The Hydrogen Value Chain, Emerging Power and Aviation Applications

The hydrogen value chain, often referred to as the hydrogen economy, has experienced significant momentum in recent years, driven by various factors on both the demand and supply sides. On the demand side, there is a strong push from industries to decarbonize hard-to-abate sectors, particularly in areas such as refining and ammonia/fertilizer production, driven by regulatory pressures like carbon taxes. Additionally, advancements in hydrogen end-use technologies across multiple applications are further accelerating this demand. On the supply side, the development of innovative financing mechanisms and incentives, especially for green hydrogen producers, is facilitating growth. This heightened activity is underpinned by the growing recognition that hydrogen and its derivatives (e.g. ammonia, methanol) will be crucial in decarbonizing diverse sectors and serving as energy carriers for global renewable energy transport. As a result, the market is seeing increased commercial interest from technology providers, engineering services, and project developers eager to capitalize on this expanding opportunity.

 

There are two primary pathways for producing low-carbon hydrogen: blue hydrogen and green hydrogen. Blue hydrogen is generated through the reforming of natural gas or other light hydrocarbons, combined with carbon capture and storage (CCS) technologies that aim to capture 90-95% of the resulting CO₂ emissions in commercial projects. In contrast, green hydrogen, often regarded as the ultimate clean hydrogen solution, is produced through water electrolysis powered by renewable energy sources. While blue hydrogen is viewed as a transitional option, enabling quick decarbonization in the near term, green hydrogen is expected to play a more dominant role as its costs decrease and it becomes more economically competitive.

 

 

The success of hydrogen as a key energy carrier hinges on the development of economically viable, well-engineered, and cohesive value chains at both regional and global levels. For low-carbon hydrogen to thrive, production sites must be seamlessly integrated with efficient storage and distribution infrastructure tailored to the needs of end-use sectors. Similar to the oil and gas industry, the hydrogen value chain is divided into upstream (production), midstream (storage and transport), and downstream (end-use) segments, each presenting its own set of technical and socio-economic challenges. Establishing strong connections across these segments is crucial to overcoming these challenges and enabling the widespread adoption of hydrogen. IDTechEx's market report "Hydrogen Economy 2023-2033: Production, Storage, Distribution & Applications" analyzes many of these technologies, commercial activities, and key needs of the hydrogen market.

 

 

 

 

Significant advancements were made in the green hydrogen sector over 2023 and 2024, marked by major project announcements and investments. Many major projects are underway globally. Sweden's H2 Green Steel is one of the most notable as it has raised €6.5 billion to fund the world's first large-scale green steel plant, powered by Europe's first gigawatt (GW)-scale electrolyzer plant. ACWA Power secured US$8.5 billion and began constructing a 2.2 GW project in NEOM, Saudi Arabia, with plans to export green ammonia to Europe.

 

The regulatory side is also developing significantly. In Dec 2023, the UK selected 11 green hydrogen projects with 125MW of total capacity to receive £2 billion in revenue support and £90 million from the Net Zero Hydrogen Fund (NZHF) from the Electrolytic Hydrogen Allocation Round (HAR1). In Feb 2024, the UK allocated a further £21 million to the NZHF to support seven clean hydrogen projects. Japan is preparing to launch a JP¥3 billion initiative to fund hydrogen value chain projects over the next 15 years. In Sep 2023, Germany committed €3.5 billion to facilitate the import of green hydrogen under the H2Global Foundation's hydrogen importing program. Globally, many private and public coalitions exist for coordinating efforts and funding projects for green hydrogen site development as well as technology R&D. For instance, the Green Hydrogen Catapult, a coalition of leading green hydrogen project developers, reported that 14 GW of projects are in advanced engineering design stages or nearing final investment decisions.

 

 

Manufacturing capacity for water electrolyzers saw a significant boost, with multiple gigafactories being developed across North America, Europe, and Asia-Pacific. The push for expansion of manufacturing capacity is being driven by high demand for water electrolyzers, large order backlogs for key electrolyzer OEMs, and government funding being allocated for the construction of these factories. One notable example is Air Liquide & Siemens Energy's joint venture gigafactory in Germany, which plans to expand its annual production capacity from 1 GW/yr to at least 3 GW/yr of electrolyzers by 2025. IDTechEx expects that future production capacities will be dominated by alkaline and proton exchange membrane (PEM) electrolyzer OEMs, which are also the most widely available and popular electrolyzer types in the market.

 

The number of OEMs, from start-ups to large multinationals, entering the electrolyzer space is also growing consistently year on year. IDTechEx has identified 83 electrolyzer OEMs across various technologies that are developing products for commercial projects. This number will likely grow further based on the high interest and market activity for green hydrogen.

 

Overall, the global green hydrogen market is projected to continue its rapid growth, driven by increasing demand from industry, transport, and energy storage sectors. IDTechEx has forecasted the cumulative amount of electrolyzers installed by 2034 to each ~290GW globally. Infrastructure development, including pipelines and export/import terminals, is expected to advance, along with international collaboration on green hydrogen production and trade. However, challenges such as very high production costs, infrastructure needs, and the necessity for supportive policies must be addressed to ensure the success of green hydrogen projects as they move forward from engineering stages to commercial operation. Cost reductions in electrolyzer capital cost, improvements in efficiency, and access to cheap renewable electricity will be key in supporting further market growth.

 

 

Detailed analyses of the green hydrogen market and electrolyzer materials and components market are available in IDTechEx's "Green Hydrogen Production & Electrolyzer Market 2024-2034: Technologies, Players, Forecasts" and "Materials for Green Hydrogen Production 2024-2034: Technologies, Players, Forecasts" reports, respectively.

 

 

 

Blue hydrogen has seen significant progress in 2024, particularly with major projects in the US and UK. Notably, Air Products' Louisiana blue hydrogen and ammonia facility and OCI's Texas blue ammonia project are advancing, with both aiming to produce several kilotonnes per annum (ktpa) of hydrogen by 2025. In the UK, blue hydrogen projects dominate the low-carbon hydrogen pipeline, with BP's H2Teesside project moving forward with front-end engineering design (FEED) expected to be completed in 2025. Several other UK projects are expected to reach final investment decisions by the end of 2024 or 2025. Globally, blue hydrogen is expected to play a key role in hydrogen supply - IDTechEx expects blue and green hydrogen to contribute similar volumes of hydrogen by 2030. As 2025 approaches, the sector will likely see continued growth, especially in regions with favorable natural gas prices and carbon capture infrastructure. However, the success of these projects will depend on securing investment, overcoming policy uncertainties, and maintaining cost competitiveness, with effective integration of production sites with CCS being crucial for progress.

 

 

Many other alternative technologies for hydrogen production are gaining attention and some commercial traction. One of the most prominent is turquoise hydrogen produced by methane pyrolysis, the splitting of methane molecules into gaseous hydrogen and solid carbon, with many smaller companies dominating this space. Hazer Group is perhaps one of the most notable, as they have commissioned a demonstration project in Australia in 2024, which uses biogas from wastewater treatment to produce hydrogen and graphite. The company plans to license modular plants to various sectors, most notably steelmaking, where both products can be utilized. Many other methane pyrolysis companies follow a similar trajectory with modular distributed production plants.

 

Activity in the hydrogen storage and distribution commercial landscape has also been picking up, with more companies than ever before supplying storage and distribution products, as well as related componentry. On the storage side, much of the activity is concentrated in the compressed gas and liquid hydrogen systems. However, solid-state hydrogen storage systems based on metal hydrides are also gaining some commercial traction, particularly in Europe and China, with companies like GKN Hydrogen (Italy) and Hydrexia (China) making significant progress in commercializing their systems. On the distribution side, many companies (e.g. Hexagon Purus and Chart Industries) are offering compressed gas and liquid hydrogen transport trailers for smaller end-uses like refueling stations. However, more notable activities are concentrated in the hydrogen pipeline network development coupled with salt cavern storage (e.g. RWE and Engie in Europe) as well as hydrogen carrier project initiatives using ammonia and liquid organic hydrogen carriers (e.g. Hydrogenious LOHC Technologies). IDTechEx expects that hydrogen carriers will play a significant role, primarily in the international trade and use of hydrogen between regions with high renewable energy potentials (US, South America, Middle East, North Africa) and regions with high hydrogen demand but relatively low renewable energy potentials (e.g. Europe, Japan, Korea).

 

 

The key takeaway is that no single hydrogen technology or use case will dominate the market; instead, a diverse mix of approaches is necessary for effective decarbonization. The current focus on green and blue hydrogen in policy and debates may inadvertently slow progress in other promising areas, such as biomass or plastic-derived hydrogen production and emerging technologies. There is no one-size-fits-all solution for hydrogen storage and distribution; the optimal approach will vary depending on the volume of hydrogen and the distance it needs to be transported. On the demand side, industrial sectors continue to lead, with most commercial projects targeting hydrogen use in petroleum refining, ammonia/fertilizer production, and steelmaking. However, advancements are also being made in emerging areas like on-road hydrogen mobility, particularly for heavy and long-haul vehicles, power applications (such as turbines using up to 100% hydrogen in the US and Japan), and synthetic hydrocarbon e-fuel production. IDTechEx expects that these emerging sectors are expected to generate significant hydrogen demand only after 2035.

 

 

There is significant hype around the use of fuel cells (FCs) in mobility and transport. However, growing opportunities are being explored for stationary applications, such as emergency back-up power, utilities, industrial power, and residential use. Despite the perceived benefits, several system improvements are required before widespread adoption of fuel cells is seen.

 

 

Proton exchange membrane fuel cells (PEMFCs) are currently the dominant FC choice, particularly for mobility applications and back-up power, due to their quick start-up times (seconds), high efficiency (60%), and high power density (>2 W/cm²). With rising power demands and some issues relating to grid instability, PEMFC adoption is set to increase. However, issues including the high cost of platinum (Pt) metal catalyst (US$32,000/kg), the need for impurity-free hydrogen, and relatively limited lifetimes have hindered market domination. IDTechEx market research indicates a clear trend towards the development of novel non-platinum group metal (non-PGM) catalysts, or the reduction of Pt metal catalyst loadings, to effectively lower the capital costs of the systems. As hydrogen production scales up and costs inevitably decrease, there is a clear roadmap for increased PEMFC adoption in several sectors.

 

Solid oxide fuel cells (SOFCs) operate at high temperatures (>600°C), enabling the use of cheaper and more readily available hydrogen carrier fuels (via internal reformation) and eliminating the need for PGM catalysts. By harnessing the thermal exhaust, efficiencies can reach up to 90% by providing both electrical power and heat. Market attention has risen within residential applications, particularly in Asia, with Japan targeting the installation of 5.3 million FC units by 2030, accounting for 10% of households. High operating temperatures enable fuel flexibility, however, there are also drawbacks. Expensive thermally resistant materials are required, alongside long ramp-up times (hours), limiting SOFC application scope to continuous power generation for utilities and industry. As global hydrogen production scales up, lowering its cost, the early market adoption of SOFCs will slow and be limited by PEMFCs. Market competition from alternative emerging green technologies, like battery energy storage, could also hinder long-term success.

 

 

Both PEMFCs and SOFCs have gained attention for their integration within data centers due to growing global energy demands and net-zero commitments. Annual data center power consumption is more than 500 TWh and is set to exceed 1000 TWh by 2026, according to the International Energy Agency (IEA). With the need for both always-on and back-up power generation, there is a compelling use case for both PEMFCs and SOFCs in this market. Google and Microsoft have announced 2030 targets for 24/7 zero-carbon electricity, and partnerships have been agreed upon with FC manufacturers, such as Ballard and Plug Power, for the testing of FCs as back-up power solutions.

 

IDTechEx provides comprehensive coverage of fuel cell markets, giving a detailed technology overview of fuel cell types (PEMFC, SOFC, PAFC, AFC, MCFC, and DMFC), analysis of the key players, and breakdown of the major application areas for fuel cells. Furthermore, independent third-party assessment is given for material and component trends, upcoming legislation, and emerging alternative materials.

 

 

 

 

Airplanes are perhaps the most difficult vehicle type to find a fossil fuel alternative for. Battery technologies are feasible for small planes; even today, one-hour flight times are being achieved for 2-seat planes under battery power. However, batteries will never have the energy density for a commercial airliner to deliver long-distance flights.

 

The aviation industry finds hydrogen very attractive; it has more than 3x the gravimetric energy density of regular aviation fuels, and it is the most abundant element. However, these two traits are heavily caveated, meaning they will not be miracle fuels for aviation. Hydrogen has great gravimetric density, but its volumetric density means only about 25% of the energy capacity of jet fuel will fit in the same-sized tank. Hydrogen is abundant, but it is difficult to produce, transport, and store compared to fossil fuels.

 

Even with its limitations, hydrogen still holds huge promise in helping to decarbonize the aviation industry in the long term. Using highly efficient fuel cells helps reduce the volumetric energy density deficit, meaning a hydrogen plane should achieve one-third the range of a jet-fuel equivalent. This does not sound fantastic at first, but most flights do not utilize the full range of the plane. For example, British Airways used to operate an Airbus A380 between London and Frankfurt, a 650km hop in an airplane capable of more than 12,000km in a single leg.

 

 

Short- to mid-length flight routes with high volumes of traffic will be the ideal use case for hydrogen-powered air travel. Ideally, routes between 500 and 4,000km encompass much of the internal travel demand in Europe, the US, and China. For example, one of the busiest routes in the US is from New York to Los Angeles, a flight of approximately 4,000km, which could be achievable with hydrogen power in the future. The key to success will be building hydrogen production sites and infrastructure at key airports and creating a network of hydrogen-powered air travel while minimizing expenditure on new refueling infrastructure.

 

Once refueling infrastructure is in place, the source of the hydrogen will need to be carefully considered. There will be a trade-off between the hydrogen's green credentials and cost. Typically, cheaper hydrogen will have more CO₂ emission associated with its production and could be even worse for the environment than operating traditional fossil fuels.

 

IDTechEx's report "Sustainable Future Aviation 2025-2045: Trends, Technologies, Forecasts" provides information and guidance related to all aspects of hydrogen aviation, from its use in general aviation planes to how it would impact the total cost of ownership for a commercial airliner. In addition to hydrogen, it also covers battery electric aviation and SAF, all of which will be needed for building a completely decarbonized aviation industry of the future.

 

 

 

For the full portfolio of hydrogen-related research from IDTechEx, please visit www.IDTechEx.com/Research/Hydrogen. Downloadable sample pages are available for all reports

This article is from "Technology Innovations Outlook 2025-2035", a free collection of insights from industry experts highlighting key technology innovation trends shaping the next decade. You can download the full collection here.

IDTechEx will be hosting a free-to-attend webinar on the topic on Monday 2 December 2024 - Hydrogen and Fuel Cells: Progress in 2024 and the Road Ahead.

 

 

Webinar contents will include:

 

We will be holding exactly the same webinar three times in one day. Please click here to register for the session most convenient for you.

 

If you are unable to make the date, please register anyway to receive the links to the on-demand recording (available for a limited time) and webinar slides as soon as they are available.

IDTechEx provides trusted independent research on emerging technologies and their markets. Since 1999, we have been helping our clients to understand new technologies, their supply chains, market requirements, opportunities and forecasts. For more information, contact research@IDTechEx.com or visit www.IDTechEx.com.