As many as 62% of heavy industry companies across sectors are looking at low-carbon hydrogen to replace carbon-intensive systems, says a new report from the Capgemini Research Institute.
The report, “Low-Carbon Hydrogen - A Path to a Greener Future,“ also found that on average, Energy and Utilities (E&U) companies expect low-carbon hydrogen to meet 18% of total energy consumption by 2050.
The global survey was conducted across 13 countries and responses were collected from 500 executives from E&U firms with more than $500 million in annual revenue, and 360 executives from end-user sectors with more than $1 billion in annual revenue, including heavy transportation, aviation, maritime transport, steel, chemicals and refining. To complement the quantitative insights, the institute also conducted over 21 in-depth interviews with supply- and demand-side organisations, startups, venture capital organisations, academics, researchers, and regulators.
Across industries and geographies, demand for hydrogen has increased by more than 10% in the past three years.; demand from more than half of organisations has grown by more than 10 % in France, India, the U.K. Japan, the US, Germany, and Sweden. Incidentally, India recently came out with a National Green Hydrogen Mission.
The report said this demand is expected to continue to grow particularly in traditional hydrogen applications such as petroleum refining, chemicals and fertilisers, while new applications like heavy-duty transportation, aviation and maritime too are predicted to increase demand for hydrogen.
The report found that most organisations believe low-carbon hydrogen will be a long-term contributor to achieving emissions and sustainability goals: 63% of E&U organisations view low-carbon hydrogen as critical for decarbonising economies, and 62% believe it can help nations reduce dependence on fossil fuels and promote energy independence. Low-carbon hydrogen could meet up to 55% of hydrogen mix totals by 2050.
Production, engineering and infrastructure challenges
However, the report acknowledges that challenges with hydrogen production remain, with current methods being neither cost-effective nor environmentally friendly.
The production of low-carbon hydrogen faces challenges with sourcing low-carbon electricity and high costs of electrolysers. “In addition, most organisations are still at the proof-of-concept or pilot stage with hydrogen. Only 11% of E&U organisations and 7% of end-user organisations have fully embedded low-carbon hydrogen projects in their market. To achieve large-scale commercialisation and deployment of low-carbon hydrogen, critical engineering and infrastructure challenges need to be addressed in addition to cost and energy concerns,” it says.
The report also found that organisations in different sectors face sector-specific pain points: 65% of organisations in heavy transport cited scaling up production of hydrogen fuel cells as their biggest infrastructure and engineering challenge, while in aviation, 58% of respondents cited the need for modification in aircraft design to use low-carbon hydrogen as fuel, and 72% of respondents in the steel industry said that a significant infrastructure upgrade is required for large-scale hydrogen-based steel production.
Apart from cost, infrastructure, and engineering issues, a lack of skills and expertise is also a top challenge to scaling hydrogen, according to 60% of organisations, with the skills shortage particularly pronounced for end-user organisations in Spain (70%) and for E&U organisations in Japan (65%), France and Australia (63% each).
Florent Andrillon, Group ClimateTech Lead at Capgemini, was quoted as saying: “Low-carbon hydrogen is crucial in the clean energy mix for decarbonizing priority high-emission sectors such as industry and transportation, and thus combating global warming. Scaling the initiatives we see today will require significant investment in R&D, collaboration across the value chain, clear partnership strategies, and tailored business-case assessments.”
