In terms of global climate challenges, the United States has led the world by financing the largest mobilization of capital in the energy sector in history. Out of this, $75 billion has been earmarked for clean hydrogen projects, a clear indication that the country means business in sustainable energy and a new way of life that seeks to address climate change.
This staggering financial investment, identified by the Hydrogen Council in September 2024, is expected to boost the global energy transition. However, there are still some issues concerning the further increase in the share of non-sustainable energy sources to achieve the challenging climate goals of the upcoming decades.
A sevenfold increase in hydrogen projects in just four years
Hydrogen is becoming an essential weapon against climate change in transport, industries, and the power sector. The hydrogen project pipeline has increased sevenfold over the past four years, from 228 projects in 2020 to 1,572 in 2024.
This growth is due to capex heavyweights, $75 billion of which has been sanctioned for assets that have made FID. This funding increase is crucial, especially when moving from the planning phase to the execution phase, as the industry now looks to hydrogen as a key driver of the global economy’s decarbonization process.
While the commitment to $75 billion in funding is a good sign, it has its issues. Hydrogen deployment is rising, but the rate must significantly increase to address global climate targets. Inflation and interest rates have increased, and the geopolitical climate has challenged the energy environment.
However, the problems associated with particular industry segments, including regulatory risks and increasing costs of renewable electricity and electrolyzers, have slowed down many hydrogen projects, especially those based on renewables. These are challenges that the energy industry needs to overcome to enable hydrogen projects to achieve their intended goals of supporting global emission reduction goals.
New investments signal a shift from hydrogen plans to implementation
The information available today speaks about the shift to the development of more mature stages of hydrogen projects. Investment in projects that have reached the post-FID phase has increased by 90% from October 2023 to May 2024, which indicates an industry beyond conceptualization.
This change is essential because the deployment of hydrogen is now necessary to unlock its full potential. According to the Hydrogen Council’s report, total investment in hydrogen by 2030 has risen by 20% from $570bn to $680bn. However, these investments have to expand faster to address the short-term and far-reaching climate targets outlined by governments worldwide. Critical global emission reduction milestones could face significant delays without this accelerated expansion.
How governments and industries are uniting for hydrogen success
This has made the governments and industries come together to develop the hydrogen industry as a significant sector. For instance, the U.S. has played an aggressive role in ensuring the development of a political framework or policies that support investment growth.
Hyundai Motor Co.’s CEO and co-chair of the Hydrogen Council, Jaehoon Chang, also stressed that a key to hydrogen’s success is maintaining the low cost and making hydrogen as readily available as gasoline. By having better policies, the right incentives, and more precise investment signals, hydrogen projects can find the traction to change the world.
However, the drive towards hydrogen speaks of the possibility of clean energy and, most importantly, the centrality of clean energy in the future sustainable world economy.
Thus, it is crucial to retain cooperation, advance the development of necessary technologies, and invest in the hydrogen infrastructure to overcome the challenges to the greener future that the U.S. leadership in mobilizing $75 billion for hydrogen demonstrates. Hydrogen, if well harnessed with the proper support, can fuel industries, economies, and nations towards a carbon-free future.
