Hydrogenscaling up

A sustainable pathway for the global energy transition
Hydrogen Council November 2017

Published in November 2017 by the Hydrogen Council.
Copies of this document are available upon request or can be downloaded from our
website at www.hydrogencouncil.com.
This report was authored by the Study Task Force of the Hydrogen Council, consistingof senior executives of 18 companies: Air Liquide S.A., Alstom, Anglo American plc, Audi
AG, BMW Group, Daimler AG, Engie S.A., GM, Honda Motor Co. Ltd, Hyundai Motor
Company, Iwatani Corporation, Kawasaki Heavy Industries Ltd., Plastic Omnium, RoyalDutch Shell, Statoil ASA, The Linde Group, Total S.A., and Toyota Motor Corporation.
The Hydrogen Council is composed of 18 steering members that authored the reportand 10 supporting members: Mitsui & Co, Plug Power, Faber Industries, Faurecia, First
Element Fuel (True Zero), Gore, Toyota Tsusho, Hydrogenics, Ballard, Mitsubishi.
McKinsey & Company provided analytical support.
Contact

secretariat@hydrogencouncil.com
www.hydrogencouncil.com

Hydrogenscaling up

Content
Executive summary

7

Methodology

12

Our vision. The hydrogen economy in 2050.

14

Hydrogen is a central pillar of the energy transformation required to limit global
warming to two degrees

16

In all seven application areas, hydrogen can offer economically viable and sociallybeneficial solutions

18

Achieving the hydrogen vision would create significant benefits for the energy
system, the environment, and businesses around the world

21

Getting there. A roadmap to the hydrogen economy.

24

Transportation. Hydrogen and fuel cells are critical elements in the
decarbonization of the transportation sector.

29

Industry energy. Hydrogen can provide decarbonized high-heat forindustrial processes.

41

Building heat and power. Hydrogen can help decarbonize building heatand power.

45

Industry feedstock. Hydrogen as feedstock can be decarbonized and used toreplace fossil feedstock.

51

Energy system. Hydrogen is a versatile energy carrier that can enable therenewable energy system.

57

What needs to be done. A call to action.

64

Building the hydrogen economy would require annual investments of about$20 to 25 billion for a total of about $280 billion until 2030

66

Industry has to bring down costs of hydrogen and applications through scale68

To begin the journey, we propose large-scale deployment initiatives supported
by long-term policy frameworks

71

Glossary

75

Bibliography

76

6

Executive summary
The Hydrogen Council is the largest industry-led effort to develop the hydrogen economy.
Launched in January 2017 at the World Economic Forum, its members include leading
companies that invest along the hydrogen value chain, including transportation, industry,and energy exploration, production, and distribution.
As members of the Council, we are convinced that hydrogen can offer economically viable,financially attractive, and socially beneficial solutions. Furthermore, in certain sectors andgeographies it will be unavoidable to enable the energy transition and improve air quality in cities.
In this report, we present the first comprehensive vision of the long-term potential of hydrogenand a roadmap for deployment. This ambitious yet realistic approach would deliver deep
decarbonization of transport, industry, and buildings, and enable a renewable energy production
and distribution system. To realize this vision, investors, industry, and government will needto ramp up and coordinate their efforts.
Our vision: The hydrogen economy in 2050
Hydrogen is a central pillar of the energy transformation required to limit global warming to twodegrees Celsius. To achieve the two-degree scenario, the world will need to make dramaticchanges year after year and decrease energy-related CO2 emissions by 60% until 20501 – evenas the population grows by more than 2 billion people2 and billions of citizens in emerging markets
join the global middle class. Hydrogen can play seven major roles in this transformation:
 Enabling large-scale renewable energy integration and power generation
 Distributing energy across sectors and regions
 Acting as a buffer to increase energy system resilience Decarbonizing transportation
 Decarbonizing industrial energy use
 Helping to decarbonize building heat and power Providing clean feedstock for industry.
In all seven application areas, hydrogen can offer economically viable and socially beneficial
solutions. In our vision, hydrogen enables the deployment of renewables by converting andstoring more than 500 TWh of otherwise curtailed electricity. It allows international energy
distribution, linking renewable-abundant regions with those requiring energy imports. It isalso used as a buffer and strategic reserve for power.

1 From 34 Gt in 2015 to 26 Gt in 2030 and 13 Gt in 2050 (IEA, 2017)
2 From 7.6 to 9.8 billion people in 2050 (United Nations, 2017)
Hydrogen scaling up

7

On the demand side, too, hydrogen molecules are a critical complement to electrons in thechallenge of far-reaching decarbonization. Our vision sees hydrogen powering more than
400 million cars, 15 to 20 million trucks, and around 5 million buses in 2050, which constituteon average 20 to 25% of their respective transportation segments. Since hydrogen plays astronger role in heavier and long-range segments, these 20% of the total fleet could contribute
more than one-third of the total CO2 abatement required
for the road transportation sector in the two-degree
scenario.

The hydrogen vision would
achieve roughly 20% of therequired CO2 abatement in
20501

In our vision, hydrogen also powers a quarter ofpassenger ships and a fifth of locomotives on nonelectrified tracks, and hydrogen-based synthetic
fuel powers a share of airplanes and freight ships.

For buildings, hydrogen builds on the existing gas infrastructure and meets roughly 10% of
global demand for heat. In industry, hydrogen is used for medium- and high-heat processes,
for which electrification is not an efficient option. Current uses of hydrogen as a feedstock are
EXHIBIT 0
decarbonized through clean or green production pathways. In addition, hydrogen is used as
Hydrogen benefits energy systems, environment, and businessrenewable feedstock in 30% of methanol and about 10% of steel production.
2050 hydrogen vision (annual figures)

Exhibit 1: Our hydrogen vision for 2050

18%
of final energy
demand6 Gtannual CO2
abatement$2.5 trannual sales(hydrogen andequipment)

30 mjobs created

SOURCE: Hydrogen Council; IEA ETP Hydrogen and Fuel Cells CBS; National Energy Outlook 2016

Achieving this vision would create significant benefits for the energy system, the environment,
and the global economy. Across all seven roles, hydrogen could account for almost onefifth of total final energy consumed by 2050. This would reduce annual CO2 emissions byroughly 6 Gt compared to today’s technologies, and contribute roughly 20% of the additional
abatement required to limit global warming to two degrees Celsius (above and beyond alreadyagreed commitments). It would also eliminate local emissions such as sulfur oxides, nitrogenoxides, and particulates linked to smog formation, and reduce noise pollution in cities. The
transportation sector would consume 20 million fewer barrels of oil per day, and domesticenergy security would rise significantly.
Hydrogen scaling up

8

Alongside its environmental benefits, the hydrogen economy could create opportunities forsustainable economic growth. We envision a market for hydrogen and hydrogen technologies
with revenues of more than $2.5 trillion per year, and jobs for more than 30 million people
globally.
Getting there: A roadmap to the hydrogen economy
To realize this vision and achieve its desired impact, a significant step-up across the value
chain would be required. Many of the required technologies are already available today – nowis the time to deploy hydrogen infrastructure and scale up manufacturing capacities so as toachieve competitive costs and mass market acceptance.
In the transportation sector, hydrogen-powered FCEVs could complement BEVs to achievea deep decarbonization of all transportation segments. FCEVs are best suited for applications
with long-range requirements, heavier payloads, and a high need for flexibility. Decarbonizingthese segments is particularly important as they consume a large share of total energy – while
trucks and buses would account for only 5% of all FCEVs in 2050, they could achieve morethan 30% of hydrogen’s total CO2 abatement potential in the transport sector.
Hydrogen can already lower the total cost of ownershipof trains and forklifts, and we expect all transportation
segments to be within a 10% range by 2030. These
cost reductions require a significant scale-up of
manufacturing capacities. If realized, FCEVs would
have lower investment costs than BEVs in longrange segments, with much shorter refueling times.
Environmentally, FCEVs produce 20 to 30% lessemissions than conventional cars even when hydrogenis produced from natural gas without carbon capture; with renewable and clean hydrogen,
FCEVs emit very little CO2 and require less resources and energy in the manufacturing
process than BEVs.

In 2030, 1 in 12 cars sold in
California, Germany, Japan,
and South Korea could bepowered by hydrogen

FCEV buses, medium-sized cars, and forklifts are commercially available today. The next five
years will see the introduction of more models in medium-sized and large cars, buses, trucks,
vans, and trains, and it is likely that additional segments such as smaller cars and minibuses
will follow until 2030. To realize our vision, 1 in 12 cars sold in California, Germany, Japan,
and South Korea should be powered by hydrogen by 2030, when sales start ramping up in
the rest of the world. More than 350,000 hydrogen trucks could be transporting goods, and
50,000 hydrogen buses, thousands of trains and passenger ships could be transporting
people without carbon and local emissions. Towards 2050, our vision also includes hydrogenas a feedstock for renewable fuels for commercial aviation and freight shipping.
Large amounts of hydrogen are used as feedstock for refining and the production of methanol.
Decarbonization of these processes is starting, and with the right regulatory framework, thefirst oil refineries and ammonia plants could produce hydrogen from clean sources in 2030.

Hydrogen scaling up

9In addition, hydrogen could be used together with
captured carbon or carbon from biomass to replacefossil fuels as feedstock for the chemical industry.
By 2030, 10 to 15 million tons of chemicals could be
produced from such renewable feedstock. In the ironand steel industry, where hydrogen can be used toreduce iron ore to iron, we expect the use of cleanhydrogen will be demonstrated by 2030 and gain momentum by 2035.

10 to 15 million tons ofchemicals could be produced
using hydrogen and carbon

For heat and power for buildings and industry, hydrogen can make use of existing gas
infrastructure and assets. For buildings, low concentrations of green hydrogen could be
blended into public natural gas networks without any infrastructure upgrades. Alternatively,
entire cities could be converted to pure hydrogen heating. Both processes have alreadystarted and could start scaling up around 2030, with the equivalent of more than 5 million
households connected to a gas network with blended or pure hydrogen. A second wave ofcommercialization could start once the costs of producing hydrogen have fallen enough todrive uptake in more cost-sensitive industry segments. While hydrogen penetration may notreach the same rates in industry as in other segments, industry’s large energy consumption
implies substantial hydrogen demand beyond 2050. By 2030, up to 200 steel, chemical, andautomotive plants could be pioneering the use of hydrogen for heat and power.
As the energy system relies more heavily on
renewables, hydrogen could also play a growingrole in the storage of renewable electricity and the
production of clean electricity. Hydrogen allows tostore and transport renewable electricity efficiently
over long periods of time and is therefore a key enablerof the transition to renewable energy. By 2030, 250
to 300 TWh of surplus renewable electricity could be stored in the form of hydrogen for use
in other segments. In addition, more than 200 TWh could be generated from hydrogen inlarge power plants to accompany the transition to a renewable electricity system.

250 to 300 TWh of excess
solar and wind power could
be converted to hydrogen

What needs to be done: A call to action
To achieve this hydrogen vision, companies across the value chain will need to step up theirefforts from hydrogen production and infrastructure to end-use applications.
Building the hydrogen economy would require annual investments of $20 to 25 billion fora total of about $280 billion until 2030. About 40% ($110 billion) of this investment would
go into the production of hydrogen, about a third ($80 billion) into storage, transport, anddistribution, and about a quarter ($70 billion) into product and series development and scaleup of manufacturing capacity. The remainder, some $20 billion, could go into new businessmodels, such as fuel-cell-powered taxi fleets and car sharing, on-demand transportationof goods, and contracting of combined heat and power units. Within the right regulatory
framework – including long-term, stable coordination and incentive policies – attracting
these investments to scale the technology is feasible. The world already invests more thanHydrogen scaling up

10

$1.7 trillion in energy each year, including $650 billion in oil and gas, $300 billion in renewableelectricity, and more than $300 billion in the automotive industry.
Industry would have to bring down costs of hydrogenand applications through scale. Significant cost
reductions have already been achieved in someareas; the cost of refueling stations and fuel cellstack production have been cut in half in the lastten years, for example. We expect major reductionsin the coming years from scaling up manufacturing
to industrial levels. Further cost reductions are also necessary to bring down the cost ofhydrogen itself. These are possible through cost reductions in the hydrogen production andrenewable power generation for electrolysis.

The cost of refueling stations
and fuel stacks have been
cut in half

To start down the road to a hydrogen economy, we
propose large-scale deployment initiatives supported
by long-term policy frameworks in countries thatare early adopters. These deployment initiatives
should use current activities as platform and scale
their successes nationally and, at a later stage,
globally. In the transportation sector, we propose
a three-phased deployment plan at national level, led by an overall roadmap and targeted
support to ramp up the infrastructure and deploy more vehicles. In building heat and power,
we propose to replicate the approach taken in the UK, which is investigating a city-by-citytransition from natural gas to hydrogen. For industrial applications, we propose to support
large-scale pilots in steel manufacturing, power generation, and clean or green hydrogenfeedstock for the chemicals, petrochemicals, and refining industries. Once these technologies
are proven, a long-term regulatory framework should be put in place to promote uptake. A
critical factor here is a fair distribution of costs so that competitiveness and employment are
not compromised in industries exposed to international trade.

We propose large-scale
deployment initiatives tostart the roadmap

The sector-specific deployment initiatives should be synchronized to achieve additional
synergies. We propose to build national action plans, such as those in Japan, for the adoptionof a hydrogen economy. These plans should have clear targets, specific deployment initiatives,and be underpinned by a long-term regulatory framework to unlock investment.
The 18 steering members of the Hydrogen Council, who represent companies with a combined
market capitalization of more than $1.15 trillion, are working towards making this vision androadmap a reality. Our research shows that hydrogen is an essential element in achieving
deep decarbonization of the global energy system at scale.
We believe the world cannot afford to put off the efforts required to reach our common goalsof deploying hydrogen and limiting global climate change as agreed in Paris in 2015. We
hope to accelerate this transformation and are looking forward to investors, policymakers,
and businesses joining us on this journey.

Hydrogen scaling up

11

Methodology
The first comprehensive vision of hydrogen’s
potential in the energy system of the future
In this report, we present the first comprehensive vision of the long-term potential of hydrogenand a roadmap for deployment. It is structured in three parts:
In Chapter 1 of this report, we lay out our vision. It is a systemic view of the potential of hydrogentechnology, considering it as an enabler in the energy system as well as an energy vector fora wide range of applications in transport, buildings, and industry. Our vision is ambitious yet
realistic. It does not rely on unknown scientific breakthroughs but on technologies whose
viability has been demonstrated. It is not about imaginary solutions but about scaling existing
technologies and considering the beneficial linkages and virtuous circles of deploying hydrogentechnology across the energy system. It also does not promote hydrogen as a winner-take-all
solution, but considers it together with other low-carbon technologies.
Making this vision a reality will require aggressive deployments of technology. In
Chapter 2, we describe a roadmap to achieve the 2050 vision, detailing the role that hydrogen
will play in each application as well as the required medium-term milestones, investments,
and deployment initiatives until 2030 that enable this vision.
In Chapter 3, we show how investors, policymakers, and industry can work together to makethe transformation a reality. We estimate the required capital investments, describe the hurdles
to adoption, and highlight deployment projects that aim to put infrastructure in place, scale
up production, and accelerate the transition to a low-carbon economy.
To quantify the vision and roadmap, we used two main sources: the IEA Energy Technology
Perspective (2017), which projects final energy demand in the transport, industry, building,and power sectors under the two-degree scenario; and Hydrogen Council members’ input
on the potential for hydrogen adoption in each sector.
To arrive at sector-level results, the members first developed a market segmentation for eachsector (e.g., vehicle segments for the transportation sector). The size of these segments wasestimated by breaking down the IEA Perspective using a range of external data sources. The
members then submitted their perspective on hydrogen adoption in each segment in 2050
to a neutral party, who aggregated the results after trimming the top and bottom quartile,and led an alignment process towards reaching a consensus among members. From thelong-term vision, the 2030 figures were calculated as realistic and required milestones on
the way to 2050.
In some instances – particularly in industry feedstock uses – we used external projections as
the basis of the vision, all referenced in the relevant chapters. All financial figures are in US
dollars ($) and refer to the world as a whole unless otherwise indicated. While 2030 milestones
are generally calculated only for likely early adopters, the period towards 2050 is expected
to see a global rollout of hydrogen technologies.

Hydrogen scaling up

12

Hydrogen scaling up

13

Our vision.
The hydrogen economy in 2050.

We, the members of the Hydrogen Council, are convinced thathydrogen can offer economically viable, financially attractive, andsocially beneficial answers to the challenges of transitioning to
low-carbon energy and improving air quality in cities. Our vision
for the hydrogen economy in 2050 is the first comprehensive
quantification of the long-term potential of hydrogen.
In our vision, hydrogen is a central pillar of the energy transformation.
In seven application areas, hydrogen will enable the renewableenergy system and decarbonize end uses. Achieving the hydrogen
vision would create significant benefits for the energy system, theenvironment, and businesses around the world. It would avoid
6 Gt of CO2 emissions, create a $2.5 trillion market for hydrogenand fuel cell equipment, and provide sustainable employment for
more than 30 million people.

Hydrogen is a central pillar of the energy transformation required to limit global warming
to two degrees
At the COP21 (Conference of the Parties) meeting in Paris in 2015, 195 countries signed alegally binding agreement to keep global warming “well below two degrees Celsius above
pre-industrial levels, and to pursue efforts to limit the temperature increase even further to 1.5
degrees Celsius” within this century. This target is ambitious, since it will require the world tolimit the cumulative energy-related carbon dioxide emissions to less than 900 Gt by 2100 – anamount the world will exceed before 2050 if it continues on its current path.
To stay within the carbon budget, the world will need to make dramatic changes year after
year and decrease energy-related CO2 emissions by 60% until 20503 – even as the population
grows by more than 2 billion people4 and hundreds of millions of citizens in emerging markets
join the global middle class.
Achieving such deep decarbonization will require a radical transformation of the global energy
system. Four levers are needed, each of which presents its own challenges (Exhibit 2):
EXHIBIT 1

Four major levers are needed to enable the energy transition

Exhibit 2: Achieving the energy transition will mean overcoming multiple challenges
Final energy consumption1, 2013 and 2050, in EJ

Power sector
CCS

640
Energy demand w/o efficiency
improvements2
Carbon capture and storage(CCS) or utilization (CCU)3431

Increasing energy efficiency
limits the rise of energy consumption
CCS/U decarbonizes the useof fossil fuels3

373

Fossil fuels

Switch to zero emission energy
carriers, e.g., electricity or hydrogen

Power sector – fossil fuels4
Power sector – renewables
Biomass and waste

Renewables replace fossil fuels
2013

1
2
3
4

2050

Within the 2oC scenario of the IEADetermined via the relative increase of CO2 emissions without energy efficiencies
Determined as 25% of the total amount of fossil fuels by relating the CO2 emission reduction compared for the 2°C and 6°C scenario
Includes nuclear energy

SOURCE: Hydrogen Council; IEA ETP 2016

First, the world will need to become much more energy efficient. In the two-degree scenarioof the IEA, the increase in primary energy demand until 2050 is limited to 10%, although global
GDP will more than triple as almost 70 million people are added to the population each year.5

3 From 34 Gt in 2015 to 26 Gt in 2030 and 13 Gt in 2050 (IEA, 2017)
4 From 7.6 to 9.8 billion people in 2050 (United Nations, 2017)
5 Annual growth assumptions: GDP 3.3%; population 0.8% (IEA, 2017)
Hydrogen scaling up

16

EXHIBIT 2

Hydrogen can play seven roles in the energy transition
Exhibit 3: Hydrogen can play 7 roles in the energy transition

Enable the renewable energy system

Enable large-scale
renewables
integration andpower generation

1

Distributeenergy acrosssectors andregions

Decarbonize end uses
4
5

2
6
3

Act as a buffer
to increasesystem resilience7

Help decarbonize
transportation
Help decarbonize
industrial energy use
Help decarbonize
building heat andpower
Serve as renewable
feedstock

SOURCE: Hydrogen Council

Second, the energy supply needs to transition to renewable sources. In the two-degree
scenario, the share of renewable energy sources triples from 23 to 68% of power generation,
which creates challenges in matching power supply and demand.
Third, end-use applications in the transportation, buildings, and industrial sectors need toswitch to low-carbon energy carriers such as renewable electricity, biomass or biogas, andgreen or clean hydrogen. While some applications, such as small cars and low-grade heat,can be readily decarbonized with electricity, others, such as long-range passenger cars, large
trucks, planes, and high-grade heat, pose serious challenges.
Fourth, carbon emissions, which are created by the remaining fossil fuels in the system, need
to be captured and stored through CCS or used in the chemicals industry through CCU.
Hydrogen – abundant, versatile, clean, and safe – can play seven vital roles to meet thechallenges of the transition (Exhibit 3):
1. Enabling large-scale renewable energy integration and power generation
2. Distributing energy across sectors and regions
3. Acting as a buffer to increase energy system resilience
4. Decarbonizing transportation
5. Decarbonizing industrial energy use
6. Helping to decarbonize building heat and power
7. Providing a clean feedstock for industry.

Hydrogen scaling up

17

In all seven application areas, hydrogen can offer economically viable and sociallybeneficial solutions
Hydrogen technology is not new. The world already produces and consumes more than
55 Mt of hydrogen annually in a wide range of industrial processes.

The world already produces
and consumes more than
55 Mt of hydrogen annuallyin a wide range of industrial
processes

In our vision, current uses of hydrogen will be outpacedby new uses in all seven applications (Exhibit 4).6

By 2050, hydrogen could power a global fleet of morethan 400 million cars, 15 to 20 million trucks, andaround 5 million buses, which constitute on average
20 to 25% of their respective transportation segments.
In automotive segments, the adoption of hydrogenvehicles will range from roughly 10% for small carsand 20 to 25% for large cars and trucks to roughly
35% for vans. Hydrogen-powered trains could replace around 20% of the world’s diesel trains.
Hydrogen could also replace 5% of the world’s fuel supply to airplanes and freight ships by 2050.

6 The hydrogen vision is based in part on input from the members of the Hydrogen Council. Please see themethodology chapter for details.

Exhibit 4: Hydrogen can play a critical role in the low-carbon technology portfolio

1

Power
generation

Power generation
4

Medium/large cars

Buffer1

Small cars

Transportation
Synfuel2

5Medium/low
industry heat

Industry energy

TrucksTrains,tramways

High-grade
industry heat6

Building heating and power

Countries without
gas networks

Countries withgas networks

7
Steel (DRI)

Industry feedstock
0

10

20

1 Percent of total annual growth in hydrogen and variable renewable power demand
2 For aviation and freight ships
3 Percent of total methanol, olefin, BTX production using olefins and captured carbon
SOURCE: Hydrogen Council

Hydrogen scaling up

18

In the power generation sector, domestic or imported hydrogen could generate roughly
1,500 TWh of electricity. It could provide roughly 10% of the heat and power jointly requiredby the global household and industry sectors. These shares are higher for residential heatand power in regions with high winter heating demand (15 to 20% of heat demand). Suchregions tend to have a natural gas infrastructure on which hydrogen can piggyback. They
are also higher in industrial processes using high-grade heat (20 to 25% of heat demand),
which is harder to decarbonize than lower-grade heat.
Current uses of hydrogen as industry feedstock could be decarbonized fully. In addition, hydrogen
could be used to produce 30% of methanol and derivatives from captured carbon instead of
methane, recycling more than 350 Mt of CO2 into products. It could also be used to produce
about 10% of steel – roughly 200 Mt – using low-carbon direct reduction processes.
The use of hydrogen for power generation (Role 1) and the decarbonization of end uses
(Roles 4 to 7) are complemented by the roles that hydrogen can play as an energy carrier
for energy distribution and storage (Roles 2 and 3), which are not quantified separately since
they do not add to total demand.
Overall, the annual demand for hydrogen could increase tenfold by 2050 – from 8 EJ in 2015
to almost 80 EJ in 2050 (Exhibit 5), enough to meet the world’s current energy demand for
two and a half months. (For other comparisons, see Box 1.) This increase is due to an increase

Bubble size indicates hydrogen potential in 2050, EJ (1 EJ)

Passenger ships

Vans, minibuses
Forklifts

Coaches, buses

Ammonia,
methanolCCU for methanol,
olefins, BTX3
30

Refining

40

60

70

80

100

Relative importance by 2050
Market share potential in segment, percent

Hydrogen scaling up

19

in uses – from feedstock to the industry, residential, transportation and power sectors – aswell as a global rollout from priority markets to the rest of the world that is expected to startbeyond 2030.

How big is 1 EJ?
1 EJ is roughly equivalent to: One day of the world’s total final energy demand The energy consumed in two years by the transportation sector in the New York
metropolitan area
 The heat used by Germany’s steel industry in one year The energy required to heat all of the houses in France for one winter The energy needed to recycle the annual CO2 emissions of Michigan’s industrial
sector.
1 EJ is provided by 7 million tons or 78 billion cubic meters of gaseous hydrogen.
It is equivalent to 990 billion British thermal units, 278 TWh of electricity, and roughly
170 million barrels of oil or 290 billion cubic feet of natural gas.

EXHIBIT 4

Annual hydrogen demand could increase tenfold by 2050
Exhibit 5: Hydrogen demand could increase 10-fold by 2050
Global energy demand supplied with hydrogen, EJ
78

1

9
4

22

Power generation,bufferingTransportation

5

Industrial energy

16
28

8

10

14

6

11
9
10

2015

20

30

40

7

Building heatand power
New feedstock(CCU, DRI)

Existing feedstock uses

2050

SOURCE: Hydrogen Council

Hydrogen scaling up

20

Achieving the hydrogen vision would create significant benefits for the energy system,
the environment, and businesses around the world
Producing almost 80 EJ worth of hydrogen would meet 18% of total final energy demand,or 12% of the world’s total primary energy demand in the 2050 two-degree scenario. Withhydrogen, the energy system would enjoy an additional energy carrier with attractive properties.
It can be flexibly produced, stored for long periods at low cost, and transported acrossregions. It can couple sectors, transforming electricity into a fuel for producing heat and viceversa. Its flexibility would make higher renewable shares in the power system cost efficientwhere they would otherwise not be. Its deployment potential would avoid the consumptionof more than 20 million barrels of oil per day compared to today’s energy composition. It
would radically decrease the need and energy required to transport fossil fuels across theworld and increase self-reliance and energy security.
Using this amount of hydrogen would reduce annual CO2 emissions by roughly 6 Gt compared
to today (Exhibit 6) and meet roughly 20% of the abatement to reach the two-degree scenario
compared to the reference case. In end-use applications, it would eliminate local emissions
such as sulfur oxides, nitrogen oxides, and particulates, which are linked to smog formationand cause an estimated 3 million premature deaths annually.7 It would also reduce othernuisances, such as noise pollution in cities and water pollution in lakes, rivers, and ports.
EXHIBIT 6

CO2 avoidance potential in 2050
Exhibit 6: Annual CO2 emissions could be reduced by 6 Gt in 2050
CO2 avoidance potential 2050, Gt
1

4Power generation,bufferingTransportation

0.4
3.2

Cars

1.7

Trucks

0.8

5Industry energy
6

Building heating
and power

7

Industry feedstock
Total

1.2
Buses

0.2

Other1

0.4

0.6
0.7
6.0

Total

3.2

1 Aviation, shipping, rail, material handling
SOURCE: Hydrogen Council

The transition to hydrogen would also create opportunities for sustainable economic growth.
As the technology reaches mass markets, it would create sustainable value chains that do
not require further government support. We calculate that using hydrogen at this scale would
7 WHO estimates of air pollution exposure and health impact, September 27, 2016
Hydrogen scaling up

21

create a revenue potential of more than $2.5 trillion per year. Half of this revenue would comefrom hydrogen sales, the other half from sales of vehicles, trains, heaters, machinery, industrial
equipment, and components.
Most of the value creation in a hydrogen economy
would occur in advanced industries. These industries
create more employment and domestic value thanthe value chains of fossil fuels – directly, indirectly,
and through implied effects. Given current estimatesof roughly 12 jobs created directly and indirectly per
million dollars of revenues in advanced industries,
the hydrogen economy would directly and indirectly
employ more than 30 million people. Roughly
15 million additional jobs would be associated with the value added around fuel cells, forinstance in the production of vehicles based on the fuel cell powertrain.

The application of hydrogenat this scale would create arevenue potential of morethan $2.5 trillion per year

Investments in the ramp-up of infrastructure and manufacturing would create additional
revenues and jobs, mostly in construction and machinery.

Hydrogen scaling up

22

Hydrogen scaling up

23

Getting there.
A roadmap to the hydrogen economy.

To realize the vision outlined in the previous chapter and achieve
its desired impact, a significant step-up will be required acrossthe value chain. This chapter describes the roadmap in detail,focusing in particular on the segments most relevant until 2030.
For most applications outlined in this report, the technology has
been proven and is ready for use. Now is the time to roll outhydrogen infrastructure and manufacturing capacity and lead thetechnology to competitive costs and mass market acceptance.

Overview: Hydrogen technology is ready for deployment
For most applications, commercialization could start before 2020 (Exhibit 7).
In transportation, hydrogen-powered vehicles are commercially available now or will
become available in the next five years in medium-sized and large cars, buses, trucks, vans,trains, and forklifts.8 In these segments, FCEVs meet the performance and convenience
requirements best. In the next wave, costs are likely to drop with scale, allowing hydrogen tocompete in more segments such as smaller cars and minibuses. By 2030, 1 in 12 cars soldin California, Germany, Japan, and South Korea could be powered by hydrogen, more than
350,000 hydrogen trucks could be transporting goods, and thousands of trains and passenger
ships could be transporting people without carbon and local emissions. Beyond 2030, hydrogen
will increasingly be used to create renewable synthetic fuels to decarbonize commercial aviationand freight shipping, which are harder to decarbonize using pure hydrogen and fuel cells.

8 Please see the transportation chapter for examples of models across all these segments.

Exhibit 7: Hydrogen technology is ready to be deployed
Forklifts
Medium/large cars
City buses
Vans

4

Transportation

Coaches
TrucksTrams, railways
Passenger ships

5

6

Industry energy
Building heating and power
Refining

7

Industry feedstock1

Ammonia, methanol

Power generation
Today

2020

25

1 Defined as sales >1% within segment in priority markets
2 Market share refers to the amount of production that uses hydrogen and captured carbon to replace feedstock
3 DRI with green hydrogen, iron reduction in blast furnaces, and other low-carbon steel making processes using hydrogen
4 Market share refers to the amount of feedstock that is produced from low-carbon sources
SOURCE: Hydrogen Council

Hydrogen scaling up

26

In feedstock, large amounts of hydrogen are already used in refining, ammonia, and methanol
production. Large-scale projects are already under way, and by the middle of the next decade,the first refineries and ammonia plants could start producing their hydrogen from cleansources, reducing upstream emissions in the petrochemicals and chemicals industries. At
the same time, carbon capture is expected to gain momentum in the two-degree scenario.
Combined with hydrogen, this captured carbon could be used as industrial feedstock andthus replace fossil fuels. Similarly, carbon from biomass could be turned into a renewable
feedstock using hydrogen. As the costs of carbon capture and hydrogen production decrease,
up to 5% of the global production of methanol and derivatives could be based on renewable
feedstock by 2035. In the iron and steel industry, where hydrogen can be used to reduceiron ore to iron, the use of clean hydrogen is also expected to be demonstrated by 2030 andgain momentum by 2035.
For heat and power for buildings and industry, low concentrations of green or cleanhydrogen could initially be blended into public natural gas networks, before entire cities could
be converted to pure hydrogen heating. Both processes have already started and could startscaling up around 2030. A second wave of commercialization could start once the costs ofproducing hydrogen have fallen enough to drive hydrogen uptake in the more cost-sensitive

Start of commercialization

Small cars

Mass market acceptability1

Synfuel for freightships and airplanes

Minibuses

Medium/low industry heat
High-grade industry heat
Blended hydrogen heating
Pure hydrogen heating
Production of methanol, olefins, and BTX using hydrogen and carbon2
Steel3
Decarbonization of feedstock4
In renewables-constrained countries
In other countries
30

35

Hydrogen scaling up

40

2045

27

industry segment. While hydrogen penetration may not reach the same rates in industrial
energy use as in other segments, the large energy consumption for industrial purposes implies
substantial potential for hydrogen demand.
As the energy system relies more heavily on renewables, hydrogen could also play a growingrole in the storage of renewable electricity and the production of clean electricity. By 2030,
250 to 300 TWh of surplus renewable electricity could be stored in the form of hydrogen foruse in the other end-use segments. In addition, more than 200 TWh could be generated fromhydrogen in large power plants to accompany the transition to more renewable electricity.
The following sections will describe the roadmap in more detail along the four end uses intransportation, industrial energy, buildings, industry feedstock, and as enabler for the energy
system. It outlines the importance of decarbonization, the role of hydrogen in our vision, as
well as the investment need and deployment projects in each.

Hydrogen scaling up

28

4

Transportation.
Hydrogen and fuel cells are critical elements in the
decarbonization of the transportation sector.
 FCEVs are a necessary complement to BEVs to achieve deep
decarbonization of the transportation sector.
 They are convenient for consumers due to long ranges and fast
refueling times and particularly competitive for heavily-used vehicles.
 Hydrogen-powered vehicles are commercially available now orwithin the next five years in medium-sized/large cars, buses,
trucks, vans, trains, and forklifts.

2030 milestones 2050 target picture 1 in 12 cars in Germany, Japan, South
Korea, and California powered byhydrogen Up to 400 million passenger vehicles (~25%),
5 million trucks (~30%), and more than 15 million
buses (~25%) running on hydrogen Globally 10 to 15 million cars and
500,000 trucks powered by hydrogen 20% of today’s diesel trains replaced withhydrogen- powered trains Deployment of hydrogen-powered trains
and passenger ships

 20 million barrels of oil replaced per day, 3.2 Gt
CO2 abated per year

Hydrogen scaling up

29

Decarbonizing road transport is a key to achieving the two-degree scenario
Today’s transportation sector depends almost entirely on fossil fuels, emits more than 20%
of all CO2 emissions – and is almost certain to grow significantly in the years ahead. The IEA
predicts that CO2 emissions will increase by about 35% by 2050 in the reference scenario,
whereas the two-degree scenario requires reducing emissions by 40% until 2050. Average
emissions per kilometer need to decrease by more than 70%, despite an increase in morecarbon-intensive freight and air traffic.
To achieve the two-degree scenario, the equivalentof 160 million low-emission vehicles – 80 million
zero-emission and 80 million plug-in hybrid electricvehicles (PHEVs) – will need to be on the roads
by 2030, just 12 years from today. 9 Reaching
this ambitious target will require a wide range oftechnologies. Since vehicle range, flexibility, andperformance requirements differ widely between
segments, BEVs, FCEVs, biofuels, and synthetic
fuels will be required in different segments to varying degrees. To bet on a single technology
to solve the decarbonization challenge in transportation is not only likely to fall short of
the required emission reductions, it is also risky if the hoped-for advances in that single
technology – or the speed at which production lines and supply chains are developed – do
not materialize.

More than 80 million zeroemission vehicles will need
to be on the roads by 2030 –just 12 years from today

But technological developments will not take place at the expense of one another. In fact, thedevelopment of BEVs and FCEVs is likely to be synergetic: both technologies rely on electric
powertrains and benefit from technological improvements in these components. Likewise,
the development of fuel cells for passenger cars could enable fuel cell applications in freighttransport, trains, on ships, and even beyond the transportation sector – and vice versa.
Hydrogen is a key technology in a decarbonized transport system
Each segment of the transport sector – from motor scooters to ocean-faring container
ships – can be characterized by range and payload. These two metrics roughly determine
the performance requirements for the engine (payload) and storage requirements for the fuel(range). Today, all of these segments rely heavily on fossil fuels.
Decarbonizing the segments is possible with a range of technologies that offer different
energy efficiency (the energy required as input) and their energy density in terms of weightand volume (Exhibit 8):10

9 IEA, 2017
10 Stolen, 2017
Hydrogen scaling up

30 BEVs have the highest well-to-wheel energy efficiency (60% when powered by electricity
from renewables, 30 to 35% when powered by gas- or coal-based electricity; compared
to roughly 25 to 30% for ICEs11), while batteries have the lowest energy density per weight(0.6 MJ per kg), making them well suited for lighter vehicles and shorter ranges.
 Hydrogen, when stored aboard a vehicle, has a much higher energy density per weight thanbatteries (currently around 2.3 MJ per kg12), allowing FCEVs to travel longer distances andperform better for heavier vehicles for which batteries become impractical and inefficient.
The energy efficiency of FCEVs is lower than that of BEVs, however (roughly 30% fromwell to wheel if produced through electricity).
 Synthetic fuels have the highest specific energy, which allows them to be used in aviationand shipping, but they suffer from low overall energy efficiency of about 10%.
EXHIBIT 7

DECARBONIZATION OF TRANSPORTFCEV can play a role to decarbonize different segments in transport where
Exhibit 8: FCEVs can help decarbonize segments with longer ranges and more weight
longer range and weight are required
Transportation market segmentation
Weighttons
Shipping1

1,000

Airplanes

Trams andrailways

100

Medium-/heavy-duty
trucksVans/LCVs,
small trucks

10

Small
cars

Bubble color representing the market share ofhydrogen vehicles in 2050
FCEV sales
share 2050
<10%

Buses andcoaches

FCEV fuelshare 2050
Up to 5%10-20%
20-30%
30-40%

Large cars
1

Bubble size roughly representing the annual
energy consumption of vehicle type in 2050 (1 EJ)

40-50%>50%

Mediumsized cars

2-/3-wheelers
0

0

300+

600+

5,000+
Range requirementkm

1 Hydrogen-based fuels or fuel cells
SOURCE: IEA ETP; IHS; A Portfolio of Powertrains for Europe (2010); Thiel (2014); Hydrogen Council

While the requirements of range and weight are related to transport segments, as shown in
Exhibit 8, it is the specific pattern of usage that determines the attractiveness of a technology.
While some consumers drive only locally, for example, others regularly drive their cars long
distances, making FCEVs more attractive. Trucks for local distribution may be able to run onbatteries, while those for long-haul freight will profit much more from the longer range of hydrogen.
Although FCEVs and BEVs are sometimes represented as competing technologies, they are
actually complementary. While some transport segments will rely primarily on one technology –commercial aviation is unlikely to be powered by batteries or fuel cells, for example – others
11 A portfolio of power trains for Europe: A fact-based analysis 2010
12 Based on Toyota Mirai tank and fuel cell weight
Hydrogen scaling up

31

are less clearly divided. In these segments, cost, convenience, available infrastructure, andother factors will play large roles.
Hydrogen is advantageous for vehicles with long range, mileage, and heavy payloads (Exhibit
9). Using 2030 cost estimates, for example, a BEV powertrain with a 30-kWh battery (the sizeof the battery in a 2016 Nissan Leaf) would be about 35% less expensive than an FCEV withsimilar storage capacity. As capacity increases, however, the FCEV becomes cheaper, sinceadding hydrogen storage costs less than adding batteries. At about 55 kWh, both powertrains
cost the same, which translates into a range of about 300 km. Beyond that, FCEVs are likely
to be less expensive than BEVs. At a range of around 1,000 km, which is the range offered byconventional thermal engines for passenger cars, the FCEV has a cost advantage of about
55%. For trucking, even larger capacities are required to move heavy payloads across long
distances, for which hydrogen is well suited.

EXHIBIT 9

DECARBONIZATION OF TRANSPORTFCEVs have lower investment costs for long-range vehicles

Exhibit 9: FCEVs have lower investment costs for long-range vehicles

Scenario analysis of powertrain costs for FCEVs and BEVs at different capacity levels, 2030

Scenario analysis of powertrain costs for FCEVs and BEVs at different capacity levels, 2030
Capex 2030, $ thousands

BEV

FCEV

15

10

5

0
20

30

40

50

60

70

80

90

100

110

120

130

140

150

Electric energy capacity, kWh
Assumptions: battery $100/kWh, fuel cell of 100 kW with $40/kW, hydrogen tank $24/kWh, FCEV battery with 1% of total capacity, FC to electricity
efficiency 55%
SOURCE: Avere-France; DoE fuel cell technology office; McKinsey: Automotive revolution – perspective towards 2030

Improvements in fuel cell efficiency will likely reduce fuel consumption by 20 to 35% until 2030
(Exhibit 10). In addition, fuel costs per kg hydrogen are expected to fall as distribution and retailinfrastructure scale up. These improvements could give FCEVs an advantage over diesel inall segments, even if oil prices remain near today’s low levels. This is particularly relevant for
consumers who drive long distances and commercial vehicles used extensively.
The costs of hydrogen refueling infrastructure are less than often thought. Our roadmap showsthat building the required refueling infrastructure would cost $1,500 to 2,000 per FCEV until
2030. This is in the same order of magnitude as the cost for the recharging infrastructure

Hydrogen scaling up

32

EXHIBIT 8

DECARBONIZATION OF TRANSPORT
Exhibit 10: FCEVs’ fuel costs
will fall by 20 to 35% until 2030
Fuel efficiency of FCEVs is improving by 20-35% every year until 2030

FCEV consumption

2017

kg/100 km
0.7

-20%

-30%

0.9

-34%

1.1
0.7

0.6

0.6

ICE consumption

6.8l/100 km
4.2

3.7

-12%

5.2

A/B

4.6

C/D

2030

6.4

-11%

-6%

J

SOURCE: A Portfolio of Powertrains for Europe (2010) [Updated]

for a BEV, as a home charger currently costs around $2,000.13 By 2030, costs of refuelinginfrastructure could decrease to less than $1,000 per FCEV. A study comparing infrastructure
costs for 20 million FCEVs and 20 million BEVs in Germany found that, when required gridinvestments are considered, the total cost per FCEV may even be lower than for BEVs.14
Considering the total costs of ownership – purchasing, fueling, and maintaining a powertrain –the FCEV cost disadvantage compared to ICEs could drop below 10% between 2025 and2030 (Exhibit 11) for C/D segment passenger cars, depending on annual range and fuelprices. The cost reductions – as much as 80% – are driven primarily by scale, with most of
the reductions coming from scaling up manufacturing and the fuel retail infrastructure between
now and 2025. Ultimately, TCO depends heavily on utilization – the more a vehicle is used,
the higher the advantages for FCEVs and BEVs compared to ICEs.
For trucks, a TCO breakeven could come even earlier. In certain use cases, such as longhaul trucking, FCEVs could break even with ICEs between 2025 and 2030.15 One reason for
the earlier breakeven is the higher mileage and energy demand of trucks, making the fuelcost benefit of FCEVs more important. Another is the limited need for infrastructure. The fuelcell trucks under development aim for long ranges and typically drive along major highways.
With a limited amount of refueling stations, complete coverage can be achieved, resulting
in lower infrastructure cost. This network would also provide a good minimum network forpassenger cars.
13 Schaufenster Elektromobilität, 2016
14 The study considered infrastructure costs for hydrogen production, transmission, distribution, and retailfor FCEVs; distribution, fast chargers, and home chargers for BEVs; it did not consider the costs for the
production of electricity (FZ Jülich, 2017).
15 ICCT, 2017
Hydrogen scaling up

33

EXHIBIT 12

DECARBONIZATION OF TRANSPORT

Exhibit 11: FCEVs could become cost competitive between 2030 and 2040
TCOs are expected to converge by 2030-2035
TCO ranges1 of different powertrain technologies, EUR/km (indexed)

ILLUSTRATIVE

FCEV

12,000 km/year

25

BEV

ICE

35

2040

30,000 km/year

TCO within 10% range

2020

C/D SEGMENT

30

TCO within 10% range

35

2040

2020

25

30

1 Based on fuel price variants and sensitivities to learning curves
SOURCE: A Portfolio of Powertrains for Europe (2010), updated with Hydrogen Council vision

Lowest costs, however, are not the only reason to consider the adoption of new technologies.
While many models of future energy systems are based on a lowest-cost principle, it is
not the only factor that most consumers or even businesses consider. For most of them,
performance, flexibility, and convenience are at least as important as price. The wide arrayof brands and models attests to these differences; car manufacturers use complex models
of buying criteria to develop and market new vehicles. In a recent survey in the Netherlands,
for example, about 75% of all customers said they would consider an electric vehicle, but only
35% would settle for a car with a range of less than 600 kilometers. While the vast majorityof current EV owners charge at home, only 40 to 50% of parking takes place at a dedicatedspot at home or at work, making charging less convenient for customers without access to
dedicated overnight charging spots.16 For these consumers, the least-cost option may not
be the one they settle on – the long ranges and fast refueling times offered by FCEVs may
outweigh price considerations (Exhibit 12).
For commercial vehicles, the cost of purchasing the vehicle is only part of the total calculation.
Flexibility, fast refueling, and range provide economic benefits that fleet managers weighagainst price. Being able to carry more payload on a truck, since hydrogen tanks and fuel cells
weigh significantly less than batteries, provides a clear economic advantage. The flexibility ofaccepting customers for long-distance rides implies higher revenue for taxis.
Trends that increase the utilization of transportation assets – such as autonomous driving
and car sharing – further increase the need for continuous operation without long recharging
periods. Further improvements in charging speeds could alleviate some of these range issues
for BEVs, but any advances will need to avoid degrading battery capacity or lifetime.
16 TU Dresden, 2015
Hydrogen scaling up

34

EXHIBIT 10

DECARBONIZATION OF TRANSPORT

ExhibitFCEVs
have
superior
andtimesrefuelingtimes to BEVs
FCEVs 12:have
superiorrange
and range
refueling
comparedRange today

Range (EPA) of exemplary models, km
Powertrain Segment
ICE

BEV

200

400

600

800

1,000 1,200

1

A/B
C/D
E+

1
1

A/B

JMC E100

Chevy Bolt

C/D

Ford Focus

BYD e6

E+
FCEV

0

A/B
C/D
E+

Tesla Model S 60

Tesla Model S 100D

Currently nonexistentToyota Mirai
Mercedes-Benz
GLC F-Cell

Honda Clarity
Hyundai iX35
(2018)

Range by 2030

Range
limitations

Refuelingtime, minFuel tanksize andweight~3

Cost ofbattery andweightHydrogentank size andweightFast: ~302
Regular: ~6002
3-5

1 Indicative
2 Charging time depends on battery size and charge rate; PHEV indication refers to a 8.7 kWh battery and home charging at a standard domestic
socket; BEV indication refers to a 24 kWh battery at 50kW for fast charging and a standard domestic socket for regular charging
SOURCE: EV-volumes.com; OEM websites; web and press search

A comparison of environmental benefits should cover the whole lifecycle of a car, since theCO2 emissions of a vehicle comprise those from the tailpipe as well as those emitted upstream
during fuel production and car manufacturing.17 Regulation, such as CAFE standards in the
US and the emission performance standards for new passenger cars in the EU, have focusedon downstream emissions – from the tailpipe. Tailpipe emissions from a diesel- or gasolinepowered B-class vehicle are around 105 to 110 g of CO2 per km, while they are zero for FCEVs
and BEVs since no combustion takes place in the vehicle. For FCEVs and BEVs, the emissionsof producing the hydrogen/electricity drive the overall environmental performance. For BEVs,
in addition, a significant contributor to the environmental performance are the CO2 emissions
and water use from battery manufacturing (Exhibit 13) and the required resource extraction.
Considering the whole lifecycle, the carbon emissions of FCEVs are very low. Even if hydrogenwere produced entirely from natural gas through steam methane reforming (SMR) without theuse of carbon capture, FCEV emissions are 20 to 30% lower than those of ICEs. In reality,hydrogen is already less CO2 intense than this: much hydrogen is produced as a by-productin the chemical industry (leading to very low CO2 intensity); a number of refueling stations draw
their hydrogen supply from electrolysis with renewable electricity; and SMR can be pairedwith effective CCS. Over time, fully decarbonized hydrogen could lead to very low emissions
for fuel production. The car manufacturing emissions for an FCEV are slightly higher thanfor an ICE, totaling around 45 to 55 g per km. In total, an FCEV powered by green or cleanhydrogen in our example could achieve combined CO2 emissions of 60 to 70 g per km.

17 The TCO calculation uses a compact car with a lifetime of ten years and 12,000 km annual driving range as
reference. For simplification, we excluded emissions from vehicle recycling and disposal.
Hydrogen scaling up

35

EXHIBIT 13

DECARBONIZATION OF TRANSPORT

Exhibitcanvery
achievevery
low CO2 emissions
if thelifecycle
whole lifecycle
is considered
FCEVs13:
canFCEVs
achieve
low CO
if the wholeis considered
2 emissions
CO2 emissions, 2015, g/km

ICE

FCEV

~180

~185

~50

~50

~25

~25

~105

~110

Battery/fuel cell manufacturing

Well to tank

Car manufacturing

Tank to wheel

BEV
135-180

120-130
15-25

25-70

~30

~30

~75

60-70
15-25
~30

~80

115-160 110-155
25-70

25-70

~30

~30

~60

~55

~15
Diesel Gasoline

H2 from Green/
SMR
clean H2

China

US

90-135
25-70

65-75

~30

25-35

~35

~30
~10

Germany Spain Green
electricity

Assumption: compact car (C-segment) as reference vehicle (4.1 l/100 km diesel; 4.8 l/100 km gasoline; 35.6 kWh battery), 120,000 km lifetime average
grid emissions in China, Germany, Spain in 2015; EV manufacturing (excl. fuel cell and battery) 40% less energy-intensive than ICE manufacturing;
10 kg CO2/kg H2 from SMR; 0.76 kg H2/100 km; 13 kWh/100 km
SOURCE: EPA; A Portfolio of Powertrains for Europe (2010); Toyota Mirai LCA; IVL; Enerdata; expert interviews

This is highly competitive with the environmental performance of BEVs. BEV carbon emissions
are dependent on the generation mix for the power that fuels the car and the power that fuels
the energy-intensive manufacturing process of the batteries. For fueling the car, the equivalentemissions currently range from about 35 g CO2 per km in Spain to about 80 g in China fora small BEV. For manufacturing, batteries require significant mineral resources, which areenergy intensive to mine and process. Since most of the required energy is electricity, theintensity depends on the power mix of the battery factory. Studies estimate emissions between
about 70 g per km (current power mix) and 25 g per km (fully renewable electricity). This puts
total emissions of a BEV produced and driving in China on par with an ICE; in Germany on
par with an FCEV driven with hydrogen from SMR without CCS. Using green electricity for
manufacturing and fueling, BEVs exhibit a similar carbon intensity as FCEVs.
From a lifecycle analysis standpoint, larger vehicles are likely to favor FCEVs slightly over
BEVs, as the incremental capacity of the battery increases its emissions. Longer lifetime andhigher utilization will play out in favor of FCEVs and BEVs compared to vehicles with ICEs, as
their emissions for driving additional distances are lower.
Hydrogen technology for transportation is technologically ready
The Hydrogen Council believes FCEVs will play an important role in the decarbonization oftransport, complementary to other technologies.
We expect that FCEV passenger cars could represent almost 3% of new vehicle sales in
2030, ramping up to about 35% in 2050, for total sales of 4 million vehicles in 2030. In themarkets leading global FCEV adoption – Germany, Japan, California, and South Korea –almost every 12th car sold in 2030 could be powered by hydrogen.
Hydrogen scaling up

36

Achieving these sales figures would require a rapid scale-up of manufacturing and refuelinginfrastructure until 2030, but they are feasible. The technology is proven – three models of
FCEVs are already offered commercially in Japan, South Korea, California, and Germany(Honda Clarity, Hyundai ix35/Tucson, Toyota Mirai), and one model is available as a retrofit(Renault Kangoo, retrofitted by Symbio FCell).18 Ten additional models are slated for releaseby 2020.19 FCEVs have driven more than 20 million km under real-world conditions and satisfy
all safety certifications and regulations. Hundreds of refueling stations have been operational
for years. Model choices will expand in the next few years, as additional manufacturers join
the race. And while the implied growth rates are ambitious, they are not unlike the growth ofearly hybrid-electric vehicles.
Deployment is likely to be led by fleet applications such as taxis and other commercial
fleets. In several cities worldwide, taxi or ride-sharing start-ups using FCEVs exclusively (e.g.,
BeeZero in Munich or Hype in Paris) or alongside BEVs (e.g., CleverShuttle in Germany or
J’Car in South Korea) have sprung up. Early uptake is likely to be highest in the sedan (C/D),
luxury (E+), and SUV (J) segments, as they require the power and ranges of fuel cells, andtheir owners are somewhat less price sensitive. As costs decline through the scale-up of
manufacturing and hydrogen, FCEVs could also compete for shares of smaller segments.
Small vans and light commercial FCEVs are on the road today. Adoption could increase toalmost 6% of sales by 2030 and almost 50% by 2050, as cities put more stringent regulations
in place to reduce local emissions from delivery vehicles and other commercial fleets.
Fuel cell buses are also getting significant traction
due to concerns about local pollution, in particular in
Europe, Japan, South Korea, and China. While smaller
buses and buses with shorter-range requirements will
run on batteries, fuel cells will allow larger buses to go
longer distances and operate with fewer interruptions.
For buses, the infrastructure hurdle is less relevant,as most rely on purpose-built refueling stations. Morethan 450 FCEV buses from different OEMs (including
ADL, Daimler, Foton, Solaris, Solbus, Van Hool, VDL,
Yutong, and Wrightbus) are on the road in the US, Europe, Japan, and China today, andcountries have ambitious plans to deploy thousands over the next few years. South Korea
plans to replace 26,000 buses from compressed natural gas with fuel cell buses until 2030;
Shanghai alone is planning to operate 3,000 buses by 2020.

Europe, Japan, South Korea,
and China have ambitious
plans to deploy thousands offuel cell buses over the next
few years

Coaches and intercity buses that travel long distances are also well suited for a hydrogen
powertrain. Most intercity buses travel from bus depot to bus depot – hence a refueling stationin every depot suffices. Due to their high mileage and fuel requirements, buses can reduceroad emissions significantly: a single city bus running 16 hours a day emits as much as 50 tonsof CO2 per year, equivalent to roughly 25 medium-sized passenger cars. Our roadmap sets a
18 Not all models are offered in all markets
19 IHS/Markit
Hydrogen scaling up

37

target share of as much as 30% of the total bus fleet by 2050 for FCEVs, which would imply
a 10% share of sales by 2030 in priority markets, for annual sales of about 20,000 buses andminibuses globally. This fleet would save about 5 to 10 million tons of CO2 per year; as muchas a million individual FCEVs.
An even larger decarbonization potential lies in trucks. With freight transport booming – theIEA projects an annual growth of freight kilometers of almost 3% per year – truck emissions
that account for roughly 25% of CO2 emissions from the transportation sector today willgrow to 35 to 40% by 2050. In particular, heavy trucks could be decarbonized with hydrogen(alongside liquefied or compressed natural gas or biogas, which competes for this segment
but suffers from local emissions), accounting for about 25% of the total fleet by 2050. This
would require a sales share of about 2.5% in 2030, for a 350,000-strong fleet of light, medium,and heavy trucks. While the number of trucks seems small compared to passenger cars, theemission abatement could be large: due to their high mileage and heavy weights, the truck
fleet would have the same abatement potential as almost 2.5 million FCEVs in the passenger
car segment. The first models are commercially available in China, where Nation Synergy has
recently signed contracts for the delivery of more than 3,000 captive fuel cell trucks.20 Several
additional models, also in heavy and long-haul segments, are expected to be commerciallyavailable within the next five years (e.g., by Toyota, Nikola Motor, and VDL).
Overall, hydrogen and fuel cells could constitute up to 20% of road vehicles in 2050, but contribute
more than a third of the transport sector CO2 abatement needed to reach the two-degree
scenario relative to the reference case. This is due to the higher mileage and consumption of
the vehicles for which hydrogen is best suited.
Hydrogen applications for material handling haveexperienced the largest uptake so far. Fuel-cellpowered forklifts, in particular, outperform batterypowered alternatives in a TCO comparison wherehigh uptime is needed. More than 15,000 fuel cell
forklifts (such as by the producers Plug Power andToyota) are operational in global warehouses today,with major projects in Amazon and Walmart warehouses in the US.21 Many other captive fleetsthat are otherwise challenging to decarbonize – such as airport ground operations, logistics,
mining, and construction – could benefit from fuel cell applications.

More than 15,000 fuel cell
forklifts are operational inglobal warehouses today

Hydrogen-powered trains are an attractive alternative to diesel trains, in particular on nonelectrified
railways – where roughly 70% of the world’s 200,000 locomotives operate today – and in themarkets of Europe and the US (together about 55,000 diesel locomotives today). Besides
avoiding carbon emissions, hydrogen trains reduce noise and eliminate local emissions suchas particulates. Since they use significant amounts of hydrogen, the required infrastructure islimited and can be immediately utilized. Hydrogen-powered trains are already being introduced
for light-rail vehicles and regional railways – such as the trams produced by the China South Rail
20 Mao, 201721 Argonne National Laboratory, 2017
Hydrogen scaling up

38

Corporation/Sifang, which are being deployed in several Chinese cities. Other models, including
regional trains by Alstom, are expected to be deployed in the coming years. By 2030, one in ten
trains sold for currently nonelectrified railways could be powered by hydrogen; by 2050, one infive trains running on nonelectrified railways or one in ten trains overall could run on fuel cells.
For water transport, fuel cells are most relevant forpassenger ships such as river boats, ferries, andcruise ships. Passengers, in particular those usingboats for recreation and tourism, will value lower
local emissions, less noise, and less water pollution.
River, lake, and port authorities will easily ban such
emissions once viable alternatives are available.
Besides propulsion, fuel cells can provide auxiliary
power on ships, replacing diesel-based units. Prototypes for fuel-cell-powered passenger
ships are already in operation, including the “MS Innogy” in Germany or the “Energy Observer”
under the French flag. In Norway, Viking Cruises is planning to build the world’s first cruise
ships powered by liquid hydrogen and fuel cells.

By 2030, one in ten trains
sold for currently nonelectrified railways could bepowered by hydrogenIn freight shipping and aviation, hydrogen could play a role as feedstock for synthetic fuel.
Ultimately, these fuels mimic the properties of conventional fossil fuels and are burned in
combustion engines. Those synfuels that use CO2 and hydrogen form a closed carbon cycle
and are hence a route to decarbonize combustion engines. Since the efficiency losses in theprocess make synfuels less attractive than other applications of hydrogen, they are likely to
be deployed only towards 2050.
Progress is under way in some of the world’s biggest markets
The deployment of transport solutions has begun around the world, with Japan, South
Korea, California, and Germany leading the way. Activities in other European countries, in
the Northeast US, and in China are also under way. Japan has set itself the target of having
40,000 FCEVs on the road by 2020 and 800,000 by 2030; China plans 1 million FCEVs by2030 and is already investing in growing its manufacturing capabilities.22
Large-scale deployment of hydrogen transport solutions would require major investments inhydrogen infrastructure. Serving a fleet of 10 to 15 million FCEVs, for example, would require
the equivalent of roughly 15,000 large filling stations23 by 2030. Developing and building thisrefueling infrastructure could cost roughly $20 billion – about $1.25 to 1.5 million per large
station. These costs are significantly lower than current costs in many countries: in Germany,an average small to medium-sized station costs around €1 million ($1.2 million); in Japan,
the costs are three to five times higher due to regulatory requirements and geographical andgeological conditions. The cost reduction underlying our estimate is driven by three factors
related to the manufacturing scale-up: technological and operational improvements, increasing
station sizes, standardization, and rationalized regulatory requirements.
22 Mao, 2017
23 1,000 kg daily capacity
Hydrogen scaling up

39

EXHIBIT 11

DECARBONIZATION OF TRANSPORT

Exhibit
14: More
than
5,000 hydrogen
refuelingstations
have
been announced
As of today,
major
countries
plan to build
more than
5,000hydrogenrefuelingstations by 2030
Needed stations for roadmap2

Latest announced investments in hydrogen
refueling stations (selected countries)

Current global announcements1~15,000+
H2Mobility UK:
up to 1,150
HRS by 2030
Northeastern
US: 250 HRS
by 2027
California:
100 HRS by
2020

Other Europe:~820 HRS by
2030

Scandinavia:
up to 150
HRS by 2020
H2Mobility
Germany: up
to 400 HRS
by 2023
China: >1,000
HRS by 2030;> 1 million
FCEVs

5,300
South Korea:
310 HRS by2022~3,000+2,800

Japan: 900
HRS by 2030

1,100
375
2017

2020

2025

2030

1 Announcements for shaded countries/regions: California, Northeastern US, Germany, Denmark, France, Netherlands, Norway, Spain, Sweden, UK; Dubai;
China, Japan, South Korea
2 Equivalent number of large stations (1,000 kg daily capacity)
SOURCE: Air Liquide; Honda; Hydrogen Mobility Europe; H2Mobility; E4tech; NREL; web search

Overall, these stations would sell about 12,000 tons of hydrogen per day; more than 4 million
tons of hydrogen per year in 2030. This hydrogen could be sourced from a central production
site using distribution trucks or pipelines, or be produced on-site (e.g., through smaller local
electrolyzers). Building this production capacity would entail investments of $10 to 12 billion.
Some countries have already set targets for hydrogen refueling stations (Exhibit 14) and ahydrogen supply chain, but a significant acceleration would be required to achieve the goalsof our roadmap.
An important barrier to this infrastructure development is the synchronization of FCEVs
ramp-up and infrastructure development. Investments in refueling stations pay off only if
vehicle numbers grow, but developing, building, and marketing vehicles is viable only with anadequate refueling infrastructure. No single fuel retailer has an incentive to be the first mover,and neither does a car manufacturer. The need for “synchronization” is obvious.
Governments can catalyze this synchronization by providing clarity and certainty on the policy andregulatory framework, and initiate structures for industry-government cooperation. In Germany, theH2 Mobility initiative is funded by car manufacturers, gas companies, and fuel retailers and enjoys
government support. It has committed to building 100 stations by the end of 2019, independentof the number of FCEVs sold in the country. After this initial phase, it aims to build another300 stations to provide full coverage of the country, contingent on FCEV sales. The joint venture,
which builds and operates the stations, has achieved significant capital and operational cost
reductions. Similar initiatives exist in the UK (H2 Mobility UK), South Korea (H2Korea), California(California Fuel Cell Partnership), Scandinavia (Scandinavia Hydrogen Highway Partnership), andJapan. Chapter 3 describes how such a coordinated rollout of stations and vehicles could be scaled.

Hydrogen scaling up

40

5

Industry energy.
Hydrogen can provide decarbonized high heat
for industrial processes.
 Clean or green hydrogen can be used as alternative to postcombustion carbon capture and storage
 Hydrogen is the main option for decarbonization of industrial
processes requiring high heat and/or combustion

2030 milestones 2050 target picture One in ten steel and chemical plants in
Europe, North America, and Japan useshydrogen for low-carbon production
 4 million tons (0.6 EJ) additional hydrogen
usedRoadmap towards a hrydogen economy

 12% of global industry energy demand (16 EJ)
met with hydrogen – 23% of high-grade, 8% of
medium-grade, and 4% of low-grade heat andpower ~1 Gt CO2 abated per year

41Decarbonizing industry is a global necessity
After the power sector, industry is the biggest consumer of energy: it accounts for a third of
final energy consumption and a quarter of CO2 emissions. Two-thirds of all energy is consumed
by only five industries: aluminum, chemicals, petrochemicals, and refining; cement; iron andsteel; and pulp and paper, all of which require large quantities of energy to run equipment
such as boilers, steam generators, and furnaces (Exhibit 15).
EXHIBIT 14

Hydrogenplay a rolein selectedindustries
high-grade
heat
Exhibit
15:canHigh-grade
heatconstitutes
a large forshareof energy
use in heavy industry

11

18

36

6

Iron and steel

Pulp and paper

High-grade heat

Electricity

53

Other industries

6

Chemicals,
petrochemicals,
and refining

Medium-grade heat

CementEJ

Low-grade heat

Aluminum

Energy consumption, 2014, EJ

SOURCE: IEA; Hydrogen Council

Fueled by economic growth, particularly in South- and Southeast Asia, the final energy
consumption of global industry is expected to increase by 10% by 2050. At the same time,
the two-degree scenario calls for CO2 emission reductions of 30% in this sector: 2.5 Gt lesscompared to today’s levels, or 4.6 Gt less compared to the reference scenario that the IEA
predicts based on current trajectories.
Industry can reach this decarbonization goal using three levers:
 Improving energy efficiency by deploying best available technologies and production
processes and recycling materials
 Switching from fossil fuels to bio-based fuels, renewable electricity, and/or hydrogen CCU/CCS.
The first lever, improving efficiency by deploying the best available technologies, could achieveroughly half of the cumulative emission reduction target for the two-degree scenario. For
instance, average emissions in the iron and steel industry range from 1.3 tons CO2 per ton
Hydrogen scaling up

42

of steel produced in Brazil to 3.8 in India. By boosting efficiency using existing tools, suchas better furnace technology and heat and energy recovery, steel producers in India could
reduce emissions by 40%.24
Yet advances in efficiency, while vital, will not be enough to reach targets. This is in part
because much of the momentum to reduce emissions comes from countries that alreadyuse highly efficient processes. Switching to electricity and/or hydrogen will therefore benecessary to achieve a deep decarbonization in industry, complemented by capturing andstoring or using carbon emissions through CCS and CCU.
How hydrogen can reduce emissions in industry
In many energy-intensive industries using high-grade heat, hydrogen could be a morefeasible or efficient route to decarbonization than electrification. Certain processes require
combustion-based heaters, in which solids, liquids, or gases are burned as the heat istransferred to the material. Blast furnaces for iron making are a good example: the coke usedin these furnaces not only creates heat needed tomelt iron, but enables the chemical reaction between
the carbon electrodes in the coke and the oxygenin the iron ore that is necessary to reduce the ore toiron. While it is possible to enhance the heat of theblast furnace with other combustible fuels (such as
natural gas or hydrogen), it is therefore not possible tosubstitute the blast furnace with an electric furnace.

Adopting hydogen could
help a wide range ofindustries make progress
toward national and global
CO2 reduction targets

Clean or green hydrogen can create high temperatures
while producing little or no CO2. Equipment can be
retrofitted to run on hydrogen or a combination of hydrogen and other combustible fuels. In
the steel industry, as in the chemicals industry, hydrogen is already used to produce heatand power, as in the heat treatment of steel billets. Research shows that much larger sharesof hydrogen-rich off-gases could be captured and used to generate power or enhance
production elsewhere in the plant – either as fuel for the blast furnace25 or as a reducing agent
in direct reduction iron-making processes (see chapter “Industry feedstock” on these uses
for hydrogen). A similar intensification of hydrogen use could also support decarbonizationin other industries, notably in chemicals and petrochemicals (where by-product hydrogenis also produced and could be used to retrofit equipment such as ethylene crackers), in
aluminum recycling (where gas-fired furnaces could be retrofitted to run on hydrogen), in
cement production (where hydrogen could be combined with waste-derived fuels), and in
the pulp and paper industry (where hydrogen could provide the high-purity flame needed
to flash-dry paper).
For medium- and low-grade heat, from under 100 to 400 degrees, hydrogen could complement
electrification and heat pumps. Hybrid boilers, which switch between electricity and hydrogen,
24 IPCC, 2007
25 Nogami, Kashiwaya, and Yamada, 2012

Hydrogen scaling up

43

could allow factories to exploit price or supply differences. Hydrogen-based cogeneration
units allow to heat and power factories with a low carbon footprint. This is particularly relevant
when hydrogen is readily available because it is used as an input into an industrial process
and wherever it is produced as by-product.
Adopting hydrogen could help a wide range of industries make progress toward nationaland global CO2 reduction targets. By 2030, first large-scale projects could pioneer the useof hydrogen in industry, accounting for a total of 4 Mt in our roadmap. This would abate therough CO2 equivalent of more than 10 million diesel cars, but still constitute less than 0.5% of
the sector’s final energy demand. By 2050, hydrogen could meet about 12% of final industrial
energy demand (16 EJ), providing up to 23% of high-grade heat, 8% of medium-grade heat,and 4% of low-grade heat.
Investments and activities
Given the cost sensitivity and long equipment lifetimes in energy-intensive industries, their
uptake of hydrogen may be slower than in other sectors. Since retrofitting of existing equipment
to burn hydrogen is inexpensive compared to new (electrical) equipment, the main barrier tothe uptake of hydrogen is the comparatively high cost of hydrogen production itself.26
But pioneering projects are under way now to demonstrate the value of hydrogen in generatingheat and power.
As part of the STEPWISE project – cofunded with a $15 million grant from the EU Horizon
2020 program – a steel plant in Luleå, Sweden, is converting blast furnace gases from theiron-making process into CO2 on the one hand and a hydrogen-nitrogen mixture on the other.
The project demonstrates the feasibility of storing the CO2 and using the hydrogen-rich gas
to generate power in a combined cycle turbine or enhance steel production elsewhere in theplant. The project, led by Swerea MEFOS and ECN since mid-2015, will run for four years
with the help of nine industrial and scientific partners. It aims to decrease carbon emissions
from about 2 tons of CO2 per ton of steel to less than 0.5 tons. The demonstration plantcurrently captures and removes 5,000 tons of CO2 each year, offsetting the emissions ofabout 2,500 cars.
In Japan, Toyota has challenged itself to eliminate all CO2 emissions from manufacturing by
2050 – the “Plant Zero CO2 Emissions Challenge.” Hydrogen energy is a central pillar in thisstrategy, along with the use of renewable electricity and improvements in energy efficiency.

26 Mathieu and Bolland, 2013
Hydrogen scaling up

44

6

Building heat and power.
Hydrogen can help decarbonize building heatand power.
 Hydrogen is a cost-effective option for decarbonization ofbuilding heat and power in regions with existing natural gas
networks.
 It can be blended in concentrations of up to 20% with naturalgas, converted to synthetic natural gas, or replace natural gas
all together in 100% hydrogen networks.

2030 milestones 2050 target picture The equivalent of 6.5 million households
heated with blended or pure hydrogenusing about 3.5 million tons (0.5 EJ) of
hydrogen 8% of global building energy use for heat andpower (11 EJ) provided by hydrogen About 700 Mt CO2 abated per year 10% of users connected to the hydrogennatural gas grid using fuel cell combined
heat and power units (micro-CHPs)

Roadmap towards a hrydogen economy

45

Decarbonizing buildings requires fuel switching alongside efficiency gains
Buildings, both residential and commercial, require almost as much energy for heating andpower as the industry sector and more than the transport sector. About 60% of householdenergy is used to heat living spaces, water, and food; the balance is used for power, including
lighting, appliances, and space cooling.
Emissions from building power uses will decrease as the renewables’ share in the electricity
mix increases. Most heat, however, is generated by fossil fuels, particularly natural gas. Not
surprisingly, the countries where heating demand is highest are those with cold winters,
and most households there are connected to natural gas networks. Others rely on oil, coal,biomass, or electricity for heating.
Achieving the two-degrees scenario will require CO2 emissions reductions of almost 50% by
2050. Making this advance will require two levers:
 Improving energy efficiency, primarily through better building insulation and more efficient
appliances such as LED lighting, but also through more energy-efficient ways of heatingwith current fuels (e.g., gas-condensing boilers, gas-heat pumps, or CHP/cogeneration
units that combine heat and power and increase efficiency by 30%)
 Switching to lower-carbon energy sources and carriers for heating, such as recovered
waste heat, bio-based fuels, renewable electricity, or clean hydrogen.
Hydrogen can make use of existing gas networks to decarbonize buildings
Communities have three main options to decarbonize
building heating: waste-heat recovery (e.g., in district
heating networks where sustainable sources ofwaste heat are available), electrification (e.g., installingelectrical heat pumps), or transitioning from natural
gas to clean hydrogen. All options are needed toachieve deep emissions reductions.

Hydrogen can piggyback
on existing natural gas
infrastructure and equipment and can therefore beless expensive than otherapproaches

Hydrogen is most attractive in countries that alreadyhave an extensive natural gas infrastructure –generally those with cold winters such as the UK, theUS, Canada, Argentina, the countries of continental Europe, and South Korea (Exhibit 16).
Hydrogen offers three main advantages in these countries: It can piggyback on existing natural gas infrastructure and equipment. It can therefore
be less expensive than other approaches, such as converting to electric heat pumps,27
as investments to upgrade infrastructure or convert appliances are minor compared to afull switch from gas to electric heating (see below).
27 KPMG, 2016
Hydrogen scaling up

46

EXHIBIT 15

Most seasonal countries use natural gas for building heating
Exhibit 16: Most countries with cold winters rely on natural gas for heating
Total energy demand (1 EJ)

Gas share, percent of total space heating demand
90
80

Focus regions for hydrogen

Nonseasonal

Seasonal, gas-based

Argentina

US

UK

70

Italy

60
Australia

50South Korea

Belgium

0

Spain

Japan

30

10

Germany

Canada40

20

Netherlands

Saudi Arabia
BrazilIndia
Mexico-10 Indonesia
0
5

10

RussiaFranceSeasonal, non-gas-based
China

Norway1South Africa
15

20

25

1 No data for heating share available

30

35

40

45

50

55

60

65

70

75

Space heating share, percent of building energy demand

SOURCE: Hydrogen Council; McKinsey Energy Insights

 Unlike electricity, hydrogen is easy to store for long periods. This is relevant as heating
demand is highly seasonal. A large share of electrical heating would create a strong
seasonal variation in demand for power, which would require extensive additional
renewable capacity that will be used only in winter. With hydrogen, a lower amount of
renewable capacity could produce and store hydrogen throughout the year. For example,
peak heating demand in the UK is about six times higher than peak electricity demand(Exhibit 17). Today, the country meets about 80% of those peak demands with gas; fullelectrification would require a tripling of total electricity generation capacity – a politicallyand financially daunting prospect.28
 Third, converting to hydrogen heating may be more convenient than full electrification. No
extra space or rewiring is needed to install new heating equipment, and no adjustments
to heating patterns need to be made. This is in contrast to the installation of air-sourced
electric heat pumps, which require space – often not available in densely populated urban
areas – and offer no on-demand heat or hot water.
Hydrogen can be used to decarbonize the natural gas grid in three ways: it can be blended
with natural gas, methanized, or used in its pure form.
Low percentages of hydrogen can be safely blended into existing gas networks without major
adaptations to infrastructure or appliances. Depending on the pipeline network system andthe local natural gas composition, hydrogen can make up 5 to 20% of the volume content of
natural gas supply.29 Blending hydrogen is actually an old, safe, and proven technology: from
28 Howard and Bengherbi, 2016; Sansom, 2014
29 National Renewable Energy Laboratory, 2013
Hydrogen scaling up

47

EXHIBIT 16

Hydrogen can be stored, balancing seasonal variations in demand
Exhibit 17: Hydrogen can be stored, balancing seasonal demand variations
Synthesized half-hourly heat and electricity demand, 2010, UK
Half-hourly demand, GWth
400
350
300
250
200

Heat demand

150
100
50
0
Jan

Electricity
demand

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Month

SOURCE: Reproduced from Sansom (2014)

the mid-1800s to the 1950s in the US and the 1970s in the UK and Australia, manufactured
gas or “town” gas was used in what is today the natural gas network. It contained 30 to 60%
hydrogen, generally produced from coal or oil. Hydrogen blends are still common in Hawaii,Singapore, and some other areas with limited natural gas resources.

Hydrogen can make up
5 to 20% of the volume
content of natural gas supply
without any infrastructure
modifications

Hydrogen can also be converted into methane througha process called methanation. This requires a CO2
source and energy for the conversion, leading to alower efficiency of about 20% compared to direct
blending and creating additional costs. The advantage
is that the resulting substitute or SNG is pure methaneand hence fully compatible with the existing natural
gas networks and storage infrastructure as well as
all appliances.30

Pure hydrogen networks are possible if infrastructure and appliances are upgraded accordingly.
Leakage control needs to be improved, and any remaining steel pipelines need to be retrofitted
or replaced with noncorrosive and nonpermeable materials, such as polyethylene or fiberreinforced polymers. In some countries, however, old pipelines are being replaced independentlyof a hydrogen transition, which limits the need for additional investment. Appliances, including
ovens and stoves, boilers and hot water tanks, would need to be converted or replaced.
Costs in a reference project in Leeds have been estimated at £3,100 ($4,160) per household
for appliance conversion. Still, this may be less expensive than electrification, which requires
30 The methanation process entails an energy conversion loss of about 20% from hydrogen, reducing theprocess efficiency from 70 to 80% (electricity to hydrogen) to 55 to 65% (electricity to hydrogen to methane).
(Schaaf, Grünig, Schuster, Rotenfluh, and Orth, 2014); (Götz, et al., 2016); (E&E Consultant, Hespul andSolagro, 2014)
Hydrogen scaling up

48

new power generation and transmission infrastructure and the installation of new electric heatpumps.31 With scale, costs of appliances are expected to decrease further.
If hydrogen is used in micro-CHP units rather than burners, it can create power alongsideheat with a total efficiency of more than 90% and an electrical efficiency of about 40 to
45%. This further improves the efficiency of hydrogen use for heating and power by 30%
over conventional gas boilers. CHP units can be deployed in family homes, in residential orcommercial building blocks, or centrally in district heating networks.
In our vision, hydrogen could meet up to 18% of heat-related energy demand in colder
climates using existing gas networks. Globally, this means that hydrogen could provide 10%of building heat and 8% of building energy by 2050. By 2030, the hydrogen share in building
heating could be about 1% in priority countries but less than 0.5% of total building energy
demand globally.
Investments and activities
Until 2030, hydrogen use in heating is likely to be driven by blending with or without
methanation, as this requires little or no investment in infrastructure or appliance conversion.
In our roadmap, about 50 million households could consume hydrogen that is blended into
the natural gas grid. In addition to hydrogen blending, pure hydrogen could heat and power
about 1.5 million households globally. Together, this would require about 3.5 million tons ofhydrogen production capacity. Based on a balanced production mix, this is roughly equivalent
to cumulative investments of $10 billion for hydrogen production, $3 billion for infrastructure
upgrades, and $1.5 billion for the development of boilers and CHP units until 2030.
Hydrogen blending and methanation initiatives are under way to demonstrate the largescale feasibility of hydrogen in buildings. In France, for example, a project called “Network
Management by Injecting Hydrogen to Reduce Energy Carbon Content” (GRHYD is the
French acronym) is preparing to blend up to 20% hydrogen into the local natural gas grid. In
Germany, Italy, and Switzerland, the “STORE&GO” project pilots large-scale efficient electrolysis
and methanation using wind, solar power, and a combination of sources for CO2 – including
biomass, sewage gases, and ambient air – to produce SNG. Other, even larger electrolysis
projects that are blending hydrogen into the natural gas grid are discussed in the chapter“Enabling a global renewable energy system.”
Although pure hydrogen networks are likely to be rolled out later, pilot cities could transition
to hydrogen by 2030. Among the first communities converted to hydrogen is the industrial
city of Ulsan in South Korea, where 130 households were connected to CHP units runningon purified by-product hydrogen from nearby petrochemical companies.
The “H21 Leeds City Gate” project in the UK is a substantially larger initiative to decarbonize
the heating system within a long-term vision. The city of 750,000 inhabitants is assessing
31 KPMG estimates the household adaption costs of full electrification at £10,000 to 12,000 per property for air
source heat pumps and other equipment (such as hot water tanks). This compares to appliance change costsfor hydrogen conversion at £4,500 to 5,500 per property (KPMG, 2016).
Hydrogen scaling up

49

the technical feasibility and preparing the regulatory
and financial framework to progressively convert
all households to 100% hydrogen between 2026
and 2029. The project will replace natural gas withhydrogen from four steam methane reformers with acapacity of 1 GW, or about 150,000 tons of hydrogen
per year, equipped with 90% carbon capture. The
produced hydrogen, about 70 GWh will be stored insalt caverns and fed into the existing gas distribution
network through a hydrogen transmission system.
The city will be converted in waves of about 2,500 homes, disconnected for about five days
during the summer months before being fully on the hydrogen network. Beyond the Leeds
transition, Northern Gas Networks is currently assessing scenarios in which ten times theequivalent of Leeds are converted between 2025 and 2035, and 50 times the equivalent ofLeeds are converted between 2025 and 2045. This experience could provide a “blueprint”
for a rollout in other countries and regions.

The “H21 Leeds City Gate”
project in the UK is planning
to progressively convert
all households to 100%hydrogen before 2030

Hydrogen scaling up

50

7

Industry feedstock.
Hydrogen as feedstock can be decarbonized andused to replace fossil feedstock.
 55 million tons of hydrogen are currently used as feedstock
for refining, fertilizer, and chemical production – these can bedecarbonized through clean production pathways.
 Other industries, such as methanol and iron production, canreplace fossil feedstock with clean hydrogen and carbon.

2030 milestones 2050 target picture Steel plants pioneering zero-carbon ironmaking using hydrogen reduction (using
about 100,000 tons hydrogen) 10% of crude steel production, about 200 million
tons, based on hydrogen, saving 190 million tons of
CO2 per year 10 to 15 million tons of methanol andderivatives, such as olefins and aromatics,
produced from clean hydrogen and carbon(using about 2.5 million tons hydrogen) 30% of methanol and ethanol derivatives produced
through hydrogen and carbon, recycling 360 million
tons of CO2 per year Demonstration of clean hydrogen use inchemicals and refining industries
Roadmap towards a hrydogen economy

 Existing feedstock uses for chemicals and refining
industry decarbonized, saving 440 million tons of
CO2 per year
51

Demand for hydrogen as feedstock is rising
Chemical and petrochemical industries use about 25 EJ worth of fossil fuels as feedstock
each year – and about 8 EJ of hydrogen; most of which is produced from natural gas, oil, orcoal. Almost all the hydrogen is used in refineries and in the production of fertilizers and otherchemicals (Exhibit 18). The total amount of hydrogen produced each year is enough to power
more than 100 million FCEVs and creates some 350 to 400 Mt of CO2 per year.32

This year, industry will
use about 55 million tonsof hydrogen as feedstock –enough to power morethan 100 million FCEVs

As industry production rises globally, the demand forfeedstock is likely to increase. By 2050, the demandfor hydrogen could rise to 70 million tons (10 EJ) in
current applications alone, driven by the growthin global chemicals production. If this hydrogen is
produced from nonclean sources, it would create
emissions of about 500 Mt of CO2.

At the same time as global industry needs todecarbonize its feedstock, it also needs to capture
its emissions to reach ambitious climate targets. In the IEA two-degree scenario, carbon
capture technology is expected to increase rapidly to meet the ambitious targets: by 2030,
0.5 Gt of CO2 should be captured in the industry sector each year; by 2050, this number
should rise to 1.4 Gt. Lacking a useful purpose, the captured CO2 would need to be stored
permanently underground. Assuming very conservative costs of $40 per ton, the annual costsof capturing and storing CO2 might amount to more than $55 billion by 2050.

32 Based on estimates of current average emission intensities (US Environmental Protection Agency, 2008)
EXHIBIT 17

Almost all hydrogen is currently used as a feedstock for industry
Exhibit 18: Industry uses about 7.7 EJ of hydrogen annually
Total hydrogen use, 2015 estimate, EJ

0.8

0.1

0.4

<0.1

MethanolOtherchemicals

Processing

Liquefiedhydrogen

Productionof methanoland derivatives

Other chemi- Rocket fuelcals (e.g.,
Automotive
polymers,fuelpolyurethanes,
Semiconducfatty acids)
tor industry

7.7

3.9
2.4
Refining

Ammonia

Hydrocracking Production
Hydrotreating of ammonia(for urea and(e.g., fueldesulfurization) otherfertilizers)
Biorefinery

Chemicals

Total

Heat treating ofsteel
Welding of metals
Forming andblanketing gas
Glass production

SOURCE: IEA Energy Technology Roadmap Hydrogen and Fuel Cells; IEA ETP 2017; expert interviews; Hydrogen Council

Hydrogen scaling up

52

Industry feedstock can be decarbonized using more and cleaner hydrogen
Hydrogen can contribute to decarbonizing feedstock in two ways:
 Hydrogen used as feedstock can be decarbonized by producing it from clean sources,
such as natural gas with CCS or through electrolysis from renewable electricity.
 Clean hydrogen could replace other fossil fuels as feedstock. Notably, it could replacecarbon (from natural gas or coal) as a reducing agent in the iron-making process, andit could be used together with captured CO2 (or CO2 from biomass) to replace fossil
feedstock in the production of hydrocarbon-based chemicals such as methanol andderived products.
Industries using hydrogen as feedstock include the refining industry as well as in the productionof fertilizers (based on ammonia) and chemicals (based on methanol). Together, the use ofhydrogen in conventional processes and industries could increase from 8 EJ to more than 10 EJ
in 2030 and 2050. Hydrogen demand in these industries will be shaped by different trends:
 Oil refineries use hydrogen to lower the sulfur content of fuels. Due to stricter desulfurization
requirements around the world, hydrogen use is expected to increase until around 2030,
when the increasing electrification of the transport sector starts to reduce overall demand.
 In the fertilizer and chemicals industries, where hydrogen is used to react nitrogen into
ammonia or to convert methane and water to methanol, the demand for hydrogen is likely
to grow continuously in line with the overall demand for ammonia and methanol projectedin the two-degree scenario.
The production of this feedstock could be decarbonized. Almost all the hydrogen used
as industry feedstock is currently produced on-site in dedicated plants or as a by-productfrom other processes (20 to 30%). If hydrogen production were to be largely decarbonized(through carbon capture or electrolysis as well as through the increased use of by-producthydrogen), this could reduce annual CO2 emissions by as much as 440 million tons in 2050.
In steel production, hydrogen can substitute for carbon as a reductant. About 4% of
global crude steel is produced through the DRI process (Exhibit 19). More energy efficientthan the traditional blast furnace route, this process is growing much faster than overall steel
production. By 2050, about 10% of crude steel could be produced through DRI.
DRI making currently relies mainly on natural gas as reducing agent. If it was replaced withclean or green hydrogen, this could reduce emissions by up to 190 million tons of CO2
annually. About 15 million tons of hydrogen (2 EJ) would be needed to produce 200 million
tons of steel through this route.
Hydrogen can be used to convert captured CO2 to chemicals. Carbon capture isconsidered an important contributor to reaching the two-degree scenario by the IEA. While
CCS has raised questions about risks and costs, CCU offers the potential of converting CO2
Hydrogen scaling up

53

EXHIBIT 18

Hydrogen-based iron reduction allows emission-free ironmaking
Exhibit 19: Hydrogen-based reduction allows emission-free ironmaking
Iron orepellets
H2 + H20
Hydrogen and water

Fe2O3 + H2 = 2FeO + H2O
FeO + H2 = Fe + H2O
H2HydrogenElectricity

DRI/HBI1

Crude steel

Scrap

1 Direct reduced iron/hot briquetted iron
SOURCE: LKAB: HYBRIT – Iron Ore to Steel based on Hydrogen; Lulea, 2016

to high-value chemicals and could encourage the uptake of carbon capture technologies(Exhibit 20). The main barriers to broader CCU uptake today are the cost of carbon capture –about $100 per ton of CO2 for small capture plants – as well as the cost of electrolysis.
As the costs of carbon capture and electrolysis decrease with scale and technology
breakthroughs (to $40 per ton of CO2 captured33), the industry could gain momentum. By
2050, 30% of methanol, olefins, and aromatics could be produced using captured carbon
and hydrogen from electrolysis. This would require about 50 million tons of hydrogen(7 EJ) and would allow industry to recycle 360 million tons of CO2 into some 260 million tonsof product in 2050. This compares to CO2 sequestration needs of 5.4 Gt CO2 in the twodegree scenario of the IEA in 2050. As an alternative, the same amount of CO2 could besourced from biomass.
By 2030, the share could amount to some 2% (roughly 0.5 EJ of hydrogen and 20 million tons ofCO2) and constitute some of the earliest applications for carbon capture.34
Overall, feedstock uses of hydrogen could grow from about 55 million tons (8 EJ) to 75 million
tons (11 EJ) in 2030, and to 140 million tons (20 EJ) by 2050. As hydrogen use grows while
its production is increasingly decarbonized, it could reduce CO2 emissions by more than
700 Mt annually in 2050.

33 IEA, 2017
34 These estimates are based on the intermediate scenario presented by DECHEMA and the European Chemical
Industry Council (DECHEMA Gesellschaft für Chemische Technik und Biotechnologie e.V. , 2017).
Hydrogen scaling up

54

EXHIBIT 19

Hydrogen enables the recycling of captured carbon to chemicals
Exhibit 20: Hydrogen enables the recycling of captured carbon to chemicals

Clean
hydrogen

H2

Carbonutilization
Carbohydrates

CO2

Captured carbon
from industry(negative emissions)

Product(e.g., methanol)

Disposal

SOURCE: Hydrogen Council

Some CO2
released after
produced use

Use
Some CO2
storedInvestments and activities
We expect a range of efforts to demonstrate and commercialize the use of clean or green hydrogenin the industry to be well under way by 2030. Producing the amount of hydrogen foreseen in
our roadmap and converting production equipment accordingly would require investments ofsome $50 billion over the next 12 years, the majority of which in existing industries.
Selected plants are already pioneering the use of clean or green hydrogen for existingfeedstock applications. In the refining industry, Shell and ITM Power recently announced
a plan to install a 10-MW electrolyzer at a Shell site in the Rheinland Refinery Complex inGermany. The scale is significant: once implemented, it would be the world’s largest PEM
electrolyzer and could contribute to reducing the upstream emissions at the site. In the ironand steel industry, a recently formed Swedish joint venture by SSAB, LKAB, and Vattenfall
is demonstrating zero-carbon steelmaking using DRI with green hydrogen from electrolysis(project HYBRIT).
Current initiatives in new feedstock uses include Carbon Recycling International’s George
Olah plant in Iceland, which produces hydrogen from electrolysis and captures CO2 froma geothermal power plant to produce about 4,000 tons of methanol per year and recycle
about 5,500 tons of CO2 in the process. Other initiatives are not yet commercialized, but may
allow carbon capture at much larger scale once successfully demonstrated. In Germany,
Carbon2Chem, a €160 million ($190 million) project financed by 16 industrial partners andthe German government, is investigating advanced processes of converting process gases
from steel production and hydrogen from surplus renewable electricity. Now operating ata ThyssenKrupp plant in Duisburg, the project is intended to reach industrial scale within
ten years, with a process that has the potential to recycle 20 million tons of CO2 emissions
annually – or 10% of annual German industry-sector CO2 emissions.
Hydrogen scaling up

55

These large-scale projects will demonstrate the feasibility of clean hydrogen use in industry
and will allow the more widespread adoption of low-carbon feedstock in the time horizon
beyond 2030.

Hydrogen scaling up

56

1-3

Energy system.
Hydrogen is a versatile energy carrier that canenable the renewable energy system.
 Hydrogen enables large-scale renewable integration throughcost-effective long-term storage.
 It allows distribution of energy across sectors and regions.
 It acts as buffer to increase system resilience.
 It provides clean dispatchable power generation inpeaker plants.

2030 milestones 2050 target picture 250 to 300 TWh of excess solar and windelectricity converted to hydrogen 500 TWh of excess solar and wind electricity
converted to 1.5 EJ hydrogen More than 20 power plants generating
100 to 200 TWh of dispatchable power fromclean hydrogen 1,500 TWh of dispatchable power produced from 9
EJ clean hydrogen More than 10 ships transporting a total of
about 100,000 tons hydrogen per year 200 TWh hydrogen stored in undergroundsalt caverns
Hydrogen scaling up

 55 million tons of hydrogen, or 8 EJ, transported/shipped overseas
 3,000 TWh of hydrogen, or 18 EJ (worth 55 daysof wind, solar, and hydrogen demand) stored instrategic reserves57

Hydrogen can help the world meet the challenges of the transition to a renewableenergy system
Limiting global warming to two degrees Celsius will require a dramatic increase in the renewableelectricity share, from 23% in 2015 to 68% in 2050 according to the IEA. This may seem
daunting, but global advances of this magnitude are not unknown. Given the consequencesof global warming, nearly every country has agreed to take major steps to increase theirrenewable electricity share.
Managing the complexity of this effort will present challenges, however. These include matching
demand and supply as more power is generated from intermittent sources, transporting
energy across sectors and regions, and buffering supplies with strategic reserves.
Hydrogen can contribute to this transition as an enabler in renewable power storage, distribution
and buffering, as well as a complementary source of clean power generation.
Hydrogen enables large-scale renewables integration through cost-effective longterm storage
Hydrogen is exceptionally well suited to store large quantities of energy for long durations(Exhibit 21). At a large scale, hydrogen can be stored in underground salt caverns in pure ormethanized form. Estimates put the cost at around $50 to 150 per MWh, which is significantly
less than other storage technologies for electricity. Only pumped hydro storage is even morecompetitive, but its remaining untapped potential is subject to local geographic conditions.

EXHIBIT 21

Hydrogenhas a longcan
discharge
duration
and withouthigh discharge
power
Exhibit
21: Hydrogenbe stored
for months
losing muchof its power
Technology overview in power and time
10 GW
1 GW

Pumped hydro storage1

100 MW

Compressed air

Hydrogen storage2

10 kW
1 kW

Battery

100 kW

Battery

1 MW

Flywheel

10 MW

Super
capacitor
Minute Hour

1 Limited capacity (<1% of energy demand)
2 As hydrogen or SNG

Day

Week

SeasonDischarge duration

SOURCE: IEA Energy Technology Roadmap Hydrogen and Fuel Cells

Hydrogen scaling up

58

Long-term energy storage is required for large-scale renewable power integration. First,
most renewables have very low operating costs. This implies they have to be “always on” tobe efficient, regardless of actual electricity demand. Europe, the US, and Australia alreadyexperience days during which electricity prices reach negative levels due to surplus wind or
solar supply. In addition, production levels of renewables vary significantly between seasons.
For example, solar generation in Europe is about 60% lower in winter than in summer, whichcoincides with higher electricity demand (about 40%) as days get colder and shorter. While
short-term balancing is likely to employ technologies such as demand-side management andbatteries, hydrogen could be used for longer-term storage (Exhibit 22).
EXHIBIT 20

The imbalances across seasons can be resolved using hydrogen
Exhibit 22: Hydrogen storage bridges gaps in supply and demand
Electricity supply and demand, TWh

ILLUSTRATIVE

Generation

DemandMeans of balancing
H2 storage
capacity

Curtailment of extreme peaks
Hydrogen used for▪ Long-term storage to balance acrossweeks and seasons▪ Transfer of renewable energy to othersectors▪ Transfer to other regions where
electricity transmission is not sufficient/
not cost efficient

Battery
capacity
Batteries and power balancing1: shortterm storage to balance within hour/dayTime
1 Demand-side load balancing, etc.
SOURCE: McKinsey

The amount of long-term storage required increases with the share of variable renewableenergy. Multiple studies of energy systems show an exponential increase of demand forlong-term storage, with a rapid increase at a share of 60 to 70% (Exhibit 23). If Germany, forexample, builds an energy system with around 80 to 90% renewable electricity, around 15%of the total electricity generated would go into the production of hydrogen.35 Without long-term
storage, additional renewable capacity above a certain threshold would not be efficient tobuild, and other non-zero-emission technologies would be required (e.g., gas-based peaker
plants). By providing seasonal storage, a higher share of renewables could become feasible.
When considering the renewable share as forecast by the IEA two-degree scenario, morethan 500 TWh of electricity globally could be converted into roughly 1.5 EJ hydrogen eachyear by 2050.36 This figure is significant by itself, but could be substantially higher if renewablepenetration exceeds the forecasts of the IEA two-degree scenario or due to specific local
35 Fraunhofer ISE, 2015; Sterner und Stadler, 2014; McKinsey
36 At an electrolyzer efficiency of 75% (US Department of Energy – Fuel Cell Technologies Office, 2017)
Hydrogen scaling up

59

EXHIBIT 22

Studies23:
estimate
thatforexcesselectricity
andincreases
the potential
for hydrogen
increases
Exhibit
The needhydrogenstorage
exponentiallywith
the variable
exponentially with the VRE sharerenewable energy share
Overview of study results

ColorsGermany

Hydrogen demand, percent of electricity production

Sweden28

Spain
Europe24

Shapes20

Fraunhofer (storage
and sector coupling)116
12

McKinsey
RWTH Aachen(power only)2
Sterner/Stadler(mean)

8
4
0
10

20

30

40

50

60

70

80

90

100

110

120

Variable renewable energy, percent of electricity demand
1 Least-cost modeling to achieve 2°C scenario in Germany in 2050 in hour-by-hour simulation of power generation and demand; assumptions: no regional
distribution issues (would increase hydrogen pathway), no change in energy imports and exports
2 Simulation of storage requirements for 100% European RES; only power-sector storage considered (lower bound for hydrogen pathway)
SOURCE: Fraunhofer Institute for Solar Energy Systems ISE, 2017; BMW; RWTH Aachen; Sterner and Stadler (2014); McKinsey

conditions preventing adequate matching of supply and demand. Annual capacity additionsof renewables have consistently outpaced analyst projections – as wind and solar prices hit
record lows around the world, it is likely that capacity will grow at an even faster pace thanin the past.
Hydrogen can provide clean dispatchable power
In addition to storing power during periods of peak renewable generation, hydrogen could bea source of clean power where there are insufficient renewables capacities or during timesof peak demand. In Japan, South Korea, and Taiwan, for example, imported hydrogen could
be used to generate clean power from imported hydrogen.
Hydrogen can also play a role in decarbonizing current power generation. Existing natural gas
power plants can be retrofitted to burn hydrogen, which can be derived from, e.g., natural gas
or biogas. This type of “pre-combustion CCS” is currently being deployed in a large-scale
project in the Netherlands (see deployment projects). The carbon emissions impact from suchplants is large: if retrofitted, the plant would reduce CO2 emissions by 4 million tons per year,
about equivalent to 1 to 2 million cars. Globally, our roadmap sees potential for 1,500 TWhof clean power from hydrogen, using about 9 EJ of hydrogen by 2050.37
Hydrogen allows distribution of energy across sectors and regions
Hydrogen storage could clearly be used to decarbonize the power system, but also to
distribute energy between sectors and regions. Major drivers of such energy transports
37 At a CCGT efficiency of 65%
Hydrogen scaling up

60

are availability and cost. For renewables, regions with abundant wind and sunshine canachieve significantly lower costs of generation. For instance, the average cost of solar poweris about 35% lower in Morocco than in the Netherlands, and about 55% lower in Australia
than in Japan (Exhibit 24).
EXHIBIT 23

Solar has a cost advantage when installed in regions with high irradiation

Exhibit 24: Solar has cost advantages in regions with more sunshine
LCOE of solar,1 EUR/MWh, 2040

66.8

50.7
Opex

9.5
33.6

-34%

13.2

-55%

9.3
41.2

Capex

53.6
24.3

29.9
6.2
23.7

Netherlands

MoroccoJapan

Australia

13

22

14

20

Load factor
Percent

1 Morocco: EU capex, Middle East opex, Australia: India capex and opex
SOURCE: WOE; IEA; renewables.ninja

Hydrogen could be the energy carrier to realize this cost advantage. Sea delivery of liquefiedhydrogen, ammonia, or liquid organic hydrogen carriers are cost-efficient delivery methods overlong distances, despite energy losses of about 20 to 30% during liquefaction, transportation,and storage.38 For distances above 3,500 to 4,500 km – such as from Australia to Japan –converting power to hydrogen and shipping it overseas can be less expensive than transmitting
it through cables as electricity.
By 2050, we expect that about 10% of total annual hydrogen demand, or 8 EJ, could betransported by sea. This would require about 400 ocean-going vessels, a small fleet compared
to roughly 4,000 large or very large oil and chemical tankers plying the seas today.39
Hydrogen can act as strategic reserve and buffer
The global energy system today has a buffer capacity of about 50 days of final demand toguarantee national and global energy security. This buffer absorbs supply chain shocks,
provides strategic reserves at a country level, and helps countries manage supply anddemand imbalances. It is held almost entirely in the form of fossil or nuclear energy carriers,
38 Cardalla, Decker, and Klein, 2017
39 Equasis: The world merchant fleet in 2014
Hydrogen scaling up

61

such as strategic petroleum or gas reserves, which reflects their high share in final energy
demand – in the power sector and in transport and heating.
Although the transition to a largely renewables-based energy system will decrease the relianceon fossil energy imports and reduce the risk of geopolitical shocks, the system may remain
exposed to other shocks, including earthquakes and other major hazards that can affectdomestic electricity generation capacity.
For the projected hydrogen demand of almost 80 EJ in 2050 and the projected power
generation of about 16,700 TWh from variable renewable sources in the IEA two-degree
scenario, a strategic reserve of about 18 EJ in 2050 would be adequate compared to current
buffers. It would require an average annual buildup of 0.6 EJ starting in 2020.
A range of companies are investing into large-scale hydrogen projects in the energy
systemEnabling the renewable energy system through hydrogen would require capital investmentsof about $20 billion in distribution infrastructure, including liquefaction plants and tankers, and$30 billion in storage capacity, such as salt caverns, until 2030 – in addition to any upstream
investments for power generation or natural gas exploration and production. It would also
imply sales on the order of $10 billion for power production equipment, including retrofitting
gas turbines to run on hydrogen.
A range of companies are investing in hydrogen technology for renewable energy integration:
 In Germany, a consortium formed by Linde, Siemens, the RheinMain University of Applied
Sciences, and the local utility Mainzer Stadtwerke in 2015, invested roughly $20 million tobuild and test a PEM electrolyzer with a peak performance of 6 MW (and a likely production
rate of 1,500 kg hydrogen per day) – the world’s largest to date. It converts surplus windenergy to hydrogen and injects it into the public natural gas grid. The “Energiepark Mainz”
project is finishing the research phase and plans to start operating commercially. In
France, a newly formed company (H2V Product) plans to raise and invest €3.5 billion ($4billion) in annual production capacities which could produce 500,000 tons of hydrogenfrom renewable electricity every year and inject them in the natural gas network.
 In the Netherlands, Statoil, Vattenfall, and Gasunie signed a memorandum in 2017 to evaluate
the conversion of Vattenfall’s Magnum power plant to run on hydrogen. If implemented,
the power plant with a capacity of 1,320 MW could reduce emissions by 4 million tons of
CO2 per year; equivalent to the emissions of more than two million cars. It could be rolled
out for any number of gas power plants worldwide.
 In Japan, Kawasaki, Obayashi, Kansai Electric Power, Iwatani, Kobe City, and Osaka
University will demonstrate a 1,000-kW-class power plant that runs on a flexible blend ofnatural gas and hydrogen (from 0 to 100% hydrogen).40 The project will begin operations in
40 “Development of smart community technology by utilization of hydrogen CGS” (2016 to 2018)
Hydrogen scaling up

62

2018 and be the first of a series of potential projects in Japan and overseas. At the sametime, two groups of companies are investigating hydrogen imports to ensure a sustainable
and affordable hydrogen supply to Japan. In 2016, Kawasaki, Iwatani, Shell Japan, and
J-POWER formed the CO2-free Hydrogen Energy Supply-Chain Technology Research
Association (HySTRA), seeking to establish and demonstrate technologies necessary
for the production, storage, and transport of hydrogen from Australia.41 In parallel to thisproject, the companies Chiyoda, Mitsubishi, Mitsui & Co., and Nippon Yusen formed theAdvanced Hydrogen Energy Chain Association for Technology Development (AHEAD)
initiative, which aims to demonstrate the supply chain of hydrogen from Brunei Darussalam
and could commercially supply up to 210 tons of hydrogen to Japan in 2020.42 These
projects, all supported by Japan’s New Energy and Industrial Technology Development
Organization (NEDO), will initiate the formation of global hydrogen supply chains.

41 “Demonstration Project for Establishment of Mass Hydrogen Marine Transportation Supply Chain Derived
from Unused Brown Coal” (2015 to 2020)
42 “Demonstration of the Hydrogen Supply Chain by Organic Chemical Hydride Method Utilizing Unused Energy”(2017 to 2020)
Hydrogen scaling up

63

What needs to be done.
A call to action.

Making the two-degree scenario a reality will require hydrogensolutions across the whole energy system. The technology isproven, safe, and ready to be deployed at scale. The world can –and should, we believe – build on existing infrastructure andknowledge to expand hydrogen production, distribution, and use.
Momentum for hydrogen is building. About 20 countries – led by
Japan, Korea, Germany, California, and China – are initiating themarket scale-up through public-private partnerships and targeted
incentives. To realize our ambitious vision, however, major stepups are required by all stakeholders. This chapter describes therequired investments until 2030 to double hydrogen production,
provide distribution infrastructure, and produce equipment such as
FCEVs, trains, heating equipment, and components at decreasing
costs.
To kick-start the roadmap, we then set out proposals for deployment
initiatives. These describe how regulators, investors, and industry
could work together to deliver this roadmap, which type of support
is required, and where such projects are being successfully
implemented. We invite all stakeholders to join us to deliver them.

Building the hydrogen economy would require annual investments of about$20 to 25 billion for a total of about $280 billion until 2030
Building the hydrogen economy described in this report represents total investments of$280 billion until 2030 along the whole value chain for hydrogen – from production over
distribution to retail – and in the industries delivering the equipment for end-use applications:car manufacturers, producers of heating equipment, component manufacturers, and otherapplications (Exhibit 25).
A significant share of this investment is required for hydrogen production equipment: adding
production capacities for an additional 6 EJ of hydrogen by 2030 would require about$110 billion. To achieve the scale-up and meet demand with a low carbon footprint, a rangeof production technologies (SMR, electrolysis), feedstocks (natural gas, biogas, power), andsizes of plants (large centralized, medium-sized, small decentralized) is likely to be used.
EXHIBIT 25

Most investments are required in hydrogen production and in
Exhibit
25: Building theseries development
forhydrogenvehicles economy will require a step-up across the value chain
Bubble size indicates cumulative2018 - 30 investment, $1 bn

4

1-3

5

Dashed bubbles indicate
downstream investments

7

6

Infrastructure investments
On-sitehydrogenproduction

Hydrogen production plants
Ships and liquefaction plants,
salt caverns

Storage, transport,
and distribution

HRS and distribution trucks

Pipeline
upgradesPipeline
upgradesPipeline
upgradesEquipment
retrofit

Contractingof CHPs

Contractingof CHPs

Manufacturing investments
Series and productdevelopment

New series/
model
development

Production lines

Capex forproduction
lines

Applications and new businesses
Applications andnew businesses

Power plant
retrofit

Taxi or leasing
fleetsSOURCE: Hydrogen Council

The infrastructure to store, transport, and distribute hydrogen could require investments ofabout $80 billion. Of this, about $20 billion would flow into the buildup of the hydrogen refueling
network including the distribution and retail infrastructure. By 2030, the costs of additionalhydrogen refueling stations is expected to have decreased to less than $1,000/FCEV. The biggest
hurdle to this investment is the classic chicken-and-egg problem – customers will not choose
FCEVs until hydrogen is readily available while investors may not want to build the storage anddistribution capacity until sufficient FCEVs are on the road. This infrastructure challenge is best
addressed through cooperative approaches such as industry joint ventures and public-private
partnerships, and risk-mitigating financial instruments (see section on delivery initiatives).
A quarter of all investments described in this report (around $70 billion) is required for productand series development and to scale up manufacturing capacity. This figure counts only
Hydrogen scaling up

66

investments related closely to the hydrogen and fuel cell technology – not the development
and production of associated product components (e.g., the body and interior of the FCEV).
Counting these investments would add another $150 billion to the investment volume.
The majority of these investments need to flow into the automotive industry and component
suppliers. The investment for the development and production of fuel cell powertrains could
amount to $6 billion per year, which is only around 2% of total capital investments of OEMsand suppliers ($310 billion in 2015). Counting the development and production of the entire
vehicles based on fuel cell powertrains would bringthis sum to $15 to 20 billion or around 5% of annualautomotive investments.
On top of the described investments into infrastructure
for hydrogen and manufacturing of hydrogenequipment, a number of new business opportunities
are expected around the end uses of hydrogen.
These could include fuel-cell-powered taxi fleetsand carsharing, on-demand transportation of goods,
and contracting of CHP units, and could represent
investments in the order of $20 billion per year.

While $20 to 25 billion would
be a major step-up in annual
investments for the hydrogen
industry, the world alreadyinvests more than $1.7 trillion
in energy each year

While $20 to 25 billion would be a major step-up in annual investments for the hydrogen
industry, the world already invests more than $1.7 trillion in energy each year, including $650
billion in oil and gas, $300 billion in renewable electricity, and more than $300 billion in theautomotive industry. By 2030, the investments in hydrogen could create an industry withannual revenues of up to $140 billion while still in a strong growth phase (Exhibit 26). Realizing
EXHIBIT 24

Exhibit 26: $280 billion in investments until 2030 will enable $140 billion in
Investment opportunities amount to ~ $280 bn by 2030
annual revenues$ billions1

Enable the renewable energy system
Hydrogen production

Decarbonize end uses
End uses in transportation, industry
energy, buildings, and feedstock

Storage, transport,
and distribution

4
Investment
potential,
2018-30

Annualrevenues,
2030

80

110

1

90+

5

2
6

40

30

65+

3

7

1 Excl. existing feedstock uses
SOURCE: Hydrogen Council

Hydrogen scaling up

67

the 2050 vision would eventually bring annual revenues up to more than $2.5 trillion in theimmediate industries associated to the hydrogen technology, or $4 trillion if revenues fromassociated products such as FCEVs are counted in total.
Investments in the hydrogen economy represent a relatively small but vital part of a muchlarger shift in investments from fossil fuels to clean energy alternatives – and a sharp increasein demand-side investments. If the world remains on a trajectory towards the two-degree
scenario, fossil fuel investments would decrease significantly compared to renewables andother low-carbon energy carriers.43
Industry has to bring down costs of hydrogen and applications through scale
A scale-up in investments and production volumes is likely to translate into major cost savingsfor hydrogen production and infrastructure as well as for fuel cell components, vehicles, andother end-use applications, which are necessary to grow the industry further (Exhibit 27).
EXHIBIT 26
These cost reductions are expected to be achieved through continuous technology andIn our roadmap, the increase in production volumes results in significant cost
manufacturing efficiency improvements as well as through higher capacity utilization.

reductions for hydrogen production

Exhibit 27: Capital costs are expected to decrease with scale
Large refueling station1
Capital costs, $ millions~3

Passenger FCEV/ICE2
Percent of comparable ICE
~300

~-60%

~-60%

~110

~1

2015

2030

2015

2030

1 1,000 kg daily capacity
2 C/D segment
SOURCE: A Portfolio of Powertrains for Europe (2010); DoE Fuel Cell Technologies Office; Hydrogen Council

Significant cost reductions have already been achieved in some areas, such as in the transportation
sector. In Germany, average costs of small and medium-sized hydrogen refueling stations built
by the CEP/H2Mobility initiative decreased from €2 million ($2.4 million) per station in 2008 to€1 million ($1.2 million).44 The cost of fuel cell stack production also decreased by at least 50%
over the last ten years, driven in part by a fivefold reduction in the required platinum content. If
produced at 100,000 to 500,000 units per year, the US Department of Energy (DoE) estimatesthat fuel cells would cost around $55 per kW using the current technology, or $5,500 for a
43 International Energy Agency and IRENA, 201744 NOW GmbH, 2017
Hydrogen scaling up

68

100-kW system. These costs could fall further to $4,000 by 2020. For comparison: productionof fuel cell stacks at lower volumes costs more than $20 to 25,000 for a 100-kW system.45
Further cost reductions are necessary to bring down the costs of hydrogen itself. If produced
at high volumes, the DoE estimates that hydrogen could already be cost competitive withgasoline using today’s technology, costing less than $4 per kg at the pump (which has acomparable energy density to one gallon of petrol).
At current low volumes, however, hydrogen costs$10 to 15 per kg at the pump if unsubsidized.

A virtuous cycle between
scale and cost reductions
is needed

A virtuous cycle between scale and cost reductions isof course also needed in the other application areas forhydrogen: at the current scale, demonstration projects
for hydrogen use in the building, industry, and power sectors are not cost competitive with fossil fuels.
A much larger scale is needed to render commercial adoption viable.
45 US Department of Energy – Fuel Cell Technologies Office, 2016

The cost of CO2 abatement in a hydrogen economy
The presented vision for a hydrogen economy has many advantages – but what are
the costs of making it a reality?
To assess the costs of the hydrogen transition, we estimate CO2 avoidance costs
based on the ramp-up derived from our roadmap.1 These estimates compare all costs
of using hydrogen (e.g., for transportation, costs for the vehicle, its maintenance, thecost of hydrogen, and the cost of the refueling infrastructure) instead of conventional
technologies and set them in relation to the amount of CO2 that is avoided at eachpoint in time. These avoidance costs are very high in early years of the roadmap when
the technology is still expensive, and decrease relative to conventional technologies as
scale is reached and costs for production and use of hydrogen decrease.
In the transportation sector, CO2 avoidance costs of new fuel cell vehicles are higher
than $1,500 per ton of CO2 avoided today. With scale, these costs could decrease
to less than $50 by 2030 and even become negative in the long run, as total cost ofownership of FCEVs drop below those of ICEs (Exhibit 28). Calculated across the whole
deployment trajectory from 2015 to 2050, a recent study estimates the cumulative costsof building a fleet of 7.5 million vehicles in Germany at €50 to 60 ($60 to 70) per ton of
CO2 avoided.2 Our vision, with its global scope and ambitious ramp-up (and therefore
accelerated cost reduction), is likely to result in even lower cumulative avoidance costs.

1 Please note that a full study of GHG abatement costs for hydrogen and competing technologies
is beyond the scope of this roadmap. The shown estimates provide only a point of reference. Costestimates are based on (FCH JU, 2011), (Mathieu and Bolland, 2013) and expert input by the Council
members.
2 Creti, Kotelnikova, Meunier, and Ponssard, 2017; abatement costs considered an upper bound due tohigher TCO differences for Germany than outlined in this vision report for the global market

Hydrogen scaling up

69

In applications where heat is produced from hydrogen (e.g., in the power industry
and building energy sectors), the avoidance costs are mostly dependent on the costdifference between hydrogen and natural gas. Over the lifetime of these applications,equipment costs tend to be small. To replace natural gas in an industrial process, forexample, would currently result in avoidance costs of $100 to 150 per ton CO2 andcould drop to around $50 per ton by 2030.
While currently only 15% of global CO2 emissions are priced through explicit taxes
or emissions trading schemes, and less than 5% of global CO2 emissions are priced
at more than $10 per ton. Experts estimate that the two-degree scenario requires acarbon price of at least $50 to 100 per ton CO2 by 2030.3 At these carbon prices, thehydrogen technologies presented in this vision become relevant.
The challenge of introducing low-carbon technologies such as hydrogen is to overcome
the initial period during which customers have no incentive to switch from conventional
technologies and bring down costs. This transition needs to be bridged through longterm plans and regulatory frameworks. In other technologies, this has been successful.
In Germany, for instance, the avoidance costs of photovoltaic deployment were initiallyestimated at more than $400 to 500 per ton CO2.4 Given the rapid cost decrease ofphotovoltaic technologies, newer studies estimate the costs at only $20 to 70 per ton
5CO, with2
EXHIBIT
28 much lower costs in other countries.
CO2 avoidance costs – passenger cars
Exhibit 28: Costs of CO2 avoided are expected to decrease with scale
Avoidance costs, $/ton CO2 equivalent

C/D SEGMENT>1,500-98%▪ FCEV, infrastructure and hydrogen costs
decrease due to scale and utilization▪ Hydrogen production moves towards lowcarbon pathways<50▪ TCOs of FCEV fall beneath those of-130%

ICEs, lowering CO2 avoidance costs
below zero

▪ Growth carbon-neutral hydrogen use
<0
2017

2030

2050

~0

~95

~1,800Total abatement
potential inroadmap

increases overall avoidance potential

Average abatement costs for 2015-50
estimated at roughly $60/ton CO21

1 Creti, Kotelnikova, Meunier, and Ponssard (2017)
SOURCE: Hydrogen Council

3 Carbon Pricing Leadership Coalition, 2017
4 ifo Institut, 2012
5 Breyer, Koskinen, and Blechinger, 2015

Hydrogen scaling up

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To begin the journey, we propose large-scale deployment initiatives supported bylong-term policy frameworks
Chapter 2 presented a range of activities that are already ongoing in the seven areas of application
for hydrogen. They range from production and storage of hydrogen from renewable electricity,
the distribution across countries, the construction of hydrogen refueling infrastructure, and the
procurement of FCEV fleets all the way to the transition of a city to a hydrogen heating networkand first uses of clean hydrogen in a range of industrial energy and feedstock uses.
While these activities demonstrate the momentum of hydrogen today, a significant step-up isrequired to achieve mass market deployment and realize our roadmap. We propose to launch
deployment initiatives that use current activities as their platform, learn from their mistakes, andscale their successes nationally and globally. Deployment initiatives encompass all involved
stakeholders – regulators, industry, investors, and customers – and require cooperation
across these groups.
Transportation sector
Deployment in the transportation sector could follow three phases (Exhibit 29).
In the first phase, market introduction of FCEVs starts with demonstration projects and small
captive fleets such as hydrogen taxis as well as corporate and government fleets. These
projects establish the requirements for FCEV deployment (such as refueling protocols),
demonstrate the technology, and create a “minimal” HRS network, which may amount tosome 50 stations in a country the size of Germany or Japan.

EXHIBIT 27

A synchronized rollout of FCEVs and HRS goes through 3 phases

Exhibit 29: A synchronized rollout of vehicles and infrastructure goes through 3 phases
Synchronized rollout: Example Japan

Synchronized rollout

FCEVs
Thousands

HRS
Number

800

900
800
700

700
600

600

500
400
300
200
100
0
2010

15

201

251

Market introduction

Public-private scaling

Maturing market

First commercial FCEVs, focus
on small fleets, buses, trucks

Buildup of network and fleets byindustry, with some investment
support for risk mitigation

Largely self-sustained
marketInitial HRS deployment withsignificant public support

Capex reductions from scaling,stations operationally CF positive

500
400
300
200
100
0
20301

Limited public support toclose gaps in coverage

1 2016 government targets (METI)SOURCE: IPHE; METI; Hydrogen Council

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Due to their small scale, these projects are likely to require significant public support. National
and local government is often the driving force behind early activities seen in countries aroundthe world and supports them through RD&D grants. A key success factor in this phase is thecreation of structures for industry-government cooperation, as Germany did, for example,
with the Clean Energy Partnership. These platforms can then serve to prepare Phase 2, thescaling of the infrastructure and FCEV rollout.
In the second phase, infrastructure needs to be scaled and mass market deployment of
FCEVs initiated. In this phase, countries need a long-term roadmap to solve the chickenand-egg problem by developing an adequate hydrogen infrastructure that makes FCEVs
attractive to mass market customers. Typically, this is achieved through industry cooperationor through large-scale public-private partnerships that involve infrastructure providers, vehicle
manufacturers, and private or public investors. The initiatives H2Mobility Germany, H2Korea,
the California Fuel Cell Partnership, and the Scandinavia Hydrogen Highway Partnership
constitute examples for such partnerships.
In this phase, public support may progressively shift from individual RD&D grants to instrumentsthat can be scaled at a lower cost to the government. One potential instrument for hydrogen
refueling stations is the use of guarantees, with fixed payments linked to the rate of underutilization
during the ramp-up phase.46 Other instruments are preferential long-term loans, equity-loan
hybrids, or refining schemes for first movers, which are tailored to the utilization rates during
the ramp-up period.
Governments can also create demand for infrastructure through public procurement ofvehicles (e.g., for hydrogen buses and government fleets) and fleet regulation (e.g., preferredlicenses for taxis or benefits for corporate fleets).). Such instruments have been used in many
countries and cities to promote BEVs and recharging infrastructure. They are shown to reduce
the hurdle to private investment in itself and send a strong signal to infrastructure initiatives
and vehicle manufacturers to continue scaling up.47
As infrastructure is scaled up, regulations and incentives can help private customers to
overcome the higher initial costs of FCEVs. In some countries – including Norway and Japan –FCEVs already cost no more than comparable ICEs; in Denmark, they are significantly lessexpensive to purchase when all taxes are considered.48
To be effective, the scale-up of infrastructure and FCEVs needs to be synchronized. Clear
long-term plans and targets from governments for both FCEVs and hydrogen refueling stationsin these regions and segments ease much of the uncertainty hindering investment andenable the long-term commitment of investor funds into infrastructure and the developmentof vehicles. Japan regularly publishes plans with targets for vehicles and refueling stations(Exhibit 29). Cities or regions with high political support can also kick-start the transition by

46 i24c, 2016
47 i24c, 2016
48 Kotelnikova, 2015
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cooperating with specific customer segments such as local public transport, taxi or corporate
fleets, and developing regional hydrogen supply chains.
Once FCEV adoption accelerates and utilization of HRS reaches levels that cover costs, further
deployment of stations will require only limited public support. In the third phase, public policy
should focus on achieving full coverage (i.e., closing gaps in more remote areas), integrating
the network with neighboring countries, and ensuring healthy competition in the market tolower prices for customers.
Building heat and power
Although challenges around legacy policies remain, scaling up the heating and powering ofbuildings is potentially less complex for market players than scaling up road transportation
efforts. Nevertheless, it requires a coordinated effort between the public sector, gas utilities,
and hydrogen producers.
The UK provides an example for such an effort. The “H21 Leeds City Gate” project will test thefeasibility of transitioning the gas network of a medium-sized city, Leeds, from natural gas tohydrogen before 2030. Before connecting district by district to the new network, the project will
establish the technical requirements and put in place the regulatory and financial framework forthe transition. At the same time, the utility Northern Gas Networks is in fact already assessing
scenarios to roll out the transition to the entire Northern region and eventually the entire UK.
By 2035, 10 times the equivalent of Leeds could be converted to hydrogen, by 2045, 50 times
the equivalent of Leeds. As these regions would benefit from the experience and scale gainedin Leeds, the rollout at scale could require a fraction of the time and budget of the initial Leeds
project and provide a model to follow in other countries.
The Leeds project is expected to be financed through an extra rate on gas bills which will beshared by all gas customers. An alternative or complementary arrangement to fund the transition
is a subsidization of hydrogen injections into the natural gas grid in the form of digressive feed-in
tariffs or contracts for difference, in which the public hand offsets the excess costs in the initialface. Around the world, digressive feed-in tariffs have been used to support investments inrenewable power generation by distributing costs across a wide customer base. In the case ofsolar power, they enabled rapid industrial scale-up, due to which solar is now close to achieving
cost parity with conventional power generation. Similar arrangements could go a long way inpromoting clean hydrogen production and use.
Japan demonstrates how micro-CHP units can be rolled out at large scale: since a digressive
subsidy of more than $10,000 was put in place in 2009, almost 200,000 CHP units were
deployed in households by 2016. Over the course of this period, costs decreased by 75%,
enabling a self-sustained market by 2020 (for a total of 5.3 million CHP units by 2030). In
South Korea and Germany, comparable subsidies were introduced more recently, andmarkets traced the Japanese growth trajectory.49 Other countries benefit from the costsavings achieved during the subsidized rollout, enabling them to reach self-sustained markets
in much shorter periods of time.
49 Dodds, et al., 2015
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Industry and power generation uses
For the industry, whether as energy carrier or feedstock, as well as in power generation,hydrogen can be adopted decentrally, plant by plant, once adequate price incentives for
decarbonization through hydrogen are in place.
Large-scale projects will demonstrate the feasibility of hydrogen production and use in industrial
settings. These projects, often with the support of public research and development grants(such as the HYBRIT project for low-carbon steelmaking or the STEPWISE and Carbon2Chem
projects for CCU), should achieve significant cost reductions, which enable the transition tocommercial operations in regions or plants with strong decarbonization incentives. In thecase of power production projects (such as the Magnum power plant in the Netherlands or
the Kobe power plant in Japan), the projects also develop the required infrastructure (such as
the hydrogen value chain from Australia to Japan) that could accelerate hydrogen adoption
in other sectors.
The uptake of hydrogen in industry and power production at large requires hydrogen to becost competitive with current processes and fuels. A reform of the energy market in termsof feed-in tariffs or contracts for difference, curtailment management, seasonal balancing
remuneration, and carbon pricing can reduce the cost difference to fossil fuels, while regulatory
requirements on industrial emissions can support the adoption.50 A critical factor here is theeven distribution of costs, such that competitiveness and employment is not compromisedin industries that are exposed to international trade.
National action plans
The presented sector-specific deployment initiatives can kick-start the deployment of hydrogen.
Additional synergies can be achieved through coordinated deployment across all sectors.
This requires long-term and stable policy frameworks that guide the energy transition andthe deployment of hydrogen.
Japan leads the way in creating such a strategic framework for hydrogen. The Ministry of
Economy, Trade, and Industry has developed a strategic roadmap for hydrogen and fuelcells. By the end of this year, the government is expected to unveil a new strategic action
plan to build a “hydrogen society.” On municipal level, the Tokyo Metropolitan Government
declared that the 2020 Tokyo Olympics should leave a hydrogen society as a legacy, just as
the 1964 Olympics left the Shinkansen high-speed train system. It will not only accelerate
the rollout of hydrogen refueling stations and FCEVs, but will also power the Olympic village
on hydrogen CHP units.
Clear national action plans for the development of hydrogen within and across sectors can
kick-start the roadmap presented in this report. A coordinated approach between government
and industry can reduce risk, deliver potential benefits faster, and do so more cost effectively.
As a council, we invite you to discuss next steps with us.

50 i24c, 2016
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Glossary
A/B		

A/B segments in the euro car segments (mini cars and small cars)

BEV		battery-electric vehicle

C/D		

medium-sized and large cars

CCU		

carbon capture and utilization

CCS		

carbon capture and storage

CHP		

combined heat and power

CO2		

carbon dioxide

DRI		

direct reduced ironE+			luxury cars in the euro car segments

EJ			

exajoule, or 1018 joules

ETP		

Energy Technology Perspectives model by the IEAFCEV		

fuel cell electric vehicleGt			

gigaton, or 1012 (one trillion) metric tons

HDV		

heavy duty vehicle

IEA		

International Energy Agency

LCV		light commercial vehicle

LDV		light duty vehicle

LiquidMt

megaton, or 106 (one million) metric tonsMW		

megawatt

PEM		

polymer electrolyte membrane

RD&D		

research, development, and deployment

SMR		

steam methane reforming

SNG		synthetic natural gas

TCO		

total cost of ownershipton			

metric ton (1,000 kg)TWh		

terawatt hour75

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