To fully decarbonize the world economy it is likely that a clean molecule-based fuel will be needed. Renewable electricity can help substantially reduce emissions, but many applications in today’s economy require the physical properties of a molecule – namely, a high energy density, the capacity to be stored for long periods, and the ability to perform chemical reactions. These applications, known as the hard-to-abate sectors, include: • Heavy trucks; shipping; aviation • Dispatchable electricity generation beyond a few days • Industrial processes that require high temperature heat like cement, aluminum and glass • To some extent, the heating of buildings and water • The production of chemicals, fertilizers and plastics, and manufacturing of products like steel, glass and food Hydrogen is well-placed to meet the requirements of many of these applications. It is versatile, reactive, storable, transportable, clean burning, and can be produced with low or zero emissions.
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Policies and funding
Policies and subsidies will be essential for clean H2 to scale up and become competitive with fossil fuels. Since our March 2020 Hydrogen Economy Outlook (free public summary) came out, many countries have made progress on two key enabling policies: the announcement and legislation of net-zero targets and national hydrogen strategies, targets and investment mechanisms. We have identified 13 countries with hydrogen strategies as of January 19, 2021 (see map on page 2). The European Union also announced a hydrogen roadmap, which requires member states without a plan to formulate one. A further 11 countries were preparing a hydrogen strategy during the course of last year, meaning that 2021 could see even more such documents. Still, clean H2 will need more government funding and higher carbon prices to take off.
The Hydrogen Market Outlook, available to BloombergNEF clients, is a bi-annual assessment of trends and developments for hydrogen.
