fuel cells for heavy-duty vehicles and marine vessels.

Coordination between government and the private sector may be needed to ensure the required infrastructure is in place to meet hydrogen demand at the pace necessary to meet decarbonization commitments and with an attractive business case.

The extent of the growth and advancement necessary to establish a hydrogen economy is not without precedent—historical adoption of natural gas in the European Union since the 1960s and 70s shows that it is possible to rapidly change an established energy system if the necessary competitiveness and support are in place.

Asia is projected to remain the region with the largest hydrogen demand to 2050

Despite uncertainties in regional and sectoral demand, Asia is projected to remain the biggest hydrogen consumer across scenarios, largely driven by the demand from chemicals that already exist today, and, to a lesser extent, the transport, iron, and steel sectors in China and India. In Japan and South Korea, a significant share of hydrogen demand is expected to come from electricity generation as ammonia and hydrogen are blended in existing coal and gas plants, respectively. As Asia will likely not produce enough hydrogen to meet its growing demand, the region might rely on imports from Oceania or the Middle East, for instance.

In Europe and the United States, the chemicals sector is projected to remain a significant driver of hydrogen demand, but new applications in sectors including steel and production of synthetic fuels for aviation, maritime, and heavy road transport are also expected to contribute significantly to demand growth.

Green hydrogen production is projected to be spread across regions, while blue hydrogen production is geography-specific

By 2050, green hydrogen is expected to dominate the global supply mix, with a share of between 50 and 65 percent across scenarios, as cost reductions in renewables and electrolyzers make this production route more cost competitive. Blue hydrogen is projected to account for the next largest share of supply, at between 20 and 35 percent.

The ratio of blue to green hydrogen production is expected to differ significantly by region, driven mainly by cost factor developments. Blue hydrogen production is projected to be concentrated in regions with cost-competitive natural gas and CCUS, such as the Middle East and North America. By 2050, blue hydrogen production could require as much as around 500 billion cubic meters of natural gas (between 10 and 15 percent of global natural gas demand in the Further Acceleration scenario), and capacity to capture and store 750 to 1,000 megatons of CO 2 .

Green hydrogen production is projected to have a higher share in regions with abundant and cost-competitive renewable resources, such as Australia and Iberia. The production of green hydrogen could potentially be constrained by a lack of renewable power. Globally, approximately a quarter of renewable electricity generation (around 14,000 terawatt-hours) could be required to produce the green hydrogen needed by 2050 in the Further Acceleration scenario. Further potential bottlenecks to be tackled to achieve strong green hydrogen uptake include large-scale investments and deployment of at-scale manufacturing of electrolyzers, with cost competitiveness being strongly dependent on the latter.

Clean hydrogen cost competitiveness is projected to vary between regions

Clean hydrogen production costs are expected to drop significantly by 2030–50, with large differences across regions under the scenarios explored. Cost differentials among regions could drive an increased mismatch between supply and demand centers and thus lead to the development of major hydrogen and hydrogen-derivatives export hubs.

Regions with cost-competitive natural gas resources and CCUS, such as the Middle East, Norway, and the United States, are expected to have the highest cost competitiveness and could potentially account for 30 percent of exports at production costs of below $1.5/kg by 2050.

Regions with access to low-cost renewable power, such as Australia or North Africa, could make up an additional 60 percent of exports at production costs of between $1.5/kg and $2/kg.

The growing hydrogen trade could enable uptake in countries that have strong decarbonization ambitions but lack the necessary energy resources for clean hydrogen production, such as parts of Europe, as well as Japan and South Korea.

A global hydrogen trade could emerge to connect demand centers with resource-rich export hubs

Major hydrogen trade flows are expected to evolve to connect export hubs with favorable renewable power or natural gas resources to two main demand regions: Asia and Europe.

Europe could meet most of its demand from within the region, importing from countries with low gas prices or abundant hydro and solar power, such as Iberia and the Nordics. The remainder could be sourced from the Middle East, North Africa, and North America. Asia could source hydrogen from countries and regions like Australia, Latin America, the Middle East, and North America.

Regions with favorable routes to market—either by producing and shipping as derivatives or building a strategic network of hydrogen pipelines toward off-takers, potentially re-using existing natural gas infrastructure—may also emerge as production hubs.

While major trade flows in Europe will likely depend heavily on pipelines, shipping could prove critical to enable overseas trade. Hydrogen shipping could be expedited by converting hydrogen to synfuels (such as ammonia or methanol) at export hubs. Liquid hydrogen shipment could be one way to enable the global hydrogen trade after 2030, potentially increasing to approximately 20 Mtpa traded in 2050 in the faster scenarios.

Although this projected ramp-up of the global hydrogen trade is ambitious, it does have historical precedent—similar growth was observed in the first 25 years of LNG development.

About the Global Energy Perspective 2023

Hydrogen is a versatile energy carrier that has the potential to play a significant role in decarbonizing the energy system. Hydrogen-based technologies and fuels can provide low-carbon alternatives across sectors. However, as of now, there is still a wide range of possible hydrogen pathways up to 2050 both in terms of hydrogen demand and supply, leading to uncertainty for organizations looking to enter the hydrogen market or to scale their operations.

Government and private sector support is projected to heavily affect hydrogen uptake. At the same time, future technological developments of alternatives (for instance, high-temperature electric furnaces, long-duration energy storage, and availability of biobased feedstock) could also create competition in some of the new applications for hydrogen and hydrogen-based fuels. Hydrogen companies may benefit from closely monitoring signposts on policies, the development of hydrogen-enabling infrastructure, and the cost-competitiveness of hydrogen-based technologies compared to other low-carbon alternatives as they chart their way forward.

To request access to the data and analytics related to our Hydrogen outlook, or to speak to our team, please contact us .

Chiara Gulli is a solution manager in McKinsey’s Amsterdam office; Bernd Heid is a senior partner in the New York office, where Maurits Waardenburg is a partner;  Jesse Noffsinger is a partner in the Seattle office; and Maurits Waardenburg is a partner in the Brussels office.

The authors wish to thank Cristina Blajin, Alison Hightman, Albertine Potter van Loon, and Ole Rolser for their contributions to this article.

Explore a career with us

Notification: View the latest site access restrictions, updates, and resources related to the coronavirus (COVID-19) »

H2A: Hydrogen Analysis Production Models

The Hydrogen Analysis (H2A) hydrogen production models and case studies provide transparent reporting of process design assumptions and a consistent cost analysis methodology for hydrogen production at central and distributed (forecourt/filling-station) facilities.

The H2A central and distributed hydrogen production technology case studies, blank model cases, and documentation are available for free. NREL develops and maintains these models with support from the U.S. Department of Energy Hydrogen and Fuel Cell Technologies Office.

Required input to the models includes capital and operating costs for the hydrogen production process, fuel type and use, and financial parameters such as the type of financing, plant life, and desired internal rate of return. The models include default values, developed by the H2A team, for many of the input parameters, but users may also enter their own values. The models use a standard discounted cash flow rate of return analysis methodology to determine the hydrogen selling cost for the desired internal rate of return.

For a more convenient, high-level techno-economic view of select hydrogen production technologies, use our H2A-Lite model .

Case Studies

The H2A case studies are technology-specific versions of the base models developed by members of the H2A team with expertise in design and advancement of these technologies. These files contain macros necessary for hydrogen price calculation. Make sure macro use is allowed in Excel. If you have difficulty opening these Excel files through your browser, please contact the webmaster .

Current Central Hydrogen Production via Biomass Gasification version Oct 2020

Future Central Hydrogen Production via Biomass Gasification version Oct 2020

Current Central Hydrogen Production from Coal Gasification with CO₂ Capture and Sequestration version Aug 2022

Current Central Hydrogen Production from Solid Oxide Electrolysis version Nov 2020

Future Central Hydrogen Production from Solid Oxide Electrolysis version Nov 2020

Current Central Hydrogen Production from Polymer Electrolyte Membrane (PEM) Electrolysis (2019) version Nov 2020

Future Central Hydrogen Production from PEM Electrolysis (2019) version Nov 2020

View supporting documentation for the PEM and solid oxide electrolysis case studies .

Current Central Hydrogen Production from Steam Methane Reforming of Natural Gas without CO 2 Capture and Sequestration version Aug 2022

Current Central Hydrogen Production from Steam Methane Reforming of Natural Gas with CO₂ Capture and Sequestration version Aug 2022

Current Central Hydrogen Production from Natural Gas Autothermal Reforming with CO₂ Capture and Sequestration version Aug 2022

Current Distributed Hydrogen Production from Polymer Electrolyte Membrane (PEM) Electrolysis version April 2022

Future Distributed Hydrogen Production from PEM Electrolysis version April 2022

View supporting documentation for the PEM electrolysis case studies .

Current Distributed Hydrogen Production from Ethanol version May 2022

Future Distributed Hydrogen Production from Ethanol version May 2022

Current Distributed Hydrogen Production from Natural Gas (1,500 kg per day) version April 2022

Future Distributed Hydrogen Production from Natural Gas (1,500 kg per day) version May 2022

Future Central Hydrogen Production from Photoelectrochemical Type 2 version Oct 2020

Future Central Hydrogen Production from Photoelectrochemical Type 4 version Oct 2020

Future Central Hydrogen Production from Solar Thermo-Chemical Ferrite Cycle version Oct 2020

H2A Hydrogen Production Model: Version 3.2018 User Guide (DRAFT)

Case Study Documentation

Supporting documentation about model development, analysis parameters, and results is available for some of the case studies.

Central Solid Oxide Electrolysis

DOE Hydrogen and Fuel Cells Program Record 16014: Hydrogen Production Cost from Solid Oxide Electrolysis

Central and Distributed Polymer Electrolyte Membrane Electrolysis

PEM Electrolysis H2A Production Case Study Documentation

DOE Hydrogen and Fuel Cells Program Record 19009: Hydrogen Production Cost from PEM Electrolysis

Hydrogen Pathways Analysis for Polymer Electrolyte Membrane (PEM) Electrolysis , 2014 Annual Merit Review Proceedings

Blank Model Cases

Blank versions of the central and distributed production models that contain no pre-populated capital inputs are also available for download.

H2A Central Hydrogen Production Model version 3.2018

H2A Current Distributed Hydrogen Production Model version 3.2018

Version History

Version 3.2018 of the models was released in 2018 and includes the following updates and corrections:

• Updated plant start dates: current technology to 2015 and future technologies to 2040.
• Updated energy feedstock costs with AEO 2017 case. Costs were extrapolated beyond AEO forecast window using GCAM .
• Changed reference year dollars to 2016$.
• Updated emissions factors with GREET 2015 values .
• Updated distributed hydrogen production cases to comply with HDSAM updated parameters for hydrogen refueling stations.
• Updated price indexes for GDP deflator, plant cost, labor cost, and chemical price until 2016.
• Updated carbon sequestration techno-economic assessment.
• Updated federal tax rate to 21%.

Updated cost of capital parameters: 40% equity financing, constant outstanding debt, 3.7% interest rate, 8% real after-tax internal rate of return.

For more version history and to download previous versions, see the H2A model archives .

Technical Support

Send questions or feedback to [email protected].

February 2024, Vol. 251, No. 2

• Current Issue
• Full Access Subscription
• Renew Subscription
• Author Guidelines
• Special Reports
• Latest News
• Conference News
• Newsletter Sign-Up
• Sustainability Leadership (Blog)
• Associations
• Project Data
• Gulf Energy Information Store
• Pipeline Projects
• Whitepapers
• Gulf Energy Information Excellence Awards
• Women’s Global Leadership Conference
• Underground Infrastructure Conference
• Pipeline Data
• Construction
• Metering & Measurement
• Corrosion Control & Prevention
• Compression
• Natural Gas
• Processing/LNG
• Technology/R&D
• Environment
• North America
• Central & South America
• Asia/Pacific
• Russia & CIS
• Middle East
• Perspectives

Spain to Launch $2.5 Billion Plan to Boost Green Hydrogen Production

(Reuters) — Spanish Prime Minister Pedro Sanchez on Wednesday announced a new plan worth 2.3 billion euros ($2.5 billion) to boost the country's transition to clean energy, including subsidies for green energy industries and hydrogen made from renewable power.

The plan will also include measures to help agriculture, infrastructure and villages transition to green energy, Sanchez said in an address to the lower house.

He did not provide more details of the new plan.

Spain has positioned itself as a renewable energy leader in Europe, taking advantage of its abundant sunshine and strong winds to produce energy.

With renewables breaking records, the country is now vying to be one of the major producers in the region of green hydrogen produced from renewable electricity.

Earlier this month, Madrid approved a 794 million euro package of subsidies for large green hydrogen projects in the country with a potential overall electrolysis capacity of 652 megawatts.

Subsidies are vital for green hydrogen projects due to high costs and are not competitive without public support.

Spain's draft climate strategy a 2030 target of 11 gigawatts (GW) for electrolyzers, up from a previous 4 GW.

($1 = 0.9167 euros)

Related News

• AG&P LNG Acquires 49% Stake in Vietnam's Cai Mep LNG Terminal
• Hess Reassesses Chevron's $53 Billion Merger Timeline Amid Exxon's Bid
• Santos Faces Fresh Legal Setback Over $2.4 Billion Narrabri Gas Project
• Xcel Energy Says Its Facilities Likely Started Texas Fire, Faces Negligence Allegations
• Mexico's Pemex, Billionaire Investor Carlos Slim Discuss Reviving Deepwater Gas Project
• Exxon Challenges Hess's Guyana Asset Sale, Signals Potential Bid

• Most Commented
• Mexican President: Billionaire Slim Interested in Pemex Natural Gas Project
• Freeport LNG Sues Three Contractors Over Defects at Texas Plant
• Energy Transfer Adds 6,000 Miles of Pipeline with $3.25 Billion WTG Midstream Acquisition
• FERC Approves Transco's Texas to Louisiana Gas Pipeline Project
• Kinder Morgan Acquires Texas Oilfield to Leverage Carbon Tax Credits, Sources Say
• U.S. to Buy 4.5 Million Barrels of Oil to Replenish Strategic Petroleum Reserve
• Kurdish Oil Smuggling to Iran Flourishes
• U.S. Court Overturns Alaska Oil Lease Sale, Halting Energy Development
• Nigeria’s New Pipeline Project Is Never Done Until It Is Done
• API Releases New Standard for Public Engagement in Pipeline Operations

• Reprints & Back Issues
• Newsletter Sign Up
• Buyer's Guide
• Global Energy Infrastructure
• White Papers
• Energy Events Calendar
• Underground Construction Technology
• Eastern Mediterranean Gas Conference
• Pipeline Opportunities Conference
• Women's Global Leadership Conference
• Pipeline & Gas Journal Awards
• Business & Markets
• Community & Environment
• Gulf Energy Information
• Hydrocarbon Processing
• PE Media Network
• Gas Processing & LNG
• Underground Infrastructure

We've detected unusual activity from your computer network

To continue, please click the box below to let us know you're not a robot.

Why did this happen?

Please make sure your browser supports JavaScript and cookies and that you are not blocking them from loading. For more information you can review our Terms of Service and Cookie Policy .

For inquiries related to this message please contact our support team and provide the reference ID below.

We collect cookies. Read our privacy policy . Do you accept?

Jul 11, 2024

Joby demonstrates potential for emissions-free regional journeys with landmark 523-mile hydrogen-electric flight

Hydrogen-electric program builds on technology developed by Joby subsidiary H2FLY, acquired in 2021, and forms part of Joby’s future technology roadmap; Joby’s hydrogen-electric, vertical take-off and landing demonstrator aircraft completes landmark 523 mile flight, with water as the only by-product; Flight demonstrates potential for emissions-free regional travel; Hydrogen-electric program supported through Joby’s partnership with the U.S. Air Force’s Agility Prime program

On June 24, 2024, Joby’s hydrogen-electric technology demonstrator aircraft completed a 523-mile flight above Marina, California, with no in-flight emissions except water. Joby Aviation Photo

Santa Cruz, CA, Jul 11, 2024 — Joby Aviation, Inc. (NYSE:JOBY), a next generation aviation company, today announced it has successfully flown a first-of-its-kind hydrogen-electric air taxi demonstrator 523 miles, with water as the only by-product. The aircraft, which takes off and lands vertically, builds on Joby’s successful battery-electric air taxi development program, and demonstrates the potential for hydrogen to unlock emissions-free, regional journeys that don’t require a runway.

JoeBen Bevirt, Founder and CEO, Joby, said: “Traveling by air is central to human progress, but we need to find ways to make it cleaner. With our battery-electric air taxi set to fundamentally change the way we move around cities, we’re excited to now be building a technology stack that could redefine regional travel using hydrogen-electric aircraft.

“Imagine being able to fly from San Francisco to San Diego, Boston to Baltimore, or Nashville to New Orleans without the need to go to an airport and with no emissions except water. That world is closer than ever, and the progress we’ve made towards certifying the battery-electric version of our aircraft gives us a great head start as we look ahead to making hydrogen-electric flight a reality.

“The vast majority of the design, testing and certification work we’ve completed on our battery-electric aircraft carries over to commercializing hydrogen-electric flight. In service, we also expect to be able to use the same landing pads, the same operations team, and Joby’s ElevateOS software that will support the commercial operation of our battery-electric aircraft.”

The landmark test flight, believed to be the first forward flight of a vertical take off and landing aircraft powered by liquid hydrogen, was completed last month using a converted Joby pre-production prototype battery-electric aircraft fitted with a liquid hydrogen fuel tank and fuel cell system. It landed with 10% of its hydrogen fuel load remaining.

Jacob Wilson, (Acting) Branch Chief, AFWERX Agility Prime, said: "Agility Prime has been very supportive of hydrogen-powered aircraft development and testing as it aligns with the program’s goals to advance transformative vertical lift technologies and broader Department of Defense operational energy goals of energy substitution and diversification, and energy demand reduction."

“Clean hydrogen has the potential to help decarbonize our aviation system for decades to come,” said Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy Jeff Marootian. “Regional air mobility innovation provides a clear opportunity to incorporate clean hydrogen into the future of transportation.” 

"Joby is a stellar example of why California continues to lead the world in clean technology and high-tech manufacturing,” said Dee Dee Myers, Senior Advisor to California Governor Gavin Newsom and Director of the Governor’s Office of Business and Economic Development. “Their pioneering work to decarbonize aviation, by advancing battery and now hydrogen fuel cell technology, is helping to fight climate change and create a clean energy future that will improve the lives of all Californians.”

Joby’s hydrogen-electric demonstrator is part of the Company’s future technology program and is the result of several years of collaboration between a small team at Joby and H2FLY, Joby’s wholly-owned subsidiary based in Stuttgart, Germany. The converted aircraft previously completed more than 25,000 miles of testing as a battery-electric aircraft at Joby’s base in Marina, CA.

Using the same airframe and overall architecture as Joby’s core, battery-electric aircraft, this demonstrator features a liquid hydrogen fuel tank, designed and built by Joby, which stores up to 40 kilograms of liquid hydrogen, alongside a reduced mass of batteries. Hydrogen is fed into a fuel cell system, designed and built by H2FLY, to produce electricity, water, and heat. The electricity produced by the hydrogen fuel cell powers the six electric motors on the Joby aircraft, with the batteries providing additional power primarily during take-off and landing.

Joby’s H2FLY team used similar technology to complete another record-breaking flight in September 2023, when they flew the world’s first piloted flight of a conventional liquid hydrogen-electric aircraft using their fuel cell technology.

As part of Joby’s wider commitment to leading the way on the development of new aviation technologies, it recently acquired Xwing Inc., an industry leader in the development of autonomous technology for aviation. Xwing has been flying autonomous aircraft since 2020, with 250 fully autonomous flights and more than 500 auto-landings completed to date, using the Superpilot software it developed in-house.

Joby plans to start commercial operations as soon as 2025, using its battery-electric air taxi. The Company is listed on the New York Stock Exchange and has raised more than $2 billion of funding to date, including investments from Toyota, Delta Air Lines, SK Telecom, Uber and Baillie Gifford.

Media assets, including photos and footage of Joby’s hydrogen-electric technology demonstrator aircraft, are available here .

Joby Aviation, Inc. (NYSE:JOBY) is a California-based transportation company developing an all-electric, vertical take-off and landing air taxi which it intends to operate as part of a fast, quiet, and convenient service in cities around the world. To learn more, visit www.jobyaviation.com .

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding the development and performance of our aircraft, the growth of our manufacturing capabilities, our regulatory outlook, progress and timing, including our expectation to start commercial air taxi operations as soon as 2025; our planned operations with the Department of Defense; our business plan, objectives, goals and market opportunity; potential benefits of, and use cases for, hydrogen-electric aircraft; the markets in which we expect to operate or sell our aircraft; and our current expectations relating to our business, financial condition, results of operations, prospects, capital needs and growth of our operations, including the expected benefits of our vertically-integrated business model. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”, “will”, “should”, “can have”, “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. All forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including: our ability to launch our air taxi service and the growth of the urban air mobility market generally; our ability to produce aircraft that meet our performance expectations in the volumes and on the timelines that we project; unknown demand, performance characteristics and certification requirements for hydrogen-electric aircraft; the competitive environment in which we operate; our future capital needs; our ability to adequately protect and enforce our intellectual property rights; our ability to effectively respond to evolving regulations and standards relating to our aircraft; our reliance on third-party suppliers and service partners; uncertainties related to our estimates of the size of the market for our service and future revenue opportunities; and other important factors discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2024, and in future filings and other reports we file with or furnish to the SEC. Any such forward-looking statements represent management’s estimates and beliefs as of the date of this release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.

[email protected]

[email protected]

• Work & Careers
• Life & Arts

EU hydrogen targets are ‘unrealistic’, says audit body

To read this article for free register now.

Once registered, you can:

• Read free articles
• Get our Editor's Digest and other newsletters
• Follow topics and set up personalised events
• Access Alphaville: our popular markets and finance blog
• Global news & analysis
• Expert opinion
• Special features
• FirstFT newsletter
• Videos & Podcasts
• Android & iOS app
• FT Edit app
• 10 gift articles per month

Explore more offers.

Standard digital.

• FT Digital Edition

Premium Digital

Print + premium digital, ft professional, weekend print + standard digital, weekend print + premium digital.

Then $75 per month. Complete digital access to quality FT journalism. Cancel anytime during your trial.

• Global news & analysis
• Exclusive FT analysis
• FT App on Android & iOS
• FirstFT: the day's biggest stories
• 20+ curated newsletters
• Follow topics & set alerts with myFT
• FT Videos & Podcasts
• 20 monthly gift articles to share
• Lex: FT's flagship investment column
• 15+ Premium newsletters by leading experts
• FT Digital Edition: our digitised print edition
• Weekday Print Edition
• Videos & Podcasts
• Premium newsletters
• 10 additional gift articles per month
• FT Weekend Print delivery
• Everything in Standard Digital
• Everything in Premium Digital

Today's FT newspaper for easy reading on any device. This does not include ft.com or FT App access.

• 10 monthly gift articles to share
• Everything in Print
• Make and share highlights
• FT Workspace
• Markets data widget
• Subscription Manager
• Workflow integrations
• Occasional readers go free
• Volume discount

Essential digital access to quality FT journalism on any device. Pay a year upfront and save 20%.

Terms & Conditions apply

Explore our full range of subscriptions.

Why the ft.

See why over a million readers pay to read the Financial Times.

• Hydrogen and Fuel Cell Technologies Office
• Key Activities
• Plans, Implementation & Results
• Accomplishments
• Biomass Gasification
• Biomass-Derived Liquid Reforming
• Natural Gas Reforming
• Thermochemical Water Splitting
• Photoelectrochemical Water Splitting
• Electrolysis
• Photobiological
• Microbial Biomass Conversion
• Hydrogen Production Related Links
• Compression
• Tube Trailers
• Liquid Hydrogen
• Novel Carriers
• On-Site & Bulk Storage
• Dispensing to Vehicles
• Hydrogen Delivery Related Links
• Physical Storage
• Metal Hydrides
• Chemical Hydrogen
• Hydrogen Storage Engineering Center of Excellence
• Hydrogen Storage Related Links
• Parts of a Fuel Cell
• Fuel Cell Systems
• Types of Fuel Cells
• Fuel Cells Related Links
• Technology Validation
• Manufacturing Related Links
• Safe Use of Hydrogen
• Codes & Standards
• Current Safe Operating Practices
• Regulations, Guidelines, & Codes & Standards
• Hydrogen Safety R&D Projects
• Project Safety Oversight Activities
• Codes & Standards Activities
• Increase Your H2IQ
• For Safety & Code Officials
• For State & Local Governments
• For Early Adopters
• Grades 5-12
• Higher Education
• Energy Education Links
• Careers in Hydrogen & Fuel Cells
• Early Adoption of Fuel Cells
• Early Market Applications for Fuel Cells
• Financial Incentives
• Resource Analysis
• Technological Feasibility & Cost Analysis
• Environmental Analysis
• Delivery Analysis
• Infrastructure Development & Financial Analysis
• Energy Market Analysis
• DOE H2A Analysis
• Scenario Analysis
• Publications
• Roadmaps & Program Plans
• Reports to Congress
• Annual Progress Reports
• Annual Merit Review & Peer Evaluation Reports
• Fuel Cell Technical Publications
• Safety, Codes, & Standards
• Market Analysis
• Jobs & Economic Impacts
• Educational Publications
• Program Presentations
• Annual Merit Review Proceedings
• Workshop & Meeting Proceedings
• Data Records
• Funding Opportunities
• Hydrogen & Fuel Cell News

Welcome to the latest edition of @H2News , the   newsletter of the U.S. Department of Energy's (DOE's) Hydrogen and Fuel Cell Technologies Office (HFTO), with collaboration from other offices in the DOE Hydrogen Program. 

This newsletter is a quarterly resource that includes a recap of news and events from the previous three months, as well as a preview of upcoming activities. Please visit the  archives for past newsletters. 

In this issue:

In the News

Funding opportunities and prize competitions, events, workshops, and webinars, studies, reports, and publications, engagement opportunities, hfto releases multi-year program plan.

In May, HFTO announced the publication of its  Multi-Year Program Plan  ( MYPP ), a detailed strategy and planning document that will help guide clean hydrogen innovation and research in the coming years. The  MYPP  sets forth HFTO's mission, goals, and strategic approach relative to broader DOE and national clean energy priorities.

Specific targets outlined in the  MYPP   include the following:

• Clean hydrogen production cost of $2 per kilogram by 2026 and $1 per kilogram by 2031.
• Electrolyzer system cost of $250 per kilowatt (low-temperature electrolyzers) and $500 per kilowatt (high-temperature electrolyzers) by 2026.
• Dispensed hydrogen cost for heavy-duty vehicles of $7 per kilogram by 2028.
• Fuel cell system cost for heavy-duty transportation of $80 per kilowatt by 2030.

DOE Announces $1.6 Billion Loan Guarantee for Plug Power to Produce Clean Hydrogen Fuel

In May, DOE's Loan Programs Office announced a conditional commitment  to Plug Power Inc. for up to $1.66 billion in the form of a loan guarantee to help finance the construction of up to six facilities across several states to produce clean hydrogen utilizing the company's electrolyzer technology. This loan guarantee will support up to 300 jobs during the construction period, and at least 50 new full-time jobs for each location. Plug Power is among the leading commercial-scale manufacturers of electrolyzers in the United States and currently operates the nation's largest proton exchange membrane electrolyzer system at its Georgia hydrogen plant. 

HFTO Launches Clean Hydrogen and Environmental Justice Web Resource

In June, HFTO  launched a new web resource,  Clean Hydrogen and Environmental Justice , underscoring DOE's commitment to a just and equitable clean energy transition benefitting all communities, particularly those that have endured disproportionate harm from energy infrastructure in the past. This new resource further supports stakeholder engagement and education through  Draft Responses to Frequently Asked Questions and Common Concerns about Clean Hydrogen . This section provides thorough, science-based information in response to an initial collection of high-priority questions asked in a range of community engagements across the nation. 

HFTO Announces H2 Twin Cities Winners 

In June, HFTO, in partnership with the Clean Energy Ministerial,  announced the winners of the latest round of the  H2 Twin Cities program  at the Hydrogen Americas 2024 Summit & Exhibition in Washington, D.C. H2 Twin Cities is administered by the Clean Energy Ministerial Clean Hydrogen Initiative (CEM H2I) and serves to accelerate global adoption of clean hydrogen technologies by connecting cities and communities around the world to share ideas, mentor and learn from each other, and strengthen global commitment to environmental justice, social equity, and clean energy jobs.

DOE and National Science Foundation Announce Clean Hydrogen Internship Program

In May, DOE and the National Science Foundation (NSF)  announced a new internship program to support workforce development goals outlined in the U.S. National Clean Hydrogen Strategy and Roadmap. This new internship collaboration is funded by HFTO as part of NSF's  Non-Academic Research Internships for Graduate Students  program. The program will support up to 10 six-month research internships per year for graduate students currently involved in active NSF grants, who are interested in professional development and training for careers that support the emerging clean hydrogen economy. 

DOE Announces $1.3 Billion Funding Opportunity for EV and Alternative Fueling Infrastructure—Including Hydrogen

In June, the Joint Office of Energy and Transportation (Joint Office)  announced a historic $1.3 billion funding opportunity for electric vehicle (EV) charging and alternative fueling infrastructure—including hydrogen fueling infrastructure—in urban and rural communities and along designated highways, interstates, and major roadways. Applications are due by August 28. 

DOE Announces $8 Million to Advance Electrolyzer and Fuel Cell Manufacturing RD&D

In May, HFTO  announced $8 million for up to 15 research, development, and demonstration (RD&D) projects that leverage DOE's Roll-to-Roll (R2R) Consortium. This funding provides an opportunity for private sector entities to partner with national labs to receive funding via cooperative research and development agreements (CRADAs). The National Renewable Energy Laboratory will manage the selection of these projects, which will complement manufacturing and recycling efforts funded by the Bipartisan Infrastructure Law and help fast-track the growth of the clean hydrogen economy. 

DOE Announces Phase Two Winners of Hydrogen Shot Incubator Prize

In April, DOE  announced the phase-two winners of the  Hydrogen Shot Incubator Prize , a multi-phase competition launched by HFTO to identify, develop, and test disruptive technologies that reduce the cost of producing clean hydrogen. This prize competition complements DOE's comprehensive portfolio of RD&D efforts to achieve DOE's  Hydrogen Shot  goal of reducing the cost of producing clean hydrogen to $1 per kg. The four winners announced for this phase (the  Prove!  phase) will each receive $300,000 in national laboratory vouchers and $100,000 in cash to support their demonstration efforts in preparation for the final stage in 2025—phase three ( Pitch Day! ), in which competing teams will present their innovations to potential investors and commercial partners.

DOE Announces MAKE IT Prize Winners

In April, DOE announced winners in both the Facilities and Strategies Tracks of the Manufacture of Advanced Key Energy Infrastructure Technologies (MAKE IT) Prize . DOE awarded a total of $4,500,000 to nine Facilities Track Phase 1 winners and a total of $600,000 to 12 Phase 1 Strategies Track winners. Hydrogen-related selections include Anderson Clean Energy and Ballard Power Systems. Anderson Clean Energy, on behalf of Bosch US, plans to establish an electrolyzer manufacturing facility in South Carolina. The electrolyzers manufactured in that facility will be a critical component for some of the Regional Clean Hydrogen Hubs and for future clean hydrogen generation facilities. Ballard Power Systems intends to establish a new hydrogen fuel cell engine assembly facility in Rockwall, Texas. The new facility is expected to create over 100 new skilled jobs.

HFTO Announces Winning Student Team in EnergyTech University Prize

In April, HFTO selected collegiate student team ECHO Solutions from the University of Houston as the  Bonus Prize Winner in the  EnergyTech University Prize (EnergyTech UP). This multi-stage prize competition challenged collegiate student teams to develop and present a business plan that leverages national laboratory-developed or other emerging energy technologies. Twenty-eight finalist teams traveled to Austin, Texas, in late April to compete in a national pitch event, where they presented their energy-focused business plans. The ECHO Solutions team was awarded $22,000 for its outstanding commercialization plans around end-user hydrogen adoption.

DOE Hydrogen Program Hosts Annual Merit Review May 6–9

The DOE Hydrogen Program hosted its  2024 Annual Merit Review and Peer Evaluation Meeting  (AMR) May 6–9, 2024, at the Hyatt Regency Crystal City in Arlington, Virginia. This four-day event convened more than 1,000 attendees and  showcased projects and subprograms from DOE's hydrogen portfolio, along with selected projects from other federal agencies. HFTO Director Dr. Sunita Satyapal kicked off the AMR with a  plenary overview outlining HFTO plans and progress to date. The AMR offers a unique view into how the U.S. government is advancing affordable clean hydrogen for a sustainable, resilient, and equitable economy in support of the  national clean hydrogen strategy  and the goals of the  Hydrogen Interagency Task Force . Based on stakeholder feedback and concurrent events in 2025, the next Hydrogen Program AMR will be held in May 2026—stay tuned for more details.

Hydrogen Interagency Task Force Takes Center Stage at the 2024 Annual Merit Review 

The opening plenary of the 2024 AMR featured a  Hydrogen Interagency Task Force (HIT) panel discussion focused on executing the national clean hydrogen strategy. Moderated by DOE Deputy Secretary David Turk , the panel featured leaders across the federal government, including Betsy Dirksen Londrigan , administrator for the U.S. Department of Agriculture; Tristan Brown , deputy administrator for the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration; Grant Harris , assistant secretary for the U.S. Department of Commerce; and David Brown , director of policy and planning for the U.S. Small Business Administration. The discussion centered on strengths and opportunities presented by a whole-of-government approach to clean hydrogen demonstration and deployment, with deeper discussion of infrastructure development and scalability, global outlook and potential, and workforce development. The AMR also featured a separate  HIT session that highlighted key activities from HIT working groups and crosscutting teams. Topics in that session included supply and demand; infrastructure, siting, and permitting; analysis and global competitiveness; and workforce and energy justice. 

DOE Hydrogen Program Presents 2024 AMR Awards and Postdoctoral Recognition Award

The 2024 AMR also featured presentations of awards to individuals from partner institutions for contributions to overall program efforts and to recognize RD&D achievements in specific areas. This year's awardees included two lifetime achievement awards presented to Nenad Markovic with Argonne National Laboratory and Piotr Zelenay with Los Alamos National Laboratory. Learn more about the  2024 award recipients  and how their critical work is helping America realize the full potential and benefits of clean hydrogen. Following the AMR awards, HFTO presented Dr. Tanya Agarwal of Los Alamos National Laboratory with the 2024  Postdoctoral Recognition Award for her work in advancing ionomer durability in membranes and electrodes. 

DOE Hosts Community-Engagement Event on Clean Hydrogen at Boston Museum of Science

In April, DOE's Office of Energy Justice and Equity (EJE) hosted a forum-based training session at the Boston Museum of Science entitled  Harnessing Hydrogen for a Just Transition . This full-day event convened nearly 100 participants interested in building stronger engagement platforms with local communities impacted by clean energy deployments. The learning objective of the activity was twofold: in the first activity, participants learned more about benefits and challenges related to the clean hydrogen economy; in the second activity, they learned how DOE  Community Benefits Plans  can facilitate highly effective stakeholder engagement strategies by fully exploring opportunities and concerns. 

DOE and SAMPE Co-Host Hydrogen Infrastructure Workshop on May 22

DOE and SAMPE North America co-hosted the Advanced Materials for Hydrogen Infrastructure Technologies Workshop on May 22, 2024, at the SAMPE 2024 Conference and Exhibition in Long Beach, California. The workshop explored current challenges and opportunities for the use of fiber-reinforced composites in hydrogen infrastructure applications. HFTO presenters included Ned Stetson, program manager; Zeric Hulvey, technology manager; and Asha-Dee Celestine, ORISE Fellow.

H2IQ Hour Webinar Recordings and Presentations Are Available

HFTO hosts monthly H2IQ Hour webinars to share information about the status and progress of DOE-funded hydrogen and fuel cell projects and initiatives and to provide a forum for exploration and discussion of general hydrogen and fuel cell topics. Recent topics include:

• H2EDGE Workforce Development
• Tri-Gen System at the Port of Long Beach
• National Petroleum Council Study on Low-Carbon Hydrogen

Recordings and presentation slides are available on the  H2IQ Hour webinars page .

Report Detailing Arctic Perspective on Hydrogen Now Available

A  report published in April by the Alaska Hydrogen Working Group explores the hydrogen economy in Alaska and establishes understanding of Alaska's hydrogen-related resources. It also outlines key opportunities to develop workforce programs, policy and regulatory frameworks, future research, and more. Authors of the report include Dr. Erin Whitney, director of the Arctic Energy Office, and Dr. Levi Kilcher, Arctic Energy Office advisor.

2024 AMR Spotlight: Accelerating Progress from the Hydrogen Shot to Hydrogen Hubs

DOE's Hydrogen Program convened a  special panel session at the 2024  Annual Merit Review and Peer Evaluation Meeting in May. This session featured program leaders from offices across DOE discussing key findings, core strategies, and next steps for galvanizing efforts across the RD&D spectrum, from basic research to commercial-scale deployments such as the  Regional Clean Hydrogen Hubs .

Discussions included market and technology readiness of various portfolio components of the Hydrogen Program; interoffice coordination across multiple DOE Earthshots; advancements in foundational science for carbon-neutral hydrogen technologies; the Office of Energy Efficiency and Renewable Energy's clean hydrogen mission and portfolio; hydrogen's role in supporting advanced nuclear energy pathways; and the scope of hub-adjacent industries and their relation to current DOE fossil energy and carbon management RD&D. 

Moderated by HFTO Chief Scientist  Eric Miller , the panel included Hydrogen Hubs Program Manager  Crystal Farmer with the Office of Clean Energy Demonstrations;  Jennifer Arrigo , director of science and energy crosscuts at the Office of the Under Secretary for Science and Innovation;  Gail McLean , division director at the Office of Science; HFTO Deputy Director  Nichole Fitzgerald ;  Bob Schrecengost , division director at the Office of Fossil Energy and Carbon Management; and  Jason Marcinkoski , program manager at the Office of Nuclear Energy. 

Argonne National Lab Announces New Test Facility to Help Decarbonize Heavy-Duty Transportation

With hydrogen emerging as a key strategy to decarbonize transportation and combat climate change, DOE's Argonne National Laboratory  announced in May that it is building an R&D test facility to develop and independently test large-scale fuel cell systems for heavy-duty and off-road applications. HFTO is providing approximately $4 million to support the effort. The goal is to improve the performance, durability, reliability, and efficiency of heavy-duty fuel cell systems while lowering the cost. 

When the facility comes online in fall 2025, industry will be able to access a dedicated location and support staff to test and validate proton exchange membrane (PEM) fuel cell systems ranging from 150 to 600 kilowatts. Few manufacturers have their own capacity to test and validate such large-scale fuel cell systems, and many have expressed interest in the ability of DOE national labs to provide such test capabilities. Argonne's facility will emulate powertrains for all on- and off-road heavy-duty vehicles by operating in a hardware-in-the-loop environment leveraging the laboratory's internationally recognized  Autonomie software  for application duty cycle commands.

"Providing the opportunity for independent, rigorous testing of first-of-a-kind, large-scale fuel cell systems will accelerate technology development and help identify challenges requiring further R&D," said HFTO Director Sunita Satyapal. ​"Such capabilities leverage the national labs' expertise and help to de-risk the technology before industry launches larger-scale demonstrations and deployments."

First-of-Its-Kind Hydrogen Facility in Texas Galvanizes Production of Low-Carbon Hydrogen

In April, the University of Texas at Austin's Center for Electromechanics, Frontier Energy, and GTI Energy  announced the grand opening of a new hydrogen research and demonstration facility. 

Located at UT Austin's J.J. Pickle Research Campus, the facility will generate zero-carbon hydrogen using water electrolysis powered by solar and wind energy, as well as steam methane reformation of renewable natural gas from a Texas landfill. The hydrogen will power a stationary fuel cell for clean, reliable power for the Texas Advanced Computing Center and supply zero-emission fuel to a fleet of Toyota Mirai fuel cell electric vehicles and to fuel cell drones. This approach marks the first time that multiple renewable hydrogen supplies and multiple end uses have been networked at a single location to demonstrate a scalable, economical hydrogen ecosystem.

This facility was developed as part of the " Demonstration and Framework for H2@Scale in Texas and Beyond " project, supported by HFTO. This first-of-its-kind hydrogen proto-hub is a significant leap forward in the clean hydrogen economy. As part of the project, a  recently released study  highlights Texas' strong position for clean hydrogen production. The state's existing hydrogen infrastructure and abundant wind and solar resources make it a prime candidate to help meet the nation's demand for clean hydrogen.

Hydrogen Fuel Cell-Powered Laboratory Vessel Completes Seven-Year Journey

Trop fort! In June, the  Energy Observer  returned to its home port of Saint-Malo, France, completing a  seven-year expedition around the world to champion the cause of sustainable energy. 

The world's first laboratory vessel powered by renewable electricity and fuel cells using clean hydrogen produced from seawater,  Energy Observer   docked earlier this year in Washington D.C., where HFTO Director Dr. Sunita Satyapal joined members of the Hydrogen Interagency Task Force and other HFTO staff for an  onboard visit . The team examined the hydrogen fuel cells in operation and exchanged ideas with the ship's crew on performance, durability, and integration of clean hydrogen technology for seafaring vessels. HFTO led the development of some of the hydrogen and fuel cell innovations in use on the  Energy Observer,  including advances in electrolyzer technology and use of carbon fiber storage tanks. 

Remembering Dr. Shimshon Gottesfeld, a Devoted Leader in Fuel Cells and Electrochemistry

HFTO extends its deepest sympathies to the family, friends, and colleagues of Dr. Shimshon Gottesfeld , who passed away July 5 after a lengthy battle with cancer. Dr. Gottesfeld was a world leading fuel cell scientist and passionate alternative energy advocate. As a pioneering fuel cell educator, innovator, and mentor, his team played a critical role in demonstrating the commercial viability of proton exchange membrane fuel cells. He was a key contributor to the success of Los Alamos National Laboratory's fuel cell program and served as a member and chair of the Physical Electrochemistry Division of The Electrochemical Society. 

Clean Hydrogen Fellowships Currently Available

HFTO encourages interested candidates to apply for  available fellowships . These fellowships directly support the commitment shared by DOE and the White House to advance innovative climate solutions and strengthen America's leadership in science and engineering, which are critical to achieving a carbon-free grid by 2035 and net-zero emissions by 2050. Recent graduates and experienced scientists and engineers are encouraged to apply—fellowship activities are flexible and can be adapted to each candidate's previous experience.

Employment Opportunities and Internships

Interested in becoming a clean energy champion? HFTO has its own hiring page with open positions for technical experts to assist with the office's hydrogen production, hydrogen infrastructure, and manufacturing efforts. There are many other ways to get involved, too, including the DOE Office of Energy Efficiency and Renewable Energy (EERE) Science, Technology, and Policy Fellowships (such as the Hydrogen Shot Fellowship ); careers ; and internships . Stay up-to-date on EERE opportunities and subscribe to the EERE Career Opportunities email list . 

Interested in Becoming a Hydrogen and Fuel Cells Project Reviewer?

HFTO is looking for a diverse pool of subject matter experts to review applications for federal funding programs. Desired areas of expertise include (but are not limited to):

• Hydrogen production, storage, and delivery
• Hydrogen fuel cell technologies
• Hydrogen and energy infrastructure
• Integrated energy systems
• Manufacturing 
• Recycling and recovery
• System integration 
• Diversity, equity, and inclusion
• Safety, codes, and standards. 

Apply to be a reviewer today!

Stay current with hydrogen and clean energy news!

• Subscribe to Hydrogen and Fuel Cell News from HFTO to stay up to date on hydrogen and fuel cell news and funding opportunities.
• Subscribe to EERE's Weekly Jolt for the latest clean energy news from DOE's Office of Energy Efficiency and Renewable Energy.

Exclusive: US-Japan Patriot missile production plan hits Boeing component roadblock

• Medium Text

Sign up here.

Reporting by Nobuhiro Kubo, Tim Kelly; additional reporting by Mike Stone, Allison Lampert, Idrees Ali and Kaori Kaneko; Editing by Gerry Doyle and Sam Holmes

Our Standards: The Thomson Reuters Trust Principles. , opens new tab

A U.S. plan to use Japanese factories to boost production of Patriot air defence missiles - used by Ukraine to defend against Russian attacks - is being delayed by a shortage of a critical component manufactured by Boeing, four sources said.