Green hydrogen is a crucial component in the global effort to decarbonize hard-to-abate sectors, like long-haul transportation, construction, and manufacturing. A process first discovered in the early 19th century may hold the key to scaling its production.
This clean fuel is produced by splitting water molecules using renewable electricity, a process called electrolysis. Unlike traditional hydrogen, which is often produced using fossil fuels, green hydrogen creates no carbon emissions, making it a promising option for industries with ambitious sustainability goals.
BloombergNEF predicts that low-carbon hydrogen production—green hydrogen and blue hydrogen, which is produced by steaming natural gas but also produces carbon dioxide (CO2)—will skyrocket from 0.5 million metric tons this year to 16.4 million metric tons by 2030. By that time, according to BloombergNEF, electrolysis will be responsible for nearly 60% of production. This growth shows how seriously countries and companies are taking hydrogen’s potential to help meet climate goals.
The U.S. introduced tax incentives for clean hydrogen, which the Department of Energy says can decarbonize up to 25% of energy-related CO2 emissions worldwide. Similarly, the European Union started a Hydrogen Bank in 2022 to help finance renewable hydrogen production. Japan updated its hydrogen strategy in 2023, setting a water electrolyzer capacity target of 15 GW by 2030, and China announced its first hydrogen strategy in 2022, targeting 100,000 to 200,000 tonnes of annual hydrogen production by 2025.
Despite these incentives and targets, a significant increase in production is needed to meet expected demand and achieve decarbonization goals. Moving forward will require overcoming technological, infrastructure, and economic hurdles while taking advantage of new trends and solutions in the green hydrogen field.
Recent advancements in alkaline water electrolysis are improving efficiency and scalability. The development of modular, scalable systems used in projects like the 10-MW Fukushima Hydrogen Energy Research Field (FH2R) in Japan demonstrates the large-scale feasibility of water electrolysis to revolutionize green hydrogen production.
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1. A multi-module hydrogen pilot plant in Kawasaki, Japan, launched in May 2024, is advancing green hydrogen production with four 0.8-MW electrolysis modules. The facility builds on successful testing at Fukushima Hydrogen Energy Research Field (FH2R) and represents a step toward 100 MW-class systems for commercial-scale operations. Courtesy: Asahi Kasei |
A multi-module hydrogen pilot plant opened in Kawasaki, Japan, in May 2024, after successful, long-term tests at FH2R. This new facility, which uses four 0.8-MW modules, is a step toward larger 100 MW-class systems for commercial green hydrogen production (Figure 1).
While green hydrogen shows immense potential for decarbonization, several significant challenges must be addressed to scale up production. Current electrolysis technologies struggle with efficiency, with energy conversion rates from electricity to hydrogen needing improvement for economic viability. Cost considerations also remain a significant barrier to widespread adoption, as green hydrogen production costs are still higher than those of grey hydrogen, which uses fossil fuels. To address both issues, advancements in alkaline water electrolysis are improving efficiency and scalability. The development of modular, scalable systems shows the potential for large-scale feasibility of water electrolysis.
Infrastructure limitations pose another significant challenge. Many regions lack the necessary renewable energy infrastructure to power large-scale hydrogen production. However, the integration of hydrogen production with renewable energy sources is advancing. The FH2R project demonstrates how large-scale electrolysis can be powered by solar energy, providing a model for future developments.
The chicken-and-egg problem of supply and demand also presents a challenge. According to the Hydrogen Council, if all announced large-scale hydrogen projects are actualized, total investment by 2030 would be $320 billion (including electrolyzer capacity of about 420 GW). However, a final investment decision has come for less than 10% of them.
The trajectory of growth and technological advancements paints a picture of a rapidly expanding sector poised to play a critical role in global decarbonization efforts. BloombergNEF forecasts that yearly global electrolyzer installations will rise sharply to an impressive 95 GW by 2030. This exponential growth reflects the increasing confidence in hydrogen’s potential to meet climate goals and the expanding capacity of the industry to deliver at scale.
The current development of 100 MW-class systems, as demonstrated by projects like the Kawasaki pilot plant, is likely just the beginning. Industry experts anticipate gigawatt-scale plants becoming feasible within the next decade, which would dramatically increase production capacity and potentially drive down costs through economies of scale.
International collaboration must play a crucial role in the industry’s future. As countries recognize the global nature of the hydrogen economy, cross-border initiatives are likely to increase. These collaborations could lead to the establishment of international hydrogen supply chains, with renewable-rich countries producing green hydrogen for export to regions with higher energy demands.
As these developments unfold, the green hydrogen sector is poised to move from pilot projects and demonstrations to large-scale commercial operations. While challenges remain, the future outlook for green hydrogen production is one of rapid growth, technological innovation, and increasing global significance in the fight against climate change.
—Tomoyuki Ishikawa is senior manager of Business Development, Green Solution Project, at Asahi Kasei.
