China is set to become the largest importer of clean hydrogen in 2030, despite its efforts to expand domestic production, as competition for supplies intensifies during the global market’s ramp-up phase, according to scenarios modelled by consultancy Deloitte.

China’s imports rise to 13mn t of hydrogen equivalent in 2030, putting it ahead of Europe on 10mn t, Deloitte says in its 2023 green hydrogen outlook.

“While China does not face the same land availability limitations as Japan and Korea or even Europe, its strong ramp-up of clean hydrogen demand by 2030 outstrips its domestic production capacity, making China the biggest importer in 2030,” it says.

$9.4tn – Required global investment in supply chain

Europe will import c.37pc of its demand in 2030, mostly in the form of ammonia from North Africa, according to the modelling. Due to severe land constraints, Japan and South Korea hold the highest import-to-demand ratio, importing nearly 90pc of their internal demand—or more than 7mn t.

“This structural constraint implies that both countries remain heavily reliant on global trade throughout the outlook period,” Deloitte says.

India will remain a marginal importer in the coming decade, according to the report, because of its slower hydrogen demand growth.

Global trade

Global trade in hydrogen between major regions represents about a fifth of the total market in 2050, a share comparable to the natural gas market, Deloitte.

About 110mn t of clean hydrogen is traded by 2050, with just over half of this in the form of ammonia. North Africa and the Middle East are the dominant ammonia exporters, accounting for more than a third of total supply, according to Deloitte’s modelled outlook scenario.

“Free and diversified trade can significantly reduce costs, improve energy security, and foster economic development in developing and emerging markets,” it says in its 2023 green hydrogen outlook report.

Global trade in all hydrogen products between major regions can generate more than $280bn in annual export revenues in 2050. The main recipients include North Africa ($110bn), North America ($63bn), Australia ($39bn) and the Middle East ($20bn), according to Deloitte.

Global trade is dominated by hydrogen derivatives, with methanol and sustainable aviation fuel accounting for significant shares, alongside ammonia.

Between 2030 and 2050, about one-third of methanol and almost half of sustainable aviation fuel will be traded between major regions—38mn t of the former and nearly 60mn t of the latter. “Like ammonia, methanol and SAF are much easier to transport over long distance than pure hydrogen, insofar as they do not require reconversion and can leverage large-scale international trade infrastructures,” Deloitte says.

Trade in pure hydrogen is limited, with only about 2pc of total demand trade between neighbouring countries through pipelines, according to the model.

Falling costs

The manufacturing cost of green hydrogen equipment can drop in the coming decades, boosting the technology’s competitiveness, Deloitte says. The cost of electrolysers, especially alkaline and proton-exchange-membrane technologies, decreases by two-thirds in the period 2020–50, its scenario shows. In 2050, levelised production costs could fall below $1/kg in Chile and below $1.1/kg in north and sub-Saharan Africa, Mexico, China, Australia and Indonesia.

“This endeavour is likely manageable if the decline in spending on oil and gas can be channelled to clean hydrogen” Deloitte

Blue hydrogen technologies could see smaller cost decreases. The cost savings achieved through scaling up and R&D on CCS technologies are partially offset by tightening environmental regulation. Overall, the cost of natural gas-based technologies is expected to remain flat between 2030 and 2050, with some of the lowest production costs, of around $1.25/kg expected in North America in 2050, mainly due to low-cost natural gas supply.

Deloitte estimates an overall global investment need of $9.4tn in the global hydrogen supply chain by 2050, with $3.1tn going towards developing economies.

“This endeavour is likely manageable if the decline in spending on oil and gas can be channelled to clean hydrogen—something that international oil and gas companies have started doing,” it says.

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Author: Stuart Penson