The discussion at the first meeting of our Power-to-X Leadership Council last month focused on the opportunities and challenges that the hydrogen sector has to grapple with. We will go into greater depth into key issues next year.
However, the overall story for green hydrogen in the last 12 months has been one of increased momentum. Here are eight of the biggest stories from 2022:
- Energy security makes headlines: Russia’s invasion of Ukraine focused the minds of policymakers on the need to boost energy security and to find alternatives to fossil fuels. This is an opportunity for power-to-X as governments seek to support non-fossil fuels and the renewables that are needed to power the electrolysers. This trend will continue in 2023.
- US makes big policy strides: The introduction of the Inflation Reduction Act in August has helped establish the US as one of the world’s hottest green hydrogen markets. Policies including the 10-year production tax credit for ‘clean hydrogen’ plants, combined with excess green energy production on some grids, have put the US in the lead of power-to-X.
- EU tied up in additionality: The European Union spent much of 2022 in knots about ‘additionality’ rules, which the hydrogen industry said were too restrictive and would deter power-to-X investment in the European Union. The EU eventually voted to ease the rules in September.
- COP27 boosts the sector: Support for green hydrogen and power-to-X generally was one bright spot from the COP27 climate conference in Egypt. We saw major projects announced across the MENA region and beyond as momentum picked up for the sector globally.
- Just 9% of projects have reached FID: Hydrogen projects worth $240bn have been announced globally according to the Hydrogen Council, but only $22bn of those have reached a final investment decision. This must improve if the sector is to reach its full potential.
- Sinopec to commission Chinese giant: Chinese firm Sinopec is planning to switch on a green hydrogen project powered by 300MW of solar next June, which Sinopec said will be the largest operational green hydrogen project on completion. Projects like this are important benchmarks of progress.
- Cross-border hydrogen export plans: The growth in headline capacity of green hydrogen projects is opening opportunities for cross-border supply lines, as with the Asian Renewable Energy Hub in Australia where BP agreed to buy a 40.5% stake in June. These supply lines will be vital for growth.
- Ports embrace green hydrogen: Ports are among early adopters of the fuel to power their operations and for exports. Notable deals in 2022 included a tie-up between the Port of Rotterdam and oil firm CEPSA to form a corridor for the fuel between the ports in the Dutch city and Algeciras in Spain.
There is great ambition, but the industry will only make good on that if it can reach commercial maturity. In 2023, our Leadership Council will help it do so.