Global classification society DNV has cut its forecast for hydrogen uptake in 2050 by 21%, citing high costs and a lack of subsidies, Kallanish learns.

In 2022, the company projected 235 million tonnes of hydrogen and derivatives will be used for energy purposes by mid-century, which was further revised to 238m t last year. However, DNV’s latest Energy Transition Outlook has cut the mid-century hydrogen forecast to 188m t, accounting for only a 3.9% share in the global energy mix. 

“Spiralling costs across many of the first hydrogen-for-energy projects, and an absence of policies that subsidise hydrogen at the hefty level required for a fast ramp-up, have led us to revise down our forecast uptake of hydrogen by 2050,” DNV explains.

“Many of the first commercial hydrogen energy projects have experienced cost overruns or have been stopped amidst market uptake uncertainty,” adds Remi Eriksen, DNV president and ceo. “Without a meaningful carbon price and/or direct market-stimulating support, hydrogen will struggle to scale and move down a cost-learning curve.”

During the forecast period, DNV says the manufacturing sector will account for over two-thirds (73%) of hydrogen demand, with the iron and steel sectors being the primary user. This is followed by transport (14%), buildings (7%), and the remaining spread across electricity generation and “various other purposes.”

“At current costs that often exceed $5/kgH2, hydrogen is up to 5 times more expensive per megawatt than natural gas in Europe,” the report explains. “Although we expect costs to fall substantially in the next five years to $3/kgH2, hydrogen uptake will be muted in the absence of higher carbon prices and/or subsidies.”

While DNV forecasts hydrogen prices to fall to $2/kg – or even around $1/kg for some projects – in the 2040s, it would require “mass installation.”

Nonetheless, the report adds: “Renewable and low-carbon hydrogen are essential for lowering emissions in energy-intensive sectors that are difficult to electrify. To align with the goals set by the Paris Agreement, hydrogen and its derivatives – ammonia, e-methanol, and other e-fuels – need to account for about 15% of the world’s energy demand by 2050.”

However, DNV has revised down the forecast for the fuel’s share within the energy mix from 0.4% to 0.2% by decade-end and from 2.6% to 1.5% in 2040. By 2050, this share is estimated to be 4%, much lower than the 15% needed.

“Since hydrogen’s key application is in hard-to-electrify sectors, the slow-down in uptake is worrying from the perspective of Paris Agreement ambitions,” the report warns.