Strategic Government Backing Sparks Growth Potential

Green and blue hydrogen industries are poised for rapid growth with the rise of low-carbon hydrogen, a key player in decarbonizing various hard-to-abate sectors like refining, fertilizer production, long-haul transport, and shipping. Despite currently representing less than 1% of overall hydrogen output, the industry anticipates producing 38 million tonnes of low-carbon hydrogen by 2030, a significant surge from under 1 Mt in 2022. This growth trajectory is substantiated by robust policy support worldwide, especially in the United States, creating a favorable landscape for companies along the hydrogen value chain.

Unveiling Government Initiatives Fueling Industry Expansion

• Global subsidies exceeding $280 billion secure an optimistic future for green and blue hydrogen sectors.
• U.S. initiatives, including a $7 billion allocation for establishing regional hydrogen hubs, underscore strong governmental commitment.
• The expanding low-carbon hydrogen realm promises broad benefits for companies involved in hydrogen and renewable energy segments.

Rapid Surge of Policy Assistance for Low-Carbon Hydrogen

Over the past half-decade, more than 50 nations, such as the U.S., Canada, China, and the EU, have introduced hydrogen strategies toward clean hydrogen amplification. Notably, the U.S. Clean Hydrogen Strategy and Roadmap, released in June 2023, envisions a robust expansion in domestic clean hydrogen production. To achieve these ambitious plans, governments worldwide are intensifying their support, quadrupling subsidies for low-carbon hydrogen to surpass $280 billion by August 2023. This significant financial injection, predominantly led by the U.S., illuminates a promising path for the sector and its stakeholders.

Among the subsidizing entities, the U.S. stands out with projections of allocating $137 billion, primarily to projects eligible for the clean hydrogen production tax credit introduced in the Inflation Reduction Act. This tax credit, offering up to $3 per kilogram of low-carbon hydrogen, accelerates the cost parity convergence of green and blue hydrogen with traditional grey hydrogen. Additionally, research and development allocations alongside the $7 billion investment in regional hydrogen hub development further solidify the nation’s commitment to the cause.

Beyond U.S. borders, Europe and Asia stand as potent contributors to the low-carbon hydrogen wave, with subsidies exceeding $100 billion and $11 billion, respectively. Noteworthy plans include France’s €4 billion injection towards hydrogen projects focused on clean energy sourcing and various initiatives across the Asia Pacific region.

Substantial Funding Injected into U.S. Hydrogen Hubs Elevates Opportunities

The Biden-Harris Administration’s announcement of seven regional clean hydrogen hubs earmarked to receive up to a combined $7 billion funding from the Infrastructure Investment and Jobs Act in mid-October signals a paramount step towards fostering a thriving domestic clean hydrogen domain. These hubs, envisaging a collective production exceeding three million metric tons of clean hydrogen annually, claim a significant portion of the country’s clean hydrogen target for 2030.