The low-carbon hydrogen sector is likely to see limited growth this decade, with acceleration expected in the 2030s and 2040s, according to BP’s latest Energy Outlook report.

The report models three scenarios. New Momentum is based on the current trajectory of the energy industry given the Russia-Ukraine war and passage of clean energy incentives in the US’ Inflation Reduction Act, while the more optimistic Accelerated and Net Zero scenarios are based on actions necessary to cut global CO₂ emissions by 75pc and 95pc respectively by 2050.

15-20pc – Additional power generation needed to produce green hydrogen in BP’s Accelerated and Net Zero scenarios

New Momentum anticipates 165mn t of hydrogen to be generated in 2050—more than double the amount produced in 2019—accounting for 4pc of total final energy consumption that year.

Demand for low-carbon hydrogen is expected to reach 30–50mn t/yr by 2030 in the Accelerated and Net Zero scenarios, with the majority of this used to displace existing grey hydrogen in refining and the production of ammonia and methanol.

However, demand is expected to rise tenfold between 2030 and 2050 in the two scenarios as hydrogen is increasingly used to decarbonise transport and heavy industry, reaching close to 300mn t/yr and 460mn t/yr respectively. Green steel and iron production is predicted to account for 40pc of total industrial hydrogen demand by mid-century.

Maritime and aviation

But while BP anticipates hydrogen will supply 10–20pc of total final energy used in the transport sector in both the Accelerated and Net Zero scenarios, this will be “heavily concentrated” in the production of hydrogen-derived fuels such as ammonia, methanol and synthetic fuels for the decarbonisation of long-distance maritime and aviation.

However, heavy-duty transport via road and rail is expected to require nearly 50mn t/yr of low-carbon hydrogen by 2050 in the Accelerated scenario and c.70mn t/yr that year in the Net Zero scenario.

Going green

Green hydrogen is expected to account for 60pc of low-carbon hydrogen supply in 2030, rising to 65pc by 2050 in both the Accelerated and Net Zero scenarios. This means that, while direct electricity consumption in 2050 is similar across all three scenarios, an additional 15–20pc of total power generation is required in the Accelerated and Net Zero scenarios to produce green hydrogen. Renewables capacity is also expected to scale up in the two scenarios, with 25–33pc used for green hydrogen production.

BP expects blue hydrogen to complement to green hydrogen, providing a non-variable source of supply while costing less to produce in some regions. “The growth of blue hydrogen also reduces the extent to which renewable energy is diverted from decarbonising electricity that is consumed directly,” the major says.

The EU is projected to produce 70pc of its low-carbon hydrogen by 2030 in both the Accelerated and Net Zero scenarios, falling to 60pc by 2050 as global supply chains develop. BP anticipates that half of the EU’s imported hydrogen in 2050 will come via pipelines from North Africa and non-EU European nations, while the other half will come in the form of derivatives and finished products by sea from “the most cost-advantaged locations globally”.

BP has recently signed memorandums of understanding to explore the development of low-carbon hydrogen projects in Egypt and Mauritania. And last year, the major acquired a controlling stake in the Asian Renewable Energy Hub in Australia, which will initially focus on supplying domestic demand before targeting exports to international markets in its second phase.

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Author: Polly Martin