Industry to Dominate Hydrogen Demand

Industrial demand, rather than transport, will dominate hydrogen demand in the coming decades, according to a new report.

The International Chamber of Shipping’s Turning Hydrogen Demand into Reality: Which Sectors Will Come First? report finds that demand for hydrogen is growing across multiple sectors, although the pace and timeline of uptake varies across sectors and is likely to occur in phases due to infrastructure and regulatory challenges.

"Current hydrogen forecasts for the coming decades suggest that the main uses of hydrogen (and its derivatives) in the early stages will be in energy-intensive sectors (chemicals, fertilizers, steel and cement), followed by transport (roads, aviation) and finally buildings," the report states.

"By 2040, hydrogen demand could double, with most of the additional demand coming from the industrial sector (because it is easier to absorb) as baseload, the rest from new industrial uses and a small portion (less than 5%) from transport."

The report adds that, overwhelmingly, the scenarios considered highlight the dominance of hydrogen consumption in the industrial sector over the coming decades.

"Industries that already use hydrogen as a feedstock are technically in a leading position, as they can simply change their hydrogen source if economics allow."

"In addition, industries that can relatively easily pass on the additional hydrogen costs to their customers are economically in a leading position if hydrogen-based technologies are developed. Nevertheless, global pressure to decarbonize industry will lead to some baseload demand for hydrogen."

The report lists Europe, South Korea and Japan as the three main hydrogen import markets.

For global hydrogen demand to remain on track to the 2050 net-zero emissions vision, it needs to grow fivefold from current levels to nearly 500 million tonnes between 2030 and 2050.

Hydrogen demand is expected to be between 90 million tonnes and 600 million tonnes by 2050, equivalent to between 4% and 11% of total global energy supply in 2050.

Due to the huge electricity demand for hydrogen electrolysis, reaching 25,000 TWh in the most optimistic scenario, the global power system needs to more than triple the renewable energy commitments announced at COP28 to enable a hydrogen economy.

"Without this, the transition to a hydrogen economy will be hampered and will not meet the targets of the EU and major Asian governments," the report states.

It is also "critical" for the maritime industry to become an enabler of the hydrogen economy by establishing clean energy maritime hubs, developing port infrastructure and preparing to facilitate the transport of hydrogen and its derivatives.

There are currently 443 ships transporting ammonia worldwide, but to meet the EU’s expected demand for 20 million tonnes of hydrogen, the fleet will need to grow by up to 300 ships to meet the EU’s 2030 target.

To meet the 33 million tonnes demand, the current fleet would need to more than double, with an additional 500 ammonia ships to meet demand in Japan and South Korea.