Global hydrogen demand is forecast to increase from around 80 million tonnes per annum in 2021 to upwards of 100 million tpa by 2030, according to analysts at Fitch Solutions.

The green hydrogen sector could produce approximately 10 million tpa by 2030 – up from its current 0.1% of hydrogen market share – although this is a preliminary assessment, Fitch said. Green hydrogen is produced using renewable energy to power electrolysis – splitting water molecules into hydrogen and oxygen.

The green hydrogen project pipeline stood at 71 gigawatts in February this year versus zero in 2019-2020 and has since increased over the second quarter to 121GW, comprising 136 projects in the planning and development phases, Fitch said.

The average – known – project price is $4.5 billion, Fitch said.


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The global growth is being driven by Western Europe and Asia Pacific, with these regions accounting for 82% of such green hydrogen projects, with Australia leading the project pipeline.

Australia has around 37GW of electrolyser projects lined up, including some 4GW under development, with the Netherlands, Germany, Italy and Brazil also making the global top 10. China currently comes in at number six on the list despite having 5GW of green hydrogen projects under development.

Increasingly stringent emissions legislation, accelerating low-cost renewable energy capacity and “ambitious” decarbonisation targets, have driven plans to develop commercial-scale green hydrogen, said Fitch.

Flagship project

Australia’s flagship project is the Asian Renewable Energy Hub that is targeting production of 1.8 million tonnes per year of green hydrogen and ammonia. The Western Australian government three years ago granted major project status to the proposed hub with the project proponents – InterContinental Energy, CWP Energy Asia, Vestas and Macquarie – aiming to take the final investment decision by 2025. Some of the production will be exported to Japan and South Korea.

In China, Beijing Jingneng Power has already started construction for the first 500-megawatt feasibility and demonstration project of the Eqianqi wind-solar-hydrogen plant, which is expected to be commissioned next year. This project forms part of a wider $3.7 billion plan that includes a natural gas pipeline and several industrial facilities.

Although the Asia Pacific region hosts fewer projects than Europe, they are much larger in size compared to the EU. The average size of European green hydrogen projects is 550 megawatts while those in Asia average 1.4GW, according to Fitch.

Asia is still expected to see robust economic growth, which Fitch said generates significant investment opportunities across many markets and demand streams for hydrogen.

“Asia also remains the largest and fastest growing renewables sector, with rapid cost declines that can drive further production of green hydrogen.”

The analyst added that the development of electrolyser manufacturing facilities will be a key step in ensuring Asia reaches its green hydrogen growth potential.

“This will include the developing of a hydrogen electrolyser supply chain and the procuring of required raw materials.”

While Fitch believes green hydrogen growth in Asia will still be largely driven by governments and state-owned energy companies, private players –particularly oil and gas majors, such as Total and Shell – are also making investments.

In the EU, Fitch sees the trend of national energy climate plans through 2030 being boosted by the EU recovery fund. Another forecast trend will be the fostering of more cluster projects and spreading the risk among multiple partners, “ensuring supply and demand, encouraging knowledge sharing, cost reduction and operational expertise”.

However, one key risk for EU green hydrogen growth is in scaling up demand, according to the analysts.

“The EU will need to ensure that it can build some level of sustained demand pool. The EU has highlighted it will seek to replace all of its current 10 million tonnes of demand in refineries, ammonia and methanol production, although that will depend on market prices,” cautioned Fitch.

The all-important price

The current approximated cost consensus is US$1 to $2 per kilogram of fossil fuel-based hydrogen, an estimated $2 to $4 per kg of blue hydrogen, and a forecast range of between $3 and $6 per kg for green hydrogen, according to Fitch.

Current gas methods account for 60% to 70% of costs for blue hydrogen and Fitch expects gas prices in Europe to increase from £0.5 per therm (85 US cents) to an average £0.6 per therm.

Electricity comprises 50% to 75% of the cost of green hydrogen.

“Two additional primary cost components are the electrolyser hardware, which accounts for 20% to 40% of green hydrogen costs, and the transport of gas to end users,” noted the consultant.

Carbon pricing presents both a key risk and opportunity to industry, according to Fitch.

The analysts cautioned that technological barriers to scaling up hydrogen projects may prove “prohibitively expensive” without high carbon prices.

“[However], carbon prices consistent with the Paris Agreement could have major impacts on companies’ financial performance.

“The bulk of the emissions are incurred at the point of combustion, but a focus on Scope 3 emissions increasingly shifts the burden of abatement onto the oil and gas sector.”