By 2050, using renewable energy to electrolyze water and produce hydrogen fuel could become a global market worth well over $1 trillion, according to a new report from Deloitte.
A new report by Deloitte’s Center for Sustainable Development (DCSP) outlines the potential of green hydrogen, or hydrogen fuel produced from renewable energy sources, to meet the demands of heavy industry.
The the report set milestones for the global market $642 billion by 2030, $980 billion by 2040, and $1.4 trillion by 2050, with industry growth spread relatively evenly among major global economies by mid-century, as shown below. This level of investment would mean a cumulative weight of $9 trillion in the global economy by 2050.
Hard-to-control industries such as steelmaking, chemical industry, aviation and global shipping require large amounts of energy, which can be difficult for electrochemical batteries to achieve. While batteries can serve mobile devices, electric vehicles, and grid-scale energy storage, hydrogen may be a viable way forward to decarbonize these large-scale use cases.
According to the report, these sectors could increase hydrogen demand and use sixfold by 2050, resulting in the use of nearly 600 million tons of hydrogen fuel. Although hydrogen electrolysis requires large amounts of electricity, the only byproduct of burning hydrogen fuel is water, making it an emission-free source created from renewable sources.
However, based on current green hydrogen project announcements, the global community could provide collective generation capacity for only a quarter of projected demand in 2030, Deloitte said.
It estimates that green hydrogen could reduce cumulative emissions by 85 gigatonnes by 2050, more than twice the total annual emissions in 2021.
Decisive climate action can boost the competitiveness of green hydrogen, Deloitte said. In about 10 years, green hydrogen could become cost-competitive, Deloitte said, leading to the creation of 2 million jobs a year between 2030 and 2050. The company said up to 70% of this job growth could happen in developing countries.
“Money is not the problem – although the average annual investment over the period is significantly less than the $417 billion spent on oil and gas production in 2022 worldwide,” said Bernhard Lorentz, DCSP’s founding director. “It’s just a question of directing investments to clean energy sources, and Deloitte sees that the global financial sector has a growing desire for large investments.”
The predictions come from Deloitte’s Hydrogen Pathway Explorer (HyPE) model, which analyzes global hydrogen supply. Deloitte’s insights provide extensive information on hydrogen costs, production and markets, even analyzing the challenges of successfully deploying clean hydrogen, and offer insights into various market dynamics such as optimal infrastructure sizing, investment needs and technology choices.
“This analysis reveals a compelling opportunity for private and public leaders to accelerate the transition to green energy,” said Deloitte Global Managing Director Joe Ucuzoglu. “While wind, solar and other more traditional forms of renewable energy are essential to a net future, Deloitte’s research shows how clean hydrogen can help solve some of the world’s most emissions-intensive and hardest-to-reduce emissions sectors. It can help mitigate the effects of climate change while fueling economic growth, especially in developing countries.”
Deloitte said inter-regional trade and versatile transport infrastructure could become a key factor in the development of green hydrogen.
“Regions that are currently able to produce cost-competitive hydrogen in quantities greater than domestic needs are already positioning themselves as future hydrogen exporters – supplying other less competitive regions and helping to facilitate a smooth energy transition,” the report states.
Deloitte has also launched Deloitte’s international hydrogen top unit, which helps hydrogen developers to expand their business with consulting, implementation and operational management services.