In the report, Deloitte uses clean hydrogen to encompass both green hydrogen— produced from renewable electricity via electrolysis—and blue hydrogen—produced via natural gas coupled with carbon capture and storage.
To achieve climate neutrality by 2050, the clean hydrogen market capacity can grow to 170 million tons (MtH2eq) in 2030 and to 600 MtH2eq in 2050. Demand is expected to initially build on the decarbonization of existing industrial uses of hydrogen (95 MtH2eq), most notably for fertilizer production. The net-zero transition then underpins rapid demand growth, cementing hydrogen’s role as a versatile solution for decarbonization.
By 2050, industry (iron and steel, chemicals, cement, and high- temperature heating) and transport (aviation, shipping, and heavy road transport) respectively can account for 42% and 36% of total clean hydrogen demand. Overall, this outlook shows clean hydrogen delivering crucial carbon emission reductions. Decarbonizing current and developing new end-uses, it can abate up to 85 GtCO2eq in cumulative emissions by 2050, more than twice global CO2 emissions in 2021.—Deloitte report
The projections come from Deloitte’s Hydrogen Pathway Explorer (HyPE) model, which delivers one of the most comprehensive analyses of the supply of hydrogen globally. This research shows that clean hydrogen can deliver up to 85 gigatons in reductions to cumulative CO2 emissions by 2050, more than twice global CO2 emissions in 2021.
Deloitte’s outlook provides extensive detail into the cost, production, and market of hydrogen, even analyzing the business challenges facing the successful implementation of clean hydrogen, and providing insights into various market dynamics, such as optimal infrastructure sizing, investment needs, and technology choices.
Interregional trade is key to helping unlock the full potential of the clean hydrogen market, supported by diversified transport infrastructure. Regions that are currently able to produce cost-competitive hydrogen in quantities that exceed domestic needs are already positioning themselves as future hydrogen exporters—supplying other less-competitive regions and helping to smoothly facilitate the energy transition. Notably, global hydrogen trade is projected to generate more than US$280 billion in annual export revenues by 2050, with North Africa expected to benefit the most (US$110 billion per year) due to its high export potential.
If policymakers and business leaders provide decisive support of the market, green hydrogen can outcompete carbon-intensive hydrogen production in less than 10 years.
Reducing our carbon emissions and the physical and economic damages from unmitigated climate change is a massive win for nations and businesses alike. This represents a key pathway for the world’s developing countries to establish their energy security and independence, bolster economic growth as a result of the investment that will need to flow, and collectively firm up global growth and resilience.—Jennifer Steinmann, Deloitte Global Sustainability & Climate practice leader
According to the report, major supply chain investment will be needed to help optimize the global value of clean hydrogen. The report estimates more than US$9 trillion of cumulative investments are required in the global clean hydrogen supply chain to help meet net-zero compliance by 2050, including US$3.1 trillion in developing economies.
To help achieve climate neutrality by the middle of the century, the Deloitte outlook shows clean hydrogen supply growing to approximately 600 MtH2eq in 2050. However, based on current clean hydrogen project announcements, the global community could only provide a collective production capacity to meet one quarter of the projected demand in 2030.
To help scale up a robust and fair clean hydrogen economy to meet projected demand, the report recommends policymakers focus attention on three key components:
Lay the market foundation. Lay out national and regional strategies to lend credibility to the market, develop a robust and shared certification process for clean hydrogen to help ensure transparency, and coordinate internationally to help mitigate political friction and promote a level playing field.
Spur action. Establish clear targets and/or markets for clean hydrogen-based products and offer pointed instruments, such as fiscal incentives and subsidies, to help reduce the cost difference between clean and fossil-based technologies and help businesses integrate clean hydrogen into their value chains.
Ensure long-term resilience. Diversify value chains—from trade partners to raw material suppliers—to help prevent costly bottlenecks during the transition to clean hydrogen, focusing specifically on improving infrastructure design to more effectively transport (pipelines and marine roads) and store (strategic reserves) clean hydrogen commodities.
To help policymakers and business leaders plan and execute a future built on clean hydrogen, Deloitte has unveiled its Global Hydrogen Center of Excellence. The center is dedicated to supporting clients in scaling up clean hydrogen and driving large-scale decarbonization. Through practitioners at Deloitte firms, the center plans to work with clients across all stages of market development—from advising and sharing insights to help address some of the most complex questions, to implementing solutions and supporting the execution of projects on the ground, to helping enable operations, such as resilient supply chains and infrastructure.
Deloitte has also launched a Hydrogen Investment Corridor initiative to help establish multilateral collaboration across key hydrogen trade and investment pathways, with an initial focus on Germany, Australia, Africa, and Japan. As a global platform, the corridor will convene specialists from the public sector, industry, and finance to help accelerate investment in clean hydrogen value chains and help enable the ramp-up of this emerging industry. Through the corridor initiative, Deloitte will support the development of public policy, including hydrogen strategies for public authorities; bring economic and technical modeling skills to help inform decision-making; and convene different entities along the value chain to help support consortia formation and scaled investment.