Green Hydrogen Challenges Ahead

January 18, 2025

The recent surge in green hydrogen project announcements has not translated into successful implementations, according to a study by researchers from the Potsdam Institute for Climate Impact Research. Despite ambitious goals, only a small fraction of announced projects have become operational, denoting challenges in the sector.

Current Project Landscape

In 2023, 190 green hydrogen projects were tracked globally.
Only 0.3 GW of the projected 4.3 GW capacity was installed, resulting in a mere 7% success rate.
Delays were common, with 86% of projects announced in 2021 not realised on time.

Future Ambitions

The announced project pipeline has nearly tripled to 422 GW since 2021.
Europe leads in capacity announcements, followed by Australia and Central/South America.
This growth reflects a closing ambition gap towards meeting 1.5°C climate targets.

Key Challenges

Three main factors contribute to the low success rate:

Rising electrolyser costs
Lack of offtake agreements
Insufficient supportive policies.

These challenges hinder timely project realisation and investment confidence.

Investment Needs

Realising the announced projects would require global subsidies of US$ 1.3 trillion, exceeding current commitments. Without carbon pricing, achieving these goals remains difficult.

Technological Advancements

Green hydrogen production relies on renewable energy sources. Innovations in electrolysis and storage are essential for cost-effective production and widespread adoption.

Sectoral Applications

Green hydrogen can decarbonise sectors like agriculture and transport, offering alternatives to fossil fuels. Its potential includes powering farm machinery and hydrogen fuel cell vehicles.

Infrastructure and Safety Concerns

Robust infrastructure for production, storage, and distribution is vital. Safety protocols are necessary due to hydrogen’s flammability, ensuring secure handling and usage.

India’s Green Hydrogen Initiatives

India’s National Hydrogen Mission aims to position the country as a global hub for green hydrogen. Initiatives include consumption obligations for key industries and the development of green hydrogen hubs.

Way Forward Strategies

To advance green hydrogen, reducing production costs through efficient technologies is crucial. Regulatory incentives and coordinated efforts among stakeholders are necessary for developing a sustainable supply chain. Awareness and capacity building will further facilitate its adoption.

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