Hydrogen Insights 2022
An updated perspective on hydrogenmarket development and actions
required to unlock hydrogen at scale
September 2022

Executive summary

Published in September 2022 by the Hydrogen Council. Copies of this document
are available upon request or can be downloaded from our website:www.hydrogencouncil.com
This report was authored by the Hydrogen Council in collaboration with McKinsey &Company. The authors of the report confirm that
1. There are no recommendations and / or any measures and / or trajectories
within the report that could be interpreted as standards or as any other form of(suggested) coordination between the participants of the study referred to within
the report that would infringe the EU competition law;and2. It is not their intention that any such form of coordination will be adopted.
Whilst the contents of the Report and its abstract implications for the industry
generally can be discussed once they have been prepared, individual strategies
remain proprietary, confidential and the responsibility of each participant.
Participants are reminded that, as part of the invariable practice of the Hydrogen
Council and the EU competition law obligations to which membership activities
are subject, such strategic and confidential information must not be shared orcoordinated – including as part of this Report.

The pipeline of hydrogen projects is continuing to grow, but actual deployment is lagging.
680 large-scale project proposals worth USD 240 billion have been put forward, but only about
10% (USD 22 billion) have reached final investment decision (FID). While Europe leads in proposed
investments (~30%), China is slightly ahead on actual deployment of electrolyzers (200 MW), while
Japan and South Korea are leading in fuel cells (more than half of the world’s 11 GW manufacturing
capacity).
The urgency to invest in mature hydrogen projects today is greater than ever. For the world
to be on track for net zero emissions by 2050, investments of some USD 700 billion in hydrogenare needed through 2030 – only 3% of this capital is committed today. Ambition and proposals bythemselves do not translate into positive impact on climate change; investments and implementationon the ground is needed.
Joint action by the public and private sectors is urgently required to move from project
proposals to FIDs. Both governments and industry need to act to implement immediate actions for2022 to 2023 – policymakers need to enable demand visibility, roll out funding support, and ensureinternational coordination; industry needs to increase supply chain capability and capacity, advanceprojects towards final investment decision (FID), and develop infrastructure for cross-border trade.

The pipeline of hydrogen projects is continuing to grow, but actual deployment is lagging.
In 2022 some 680 large-scale hydrogen project proposals, equivalent to USD 240 billion in direct
investment through 2030, have been put forward – an investment increase of 50% since November
2021. Yet, only about 10% (USD 22 billion) have reached final investment decision.
Europe is home to over 30% of proposed hydrogen investment globally. However, other regions
are leading the implementation on the ground: 80% of operational global low-carbon hydrogenproduction capacity is in North America, while China has surpassed Europe in electrolysis with 200
megawatts (MW) operational, versus 170 MW in Europe, driven by strong government support.
South Korea and Japan, in turn, are leading on fuel cells, driven by strong government and corporate
ambitions: more than half of the 11 gigawatts (GW) of global fuel cell manufacturing capacity is
located there, and Japan has ramped up deployment of hydrogen-ready combined heat and power(CHP) plants, with 425,000 such systems installed.
The urgency to invest in mature hydrogen projects today is greater than ever. The reboundof carbon emissions to above pre-COVID levels, the invasion of Ukraine, and the growing concerns
around energy security resulting from the war in Europe make one thing clear: our economies needclean hydrogen, and action is needed to convert proposals into actual deployment. Out of the more

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than 680 projects announced, 45 projects worth USD 29 billion are in the front-end engineering
design (FEED) phase and 120 projects worth USD 80 billion are undergoing feasibility studies.
However, only USD 22 billion (about 10% of proposals) have reached final investment decision (FID)or are under construction or operational. This number has only grown by USD 2 billion in the last half
year, significantly slower than growth in project announcements.
The key barrier that project developers face today is a lack of demand visibility – many are awaiting
decisions on the enabling regulatory frameworks and funding to incentivize offtakers to enter longterm hydrogen supply contracts. Such long-term offtake is key to unlocking project finance andsupport from financial investors.
Capturing the maximum climate value of hydrogen to deliver the 2050 net zero target requires a
tripling of investment in hydrogen by 2030 to USD 700 billion – in other words, additional investmentsof USD 460 billion into hydrogen projects through 2030. This sounds enormous but in fact isequivalent to less than 15% of the investment committed to upstream oil and gas in the past decade.
Across the value chain, investment in infrastructure connecting supply and demand is particularly
lagging as visibility on demand is lacking, with an investment gap of more than 80% between project
proposals and what is needed to reach net zero.
Joint action by the public and private sectors is urgently required to move from project
proposals to FIDs. For policy ambition and project proposals to materialize into actual investments
and start delivering environmental and socio-economic benefits, enabling conditions are necessary
today. Below, a set of mutually reinforcing priority actions for policymakers and industry for 2022
to 2023 to progress from proposals to investments, scale up hydrogen deployment in regions andenable global hydrogen trade (Exhibit 1). These are critical for moving from ambition to action,
accelerating hydrogen deployment.

Policy - Priority actions for 2022-2023:
1. Enable demand visibility and regulatory certainty by adopting legally binding
measures. Create demand visibility through measures such as targets or quotas forhydrogen consumption across end-use sectors, alongside public procurement measuresor competitive bidding for (carbon) contracts for difference. This will bridge the gap tocost competitiveness, boost investor confidence and have a ripple effect throughout thevalue chain, enabling investments in hydrogen supply, equipment manufacturing, andinfrastructure.
2. Fast-track access to public funding for hydrogen projects. Introduce measures suchas grants, loans, tax credits, as well as funding support schemes based on competitive
bidding. Policymakers across geographies have put forward plans to roll out the relevant
instruments designed to stimulate hydrogen uptake. Right now, it is crucial to move fromvision to action, and proceed with the implementation of these instruments. Rapid rolloutof support schemes for hydrogen will lift mature projects off the ground and acceleratehydrogen deployment to support global climate goals within this decade, while bringing thecosts further down.
3. Ensure international coordination and support credible common standards androbust tradeable certification systems. A common standard methodology for assessing
all hydrogen production pathways is essential to allow the hydrogen with the lowest carbon
footprint to reveal its climate benefits. Robust certification systems are instrumental inbuilding consumer trust and paving the way for global hydrogen trade, which in turn will
support scale-up and minimize hydrogen cost.

Industry - Priority actions for 2022-2023:
Exhibit 1 – Synchronizing the efforts of governments and the industry

Progress projects andscale up deployment in regions

Enable internationalhydrogen trade

Priority actions
for policymakers

Enabledemandvisibility

Fast-track
access to
public funding

Ensureinternational
coordination

Priority actions
for industry

Advance project
proposals
to FID

Scale up supply
chain capability
and capacity

Build
infrastructure forcross-border tradeiv

Hydrogen Insights Report September 2022
Hydrogen Council, McKinsey & Company

1. Advance project proposals to FID by committing to funding and resource
deployment. As regulatory certainty is being strengthened and funding support starts
rolling out, industry should commit to deploying resources to mature projects towards FID
by conducting feasibility and FEED studies to realize the USD 240 billion project proposals.
Furthermore, new projects must continue to be developed to bridge the USD 460 million
investment gap to net zero toward the end of this decade. Project developers should focus
on building long-term relationships between hydrogen suppliers and offtakers, and actively
mitigate the perceived risk of investing in hydrogen projects by staging projects and byworking with established partners with strong track records.
2. Scale up hydrogen supply chain capability and capacity. As government targets
translate into regulatory action and confidence in a sustained demand outlook, commit
to increasing supply chain capability and capacity. The industry should start ramping up
capacity to enable deployment at scale. Alignment and synchronization between the policy,
infrastructure, and end-use applications is essential. The industry needs to ensure theproject proposals and equipment (e.g., electrolyzers) are available as the industry scales.
Supply chains must be readied, and only industry can do it. Increasing renewable power
capacity at scale remains vital to scale up renewable hydrogen deployment.
3. Build infrastructure for cross-border trade. Global trade unlocks the full benefitsof hydrogen as transportable, clean energy. But project proposals to develop hydrogen
infrastructure are lacking, and industry should concentrate its efforts toward establishing
infrastructure to enable cross-border trade (e.g., through building out terminals, large-scalestorage, and hydrogen conversion technologies). As international cooperation between
governments advances, the industry should actively help to prioritize actions to enableinternational trade flows match supply and demand in an efficient manner.

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Context and objectives

The urgency to invest in mature hydrogen projects today is greaterthan ever
Climate change must be addressed, urgently. It is clearer than ever that climate change urgently
needs to be addressed as highlighted in the most recent IPCC report published in May 2022.
Stakeholders are making commitments to curb emissions rapidly: 131 countries covering 90% of
global GDP have introduced net-zero targets,1 and 46 countries have implemented or announced
carbon dioxide emissions pricing or trading schemes. Globally, 40 national hydrogen strategies
have been announced as countries set pathways to tap into hydrogen’s potential to decarbonize,
ensure energy security, and spur sustainable economic growth from stranded energy resources.
Stakeholders from governments to industries to consumers themselves increasingly recognize thathydrogen is needed to achieve net-zero emissions.
The energy system needs hydrogen. Hydrogen can accelerate the energy transition by allowing
clean energy to be stored and large volumes to be transported over long distances via pipelines andships. It can foster greater resilience, cost-efficiency, and optimization at a system level. Hydrogenis a versatile clean2 molecule that plays multiple roles across end-uses and goes hand-in-hand withother decarbonization levers such as direct electrification, carbon capture and storage, biofuels,and energy efficiency measures. For example, it can serve as a fuel directly usable in fuel cells
used in mobility or stationary power, or for high-grade heat needed for cement production, or grid
power generation. It is a feedstock to produce ammonia or synthetic fuels for use in the maritime
and aviation sectors or other clean chemicals, and a reductant for processing iron ore for clean
steelmaking.
Global political and economic trends influence hydrogen deployment. The pace of
deployment is influenced not only by regulations, as critical as they are, and private sector
commitments, but also by factors such as the state of the global economy, geopolitics, commodity
prices, and the state of global supply chains. The world is recovering from the COVID-19 pandemic,
resulting in rapid growth in economic activity with recent supply chain disruptions and high inflation
rates. Economic development is uneven across geographies and the growth outlook is uncertain.
These factors influence hydrogen deployment, but not necessarily in a negative fashion: recent
developments suggest these shifts have strengthened the focus on hydrogen in the past months.
However, on-the-ground deployment is not moving fast enough and needs to accelerate to realize
the benefits of hydrogen.
Beyond its importance in decarbonization, hydrogen is gaining traction as a way toincrease energy security. Countries are increasingly pursuing energy independence anddiversification of energy supplies, particularly considering the current war in Europe and uncertainties
in global politics. In the EU, the war in Ukraine has led to bolder ambitions for clean hydrogen tostrengthen energy security and spur decarbonization beyond the “Fit for 55”3 package. The EU’s
REPowerEU communication, announced just three weeks after the start of the Ukraine war, raised
the ambition from 5.6 million metric tons (MT) of renewable hydrogen deployed by 2030 to 10 million
MT of renewable hydrogen produced domestically and another 10 MT of imported clean hydrogen.
Stakeholders have accelerated plans to develop hydrogen pipeline transmissions as laid out in theEuropean Hydrogen Backbone initiative,4 which now targets 28,000 km in 2030. For many countries,hydrogen is about monetizing decentralized energy resources like renewables in Chile, Brazil,
Australia, and Egypt, or ensuring energy security and self-sufficiency, which are key components

1

2

3
4

2

of the Chinese hydrogen strategy. They include building a domestic industry around technology forseaborne hydrogen trade and use in the power and automotive sectors, such as in Japan and South
Korea.
Incentive schemes to accelerate hydrogen adoption are taking shape across the globe –these need to be rolled out, fast. In the EU, for instance, the first Important Projects of Common
European Interest (IPCEI) pre-notifications were made at national level in 2021, with first approvals
from the EU Commission received in July 2022. Furthermore, the development of a carbon contracts
for difference (CCfD) scheme for renewable hydrogen has been announced on EU level. Countries
in Europe are developing national support schemes for hydrogen. For example, Germany and
Denmark are pursuing joint purchasing agreements and CfD schemes for clean hydrogen imports.
Other regions are not standing still, with various incentive schemes emerging around the globe. For
instance, the US has allocated USD 9 billion in funding to develop clean hydrogen hubs and advanceand scale up electrolyzer technology while granting tax credits for carbon capture and storage, while
Japan’s Green Innovation Fund is allocation about USD 2 billion to develop carbon neutral projects,
supporting development of liquid hydrogen value chains, amongst other technologies. Oman iswaiving grid fees for renewable hydrogen production, while India is considering approaches suchas grid tariff reductions, clean hydrogen blending mandates in refineries, and electrolyzer capital
expenditure subsidies. But speed is of the essence – important controls and bureaucracy need to beadapted to match the urgency of the situation and the typical commercial product development rhythm.
Hydrogen’s future is bright – right now, joint action is required to scale the hydrogen
economy as fast as needed. Decarbonization is an urgent need as the world is expected toexhaust its remaining carbon dioxide emissions budget of about 400 gigatons (GT) by 2030 to remain
within 1.5 degrees Celsius warming. The recent momentum in the hydrogen economy is positive,
but ambition and proposals by themselves do not translate into a positive impact on climate change;
investments and implementation on the ground are needed. Joint action by the public and private
sectors is urgently required to move from project proposals to FIDs.

Hydrogen Insights sheds light on the state of the industry – and whatneeds to be done for ambition and proposals to materialize into
investments and deployment
Hydrogen Insights is the Hydrogen Council’s perspective on the hydrogen industry’s evolution.
It summarizes the current state of the global hydrogen sector and offers a unique view into actualhydrogen deployment.
This publication has three sections:
Momentum: Industry announcements show current investment momentum in the globalhydrogen industry.
Actual deployment today offers unique insights into the real deployment of hydrogen acrosssectors and geographies.
Priority actions for policymakers & industry suggest a set of priority actions for policymakers
and industry for the coming year to overcome the key challenges preventing hydrogen deployment at
scale.
This perspective is co-authored by the Hydrogen Council and McKinsey & Company and represents
a collaborative effort to share an objective, holistic, and quantitative perspective on the status quo of
the global hydrogen industry development. The Hydrogen Council counts 141 members (Exhibit 2),
up from 60 in 2020, representing USD 8.2 trillion in market capitalization, 6.8 million employees, andrevenues of USD 5.2 trillion in 2021.

Includes 14 EU member states that have not announced targets but fall under the EU’s overarching net-zero target by 2050,
Purchasing Power Parity methodology used for GDP calculation, definition and list gathered from Oxford Net Zero Tracker
Clean hydrogen in this publication defined as both renewable (from electrolysis and renewables) and low-carbon (from fossil fuelreforming with carbon capture and storage)
The EU plan to cut greenhouse gas emissions 55% by 2030
Initiative driven by 31 infrastructure operators

Hydrogen Insights Report September 2022
Hydrogen Council, McKinsey & Company

Hydrogen Insights Report September 2022
Hydrogen Council, McKinsey & Company

3

Momentum:
Industry announcements

Exhibit 2 – Hydrogen Council Members

USD

USD

8.2

trillionmarket capitalization

6.8

millionFTEs worldwide

5.2
revenues

trillion

While the number of project proposals continues to grow globally,
less than 10% of hydrogen projects have reached FID
Globally, the industry has announced 680 large-scale hydrogen project proposals (Exhibit 3) as of theend of May 2022, an increase of more than 160 projects since our previous publication (Hydrogenfor Net Zero, November 2021). Of these, 534 aim to fully or partially commission through 2030 andrepresent USD 240 billion of direct investments needed in hydrogen value chains by 2030 (up from
USD 160 billion in the previous publication).
Of these 534 project proposals, about a third are undergoing feasibility and FEED (front-end
engineering design) studies, representing USD 109 billion in investments. However, only USD 22
billion (about 10%) have reached a final investment decision (FID), are under construction, or are
operational. This number has only grown by USD 2 billion in the last half year, significantly slower than
the growth in announcements.
Giga-scale project proposals (over 1 GW of electrolysis for renewable or more than 200,000
metric tons a year of low-carbon hydrogen supply) account for 61 projects, of which 18 have beenannounced since the previous publication. Of these 61 proposals, 45 are renewable and 16 are
low-carbon hydrogen. 51 of these are planning full or partial commissioning by 2030, while 33 areundergoing feasibility or FEED studies, and three have reached FID (linked to low-carbon hydrogenin North America). Giga-scale project proposals are found across all continents and are focused onexports to demand centers in Europe or Asia or on serving demand in large industrial hubs.
Europe is home to over 30% of proposed hydrogen investments globally (about USD 76 billion),with nearly 314 project proposals in total and 268 aiming for full or partial commissioning through2030. Of this, about USD 32 billion is in the planning stages and USD 6 billion involves committed
investment. In the past six months, about 50 new project proposals were announced in Europe, withmost new additions focusing on the decarbonization of large-scale industrial uses.
North America and Latin America follow Europe in terms of announcements with about 20% eachof proposed investments. In fact, since the previous publication, the proposed investments in these
two regions have grown at the fastest rate, with USD 20 billion added in North America and USD
34 billion in Latin America. In Latin America, project proposals worth USD 30 billion are undergoingfeasibility or FEED studies. In North America, project proposals worth about USD 13 billion are
undergoing feasibility or FEED studies, and USD 8 billion is committed capital (mainly driven byexisting low-carbon hydrogen projects).
Maximizing the climate value of hydrogen to deliver the 2050 net zero target requires a tripling ofinvestment in hydrogen by 2030, to USD 700 billion. In other words, an additional USD 460 billionhydrogen project proposals by 2030 are needed, even if all current proposals are realized.

An increasing number of project proposals are undergoing feasibility
and FEED studies, yet FIDs are lacking
Of the USD 240 billion announced through 2030, nearly half is in the planning stage, i.e., undergoingfeasibility or FEED studies (Exhibit 4). Since the previous publication, the number of project proposals
undergoing engineering studies has increased from 115 to 165, an increase of 70% in terms oftargeted investment, from USD 64 billion to USD 109 billion. Despite the momentum, many project
proposals have not reached FID and are awaiting the development of supportive regulation andincreased visibility on demand for clean hydrogen and its derivatives.
While there is positive momentum in further maturing projects, there is a slowdown when looking at
the FIDs, which only grew by USD 2 billion (about 10%). The key barrier that project developers are4

Hydrogen Insights Report September 2022
Hydrogen Council, McKinsey & Company

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Hydrogen Council, McKinsey & Company

5

facing today is the lack of demand visibility, as many are awaiting decisions on the enabling regulatory
frameworks and funding (including the existing frameworks such as IPCEI in Europe or hydrogenhubs in the US) to incentivize offtakers to enter long-term hydrogen supply contracts. The largest
volume of committed investment is in North America (about 35%, partially due to operational lowcarbon hydrogen projects), followed by Europe (driven by a somewhat clearer regulatory environment
and industry decarbonization targets) and Asia (excluding China and Oceania), both at about 25%.

Exhibit 3 – Global hydrogen project announcements
As of May 8, 2022
Out of 5341 large-scale projects worth USD 240 bn announced globally …

USD 240bn
investments required forannounced projects until 2030
76

Europe# ofprojects

51
Giga-scale
production

North America

47

Latin
America

43

262

33

Oceania

Large-scaleindustrial use

128
Transport

Japan, Korea,
rest of Asia

1953
Integrated H2
economy

15

China

40

6

AfricaInfrastructure
projects… 165 – about one third – are undergoing feasibility and FEED studies …

USD 109bn
investments until 2030,
related to projects in planning
32

Europe# ofprojects

33

Considering only project proposals in the planning stage, the share of hydrogen supply is above
70% of the total associated investment of USD 109 billion. However, the supply share of investments
declines to about 50% when considering only committed investments, while the share of investments
targeting hydrogen transmission and distribution increases to more than 20%. This is a doubling fromabout 10% share of investments when considering projects across all maturity levels. This could be
due to the infrastructure component of a project maturing after the hydrogen supply aspect is clearer,or due to a significant current momentum around hydrogen supply specifically.
Hydrogen supply: Announcements reach one third of net zero target
Companies have announced project proposals adding up to about 26 million MT of clean hydrogencapacity through 2030 (Exhibit 5), an increase of about 8 MT since the previous publication. This
amounts to about a third of the 75 MT required by 2030 to be on track toward net zero (as laid out inthe Hydrogen for Net Zero report). Announcements add up to 7.3 MT of clean hydrogen by 2025, up
from 6.5 MT in the previous publication. About 60% of the announced volumes through 2030 feature
renewable hydrogen, while about 40% consist of low-carbon hydrogen.
The majority of this capacity is at an early project development stage, with about 15 MT in theplanning stage undergoing feasibility or FEED studies, and only 2 MT (about 7% of total announced

Giga-scale
production

13

North America

86

Latin
America30

Oceania24

Large-scaleindustrial use

26
Transport

Japan, Korea,
rest of Asia

Along the value chain, about 65% of the total announced investments of USD 240 billion focus onclean hydrogen supply, followed by end-use (25%) and transmission and distribution (10%).

6

China

3

Africa1

13

Exhibit 4 – Announced investments by maturity
Direct hydrogen investments until 2030, USD billion
As of May 8, 2022

Integrated H2
economyUSD 240bn

7
Infrastructure
projects

total announced investments… and only about 10% of investments have achieved final investment decision

USD 22bn
investments until 2030,
related to committed projects
Europe6

North America

8

Latin
America<1

Oceania<1

Japan, Korea,
rest of Asia

6

109

108
# of
projects

763
Giga-scale
production

77
Large-scaleindustrial use

61

64

End-use &offtake
Infrastructure
Production &supply

20

22

2021

2022

Transport

China

2

29
Integrated H2
economy19
Africa1

6<1

Infrastructure
projects

2021

2022

2021

2022

Announced

Planning stage

Committed

Projects in press
announcements or
preliminary study stages

Projects that are at thefeasibility of front-end
engineering and design
stage

Projects where a final investment
decision has been taken, that isunder construction, commissioned,or operational

680 projects announced globally of which 534 are (partially) deployed until 2030

Hydrogen Insights Report September 2022
Hydrogen Council, McKinsey & Company

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Hydrogen Council, McKinsey & Company

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capacity) at FID, under construction, or operational. Considering the proposals currently in theplanning stage, about 55% of capacity is renewable and 45% is low-carbon hydrogen. For the
projects with committed capital, the majority is low-carbon hydrogen (about 70% of total volumes),
driven largely by operational low-carbon hydrogen projects in North America.
From a regional perspective, Europe, North America, and Latin America account for over 70% of thetotal announced clean hydrogen supply volumes, with the highest volumes found in Europe (about 8
MT in announced supply). Latin America has the largest announced supply of renewable hydrogen(4.8 MT by 2030), while North America has the largest volume of low-carbon hydrogen (4.7 MT). Latin
America and North America are the regions with the highest growth in announced volumes since
the previous publication, adding 3.6 MT and 2.8 MT, respectively. About three-quarters of project
proposals focused on hydrogen supply are undergoing feasibility or FEED studies in Europe, Latin
America, Oceania, and the Middle East, indicating that the industry is investing in maturing hydrogen
supply projects further.
Beyond 2030, an additional 15 MT of clean hydrogen capacity has been announced globally, bringing
the total to about 41 MT. If all the announcements were realized, it would reflect about 6% of the 660
MT required by 2050 to reach the net-zero target. More clean hydrogen supply project proposals areneeded to be on track to net zero.

positive development, infrastructure is the value chain step that sees the largest gap in investments
required to be on track to net zero, with project proposals covering less than 15% of the investment
requirement.
Developers are considering multiple hydrogen carrier technologies for global hydrogen transmission,
including ammonia, LOHC5, and liquid hydrogen. Most of the projects announced through 2030
with defined hydrogen carriers have currently opted for ammonia (about 35% by volume hydrogen),followed by LOHC (about 10%), and liquid hydrogen (about 5%). However, about half of the projects
have not yet selected technology, and even for those that have, the final decisions on concept,
design, and investment have not yet been made.
Hydrogen end-use: Mobility and steel are driving investments
Announced investments in hydrogen end-uses through 2030 account for about USD 60 billion andencompass, for example, fuel cell vehicles, the deployment of methanol and ammonia synthesis
plants (of which some capacity is intended for export), or the use of hydrogen in clean steelmaking or
power applications. Of this, about USD 23 billion is currently undergoing feasibility or FEED studies,while USD 6 billion is committed capital. Ground transport is the segment with the highest shareof committed capital, with 25% of total investment proposals at FID or more advanced, followed bypower where the share is about 15%.

Hydrogen transmission & distribution: Largest gap to net zeroCompanies have announced approximately USD 24 billion in investments in hydrogen infrastructure
through 2030, encompassing refueling stations, pipelines, terminals, and ships, for example, up
from about USD 22 billion reported in the previous publication. About half of these announced
investments target the Asia-Pacific region, while Europe accounts for about 25%, followed by the
Middle East at 15%. About a third is currently undergoing feasibility or FEED studies, with the majority
in Europe (about 30%), followed by China and Oceania (each about 20% of volumes). Despite this

Most announced investments target the mobility sector and new industry end-uses such as
steelmaking, each at about 30% of investments, followed by existing industry uses, like ammonia
and refining, at about 25% of announced investments. Announced investments in existing industry
uses, where clean hydrogen directly substitutes for fossil-based (“grey”) hydrogen, have more thantripled since 2021 (from USD 5 to 16 billion). However, a large share of this growth is from additionalammonia production projects, many of which target energy export to demand centers in Asia andEurope, rather than substituting grey hydrogen in fertilizer markets. Investments in new industry uses

Exhibit 5 – Announced clean hydrogen production volume by pathway

Exhibit 6 – Global fuel cell and electrolyzer manufacturing capacity

Cumulative production capacity, MT p.a.

Electrolyzer and Fuel cell manufacturer capacity, 2025 GW p.a. by HQ region

As of May 8, 2022

As of May 8, 2022
1 GW

10 GW

26.2
Announced1

Announced
as of 2022

Planning2

2021

LowcarbonhydrogenCommitted3

Announced1
Renewablehydrogen

2020
2019

USA

EuropeChina

Japan and Korea

Manufacturing capacity announcements, GW

Planning2

Electrolyzer

3.5

45.0

Committed3
2020

21

22

23

24

25

26

27

28

29

2030

Fuel cell1232021 – installed

Preliminary studies or at press announcement stage
Feasibility study or front-end engineering and design stage
Final investment decision has been taken, under construction, commissioned or operational

58Hydrogen Insights Report September 2022
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28.0

11.0
2025 – announced

Liquid organic hydrogen carrier

Hydrogen Insights Report September 2022
Hydrogen Council, McKinsey & Company

9have grown by about 25% since the previous publication, primarily reflecting 26 steel projects (ofwhich 20 are in Europe).

Actual deployment today

Momentum around proposed projects targeting hydrogen end-uses is strongest in Europe, where
half of the proposed investments have been announced, followed by the Asia-Pacific region andNorth America (each about 15%). There is significant variation in the focus segments across regions.
In Europe, most end-use investments focus on steel (60%), whereas Latin America sees 60% ofinvestments related to ammonia production (majority of which is intended for export). The Asia-Pacificregion focuses on power and transport (about 40% each), while in North America about half of theinvestments target mobility (ground transportation and sustainable fuels).

Clean hydrogen deployment is increasing across the value chain

Hydrogen technology supply chains are preparing for a rapid scale-up
Anticipating hydrogen market growth, technology providers are planning to ramp up fast (Exhibit 6)– if demand materializes and regulatory frameworks are put in place. For example, electrolyzer OEM
announcements worldwide add up to 45 GW of annual manufacturing capacity by 2025, more thanten times the capacity installed by end of 2021. European OEMs are the most ambitious, accounting
for 40% of the announced capacity. Chinese OEMs follow with about 35% of announced capacity,
potentially driven by supportive government policies toward clean hydrogen supply.
Fuel cell OEMs have announced 28 GW installed capacity until 2025, up from 11 GW installed today.
About 60% of existing capacity is concentrated in Japan and South Korea, where some of theworld’s leading vehicle OEMs are based.

The deployment of hydrogen technologies and projects is gradually growing across the value chain,with progress in hydrogen supply, transmission and distribution, and end-uses in the past year
(Exhibit 7)
Hydrogen supply: 800 kt low-carbon, 550 MW electrolysis deployed
Up until now, the global industry has installed about 800 kilotons (kt) per annum of low-carbonhydrogen capacity and about 550 MW of water electrolysis for renewable hydrogen supply.
Operational low-carbon hydrogen volumes are spread across 18 projects, with about 90% of thecapacity in North America. Installed electrolyzer capacity grew about 80% from 2020 to the endof 2021, with most of the growth (160 MW) in China. China is currently the world’s largest market
for electrolysis, with about 200 MW capacity installed (most of which involves a 150 MW plantcommissioned in 2021). Europe is the second-largest market with about 170 MW of electrolyzers
installed (with 40 MW added in 2021). About two-thirds of this serve demand from industrial end-uses
such as ammonia plants or refineries, followed by mobility at about 10% of total capacity.
About 75% of the installed electrolyzers are alkaline technology, followed by proton-exchange
membrane (PEM) solutions, which account for most of the remaining 25%. Most PEM electrolyzer
capacity is installed in Europe, while other regions have higher shares of alkaline technology.

Exhibit 7 – Hydrogen deployment across the value chain

Supply550 MW
Electrolysis capacity
operational in 2021

3.5 GW

200 MW installed in
China

50,000Electrolysis mfg.
capacity

FCEVs fleet on the road

+3.5 GW in 2022

700 HRS
operational+50% sales in 2021

50% in Europe

800 ktpa

Manufacturing
capacity

End-useLow-carbon hydrogencapacity in 2021

11 GW

425,000

Fuel cell mfg. capacity in
2021+2 GW in 2022

3 H2

Stationary fuelcells installedshipping pilots
LH2, clean NH3,1
LOHC shipped toJapan from Australia /Middle East

Transmission
and distribution
1

10

Hydrogen Insights Report September 2022
Hydrogen Council, McKinsey & Company

Note that grey ammonia (i.e., produced from natural gas without carbon sequestration) is shipped today at scale

Hydrogen Insights Report September 2022
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Hydrogen transmission and distribution: Initial steps to develop a hydrogen trade system
are being taken
Regional and global hydrogen infrastructure is gradually developing and maturing, and this ishappening across pipelines, refueling stations, and global hydrogen shipments.
Global seaborne hydrogen trade is slowly evolving. Small-scale deliveries of clean hydrogenby ship have taken place. Three pilot projects carrying clean ammonia, liquid hydrogen, and liquidorganic hydrogen carriers (LOHC) have already sailed in the past three years, delivering hydrogenfrom Australia and the Middle East to Japan. The Japanese government focuses on hydrogen as aclean energy vector, and is taking steps to, for instance, develop the world’s first international value
chain for transporting liquid hydrogen between Japan and Australia.
Other regions are starting to focus more on hydrogen trading as well. European countries are
considering imports from several potential export countries in the Middle East, Northern Africa, andelsewhere, while Singapore is considering importing hydrogen from Australia. Several regions are
positioning themselves as exporters of renewable or low-carbon energy, including Australia, Latin
America, North America, Northern Africa, and the Middle East.
Hydrogen pipelines are advancing. There is about 4,500 km of hydrogen pipeline installed
globally, transmitting grey hydrogen to industrial end-users, showcasing the feasibility of transmittinghydrogen via pipelines. Several initiatives are currently exploring pipeline transmissions of hydrogen.
For instance, pipeline exports of hydrogen from energy resource-rich areas in Northern Africa or
Norway to continental Europe are being considered, while the UK and California, among others, aretesting the blending of hydrogen in natural gas pipelines.
The deployment of hydrogen refueling stations continues to grow. About 700 hydrogenstations were installed globally by the end of 2021, reflecting about 25% annual growth from the endof 2020. About half of these are in Japan, South Korea, and China, with about 100 stations added in
the past year, reflecting annual growth of about 35%. Europe accounts for about 230 stations, while
the US has 80 operational stations concentrated in the coastal states. Annual growth in these twomarkets was about 20%, notably slower than in Asian markets.
Hydrogen end-use: 65% growth in vehicles, clean ammonia producers lead in industry
segment
Hydrogen is advancing in mobility. Sales of fuel cell vehicles grew by about 65% from 2020 to2021, with total sales of about 17,000 vehicles (up from 11,000 in 2020). Commercial vehicles accountfor about 10% of total vehicle sales, with about three-quarters consisting of fuel cell buses and theremainder of trucks. However, these two segments grow at different rates. Whereas sales of fuelcell trucks grew sevenfold in a year, mainly in China followed by Europe, bus sales declined by 30%
driven by lower sales in China.
Sales of fuel cell passenger vehicles grew about 80%, totaling about 15,000 vehicles sold worldwide
in 2021. Most sales were in South Korea (55% of sales), North America (20%), and Japan (15%). The
highest relative growth occurred in North America (nearly quadrupled) and Japan (more than tripled),
reflecting supporting regulatory schemes and available refueling infrastructure.
Progress is happening with off-road vehicles as well, where hydrogen has a role to play for heavy,
long-duration uses in sectors like mining, construction, or rail. Multiple projects have retrofitted
mining trucks with fuel cells, while OEMs have developed crawler excavators that run on hydrogen.
Hydrogen-fueled trains were deployed in several countries in Europe and Asia. More than 10 trains
currently operate globally, with orders for over 60 more in place.

for methanol-fueled oceangoing container ships, while automotive companies are committing tosourcing “green steel.” However, no full-scale plants have reached the FID stage.
Energy and heating end-uses are progressing. Examples include the blending of hydrogen innatural gas turbines as well as the development of hydrogen-ready turbines and hydrogen for highgrade heat applications, as well as the replacement of coal with clean ammonia in power plants.
Notably, Japan and South Korea have deployed combined heat and power (CHP) fuel cell systems
that can run on hydrogen, with about 425,000 such systems installed across Japan.
Technology suppliers have ramped up manufacturing capacity
Hydrogen deployment is gradually evolving, and although demand visibility is limited, suppliers arereadying and have installed manufacturing plants for equipment such as electrolyzers and fuel cells.
Electrolysis. Companies have installed about 3.5 GW of electrolysis manufacturing capacity globallyby the end of 2021, with another 3.5 GW announced to be added during 2022. European OEMs
have developed about half of the existing capacity, while Chinese OEMs have announced the mostambitious targets for 2022 and are planning to install an additional 1.5 GW this year. Two-thirdsof existing capacity is atmospheric alkaline technology today, whereas the share of pressurized
electrolyzer technologies should gradually increase as new manufacturing capacity rolls out.
Fuel cells. The currently installed fuel cell manufacturing capacity is approximately 11 GW, with
about 60% of this capacity developed by South Korean and Japanese OEMs, followed by Chineseand American OEMs. Announced near-term growth is limited, with a target of 13 GW total installedcapacity in 2023, and most growth will occur in South Korea.
Vehicle platforms. Vehicle OEMs have developed 87 fuel cell vehicle platforms to date, up from 61
in 2021 (about 70% are in China). Most of the current platforms are for fuel cell buses, followed bytrucks and light vehicles. Most of the new platforms target fuel cell trucks, followed by light vehicles
such as vans or passenger vehicles.
Developers and financial investors are investing in hydrogen
Companies are actively investing in hydrogen, both to develop projects to supply and consume cleanhydrogen, and in hydrogen companies themselves (e.g., technology providers).
Companies are investing in maturing hydrogen project proposals. Stakeholders are investing
about USD 4 billion in feasibility or FEED studies for projects that have yet to reach FID. About 40%of these investments are centered in the Asia-Pacific, followed by Europe (about 35%). Historically,
companies have invested about USD 2 billion in such studies to develop projects that have alreadyreached FID or have been deployed – these projects imply an estimated committed investment of
USD 22 billion.
Financial investors are following suit. Globally, investors spent about USD 7 billion on fuel celland electrolyzer suppliers in 2021, nearly doubling in a year. Both private and public markets areactive, with significant growth seen across all types of investments. Notably, private investment inpublic equity (PIPE) doubled, while merger and acquisition (M&A) activity grew fivefold from 2020 to
2021. Average deal sizes increased by 60% year on year, with an average deal worth USD 41 million
in 2021.

Industrial hydrogen end-uses have high activity levels, but large-scale plants have yet
to be built. 27 renewable hydrogen projects have reached FID, of which about 20 are in Europe,
encompassing the production of clean ammonia, methanol, steel, and synthetic fuels. Among these,ammonia leads the way with seven projects having reached the FID stage and three operational
projects (up to 20 MW electrolyzers). Meanwhile, clean methanol production projects are maturing,with seven at the FID stage and the largest operational plant having a 10 MW electrolyzer. Anotherfive renewable hydrogen projects focus on refining, four small-scale projects target hydrogen-based
steelmaking, and four others will produce synthetic fuels. Much of this momentum is driven by private
sector commitments, even before regulatory frameworks and potential government support areclear. For instance, two large global container ship operators have placed the world’s first orders

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Hydrogen Council, McKinsey & Company

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Hydrogen Council, McKinsey & Company

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Priority actions for policymakers
and industry

Joint action by the public and private sectors is urgently required
There is no climate solution without clean hydrogen. Scaling it up rapidly is crucial for staying on
track to net zero but doing so will not happen by default. The two most important priorities forpolicymakers and industry in the next few years are: i) to progress from proposals to investments andscale up hydrogen deployment in regions, and ii) to enable global hydrogen trade (Exhibit 1).

1. Progress from proposals to investments and scale up hydrogen
deployment in regions
Accelerating hydrogen deployment at scale is critical, and it will help push the costs of cleanhydrogen further down. To do so, policymakers can create demand visibility and regulatory certainty
as well as fast-track access to public funding for mature projects. In parallel, industry should mature
projects towards FID and further increase supply chain capacity and capabilities.
Policy action 1: Enable demand visibility and regulatory certainty by adopting legally binding measures
Currently, about 680 large-scale hydrogen project proposals are on the table. To move these projects
forward, investors are looking for visibility on future demand, which depends to a large degree
on the regulatory framework for offtakers. Measures such as binding targets and quotas for the
consumption of clean hydrogen (for instance in steelmaking, road mobility) and hydrogen derivatives(such as synthetic fuels and clean ammonia), contracts for difference (CfDs) and public procurement
measures would increase this demand visibility.
If enacted, these policies will create a ripple effect through the value chain, enabling investments
in hydrogen supply, equipment manufacturing, and infrastructure. With the increased scale, costs
will come down, bridging the gap towards cost competitiveness. In electrolysis, for example, anestimated 70 GW of installed electrolysis is sufficient to bring down costs to be on par with greyhydrogen.6
Several countries have proposed schemes to increase demand visibility. The Netherlands haveenacted SDE++, a carbon contract-for-difference scheme that provides a reliable and robust
carbon price to support decarbonization projects. Germany is implementing the H2Global scheme
to facilitate hydrogen imports by matching long-term supply contracts with shorter-term offtake
contracts. In the United States of America, California’s Low Carbon Fuel Standard (LCFS) has provento be a cost-effective demand-pull measure incentivizing fuel switching from fossil fuels to low carbon
alternatives in the transport sector. Meanwhile South Korea has, as part of its hydrogen roadmap,
launched ambitious public procurement measures for fuel cell electric vehicles.
Policy action 2: Fast-track access to public funding for hydrogen projects
Governments have earmarked USD 80 billion to kickstart the hydrogen economy. The funding aims
at supporting early hydrogen deployment, creating infrastructure and clusters, and speeding up cost
reductions as hydrogen reaches scale. Such announced measures across different regions include:— Funding program for regional hydrogen hubs and production technology development in the US(USD 9 billion), as well as production tax credits (PTC) for clean hydrogen production with supportof up to USD 3 kg a kilogram depending on carbon dioxide content.

at the EU level. Further, several national hydrogen strategies have pledged funding for growinghydrogen deployment (e.g., Germany, Spain).
— In Japan, the government has pledged about USD 2 billion for the development of a large-scaleliquefied hydrogen supply chain.
Most of these funds, however, remain pledges to date, and only a small share has been assigned
to specific projects. Following through with rapid implementation of these instruments to supporthydrogen deployment is essential and will allow lifting mature projects off the ground. For instance,
across Europe there are project proposals worth USD 32 billion undergoing feasibility or FEED
studies – an acceleration of funding could help propel them forward.
Government action and support for clean hydrogen deployment today is critical to move from vision
to action and accelerate hydrogen uptake, while helping industries that are decarbonizing to retain
their competitiveness.
Industry action 1: Advance project proposals to FID by committing to funding and resource deployment
As governments increase regulatory certainty and funding support starts to roll out, mature projects
will move toward FID. Investing in feasibility and FEED studies will be required to bring the USD 240
billion of project proposals closer to deployment. In addition, more projects – an estimated USD 460
billion of investments until 2030 – are needed to be on track to net-zero in 2050. Project developers
would need to step up the development of more proposals spanning the entire hydrogen value chain,boosting hydrogen supply, investments in end-use, and the infrastructure that connects supply withdemand.
To lower risks for both offtakers and suppliers, new partnerships across the value chain are alreadyemerging. Project developers are eliciting demand from potential offtakers, for example, by way oforganizing them in project consortia together with potential hydrogen suppliers and infrastructure
players. As the project concept matures, binding offtake agreements are concluded, which in turnallow the suppliers and infrastructure players to raise funding and commit further investments. By
coordinating across the value chain, sharing risks, leveraging existing infrastructure and building inphases, such projects are solving the chicken-egg problem in an iterative fashion.
Industry action 2: Scale up hydrogen supply chain capability and capacity
As demand visibility increases, the industry will be able to ramp up manufacturing and deployment
capacity across all types of equipment. For example, electrolyzer OEMs need to expand capacityfrom the current 3.5 GW installed by end of 2021 to at least 50 GW a year by 2030 to be on track to
net zero.
Furthermore, scale-up is required along the full value chain, starting with the materials that go into thecomponents and ultimately the equipment to produce, store, convert, transport and use hydrogen.
To succeed, companies need to deploy capital early to build manufacturing experience, prepare
product designs, optimize manufacturing processes, and gain experience in building the plants.
Projects require alignment and synchronization along the value chain, both in terms of regulations aswell as with infrastructure and end-use applications. Partnerships along the value chain – for example
between electrolyzer suppliers and project developers and between component manufacturers andfuel cell stack manufacturers – can be used to jointly develop products and synchronize scale up.

2. Enable global hydrogen trade
Global trade in hydrogen allows to bring clean hydrogen from regions with abundant energy
resources to the demand centers thereby accelerating hydrogen uptake and reducing costs. Thisrequires common global standards for hydrogen, robust tradeable certification systems and crossborder infrastructure.

— Alongside funding from the Important Projects of Common European Interest (IPCEI) in the EU,from which first approvals from the EU Commission were received in July 2022, release funding forrolling out carbon contracts for difference (CCfD) scheme for renewable and low-carbon hydrogen

Policy action 3: Ensure international coordination
To enable trade of hydrogen and its derivatives, international coordination, credible common
standards and robust certification systems for hydrogen are required. A common global ISO7
standard methodology for assessing the carbon footprint of different hydrogen production pathways

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See Path to Hydrogen Competitiveness, January 2020, and Hydrogen Insights, February 2021

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Hydrogen Council, McKinsey & Company

International Organisation for Standardisation

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is essential to allow the hydrogen with the lowest carbon footprint to reveal its climate benefits.
The Hydrogen Council is supporting the development of the said ISO standard, with the IPHE
guidelines8 serving as the seed document. Meanwhile, robust certification systems are instrumental
in building consumer trust and paving the way for cross-border hydrogen trade, which in turn will
support production scale-up and bring the cost of hydrogen further down. The upcoming Hydrogen
Council publications on the global trade of hydrogen and on hydrogen certification will explore these
topics in more detail.
Industry action 3: Build infrastructure for cross-border trade
The biggest gap between announced projects and projects required to achieve net zero isin hydrogen infrastructure. Only 10% of currently proposed investments focus on hydrogen
infrastructure, highlighting an investment gap of about 85% to the required USD 200 billion in
spending through 2030. The industry needs more proposals in these areas and should concentrate
its efforts on establishing infrastructure to enable cross-border trade. Such proposals would involve
terminals, large-scale storage of hydrogen, hydrogen carriers, conversion technologies, and refuelingstation networks. As international cooperation among governments advances, industry should
actively help prioritize actions to enable trade flows that efficiently match supply and demand acrossborders.

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IPHE Working Paper, Methodology for Determining the Greenhouse Gas Emissions Associated with the Production of Hydrogen

Hydrogen Insights Report September 2022
Hydrogen Council, McKinsey & Company