The Global Hydrogen Review by the IEA reveals a hydrogen sector that is evolving, with clear opportunities for scaling up low-emissions hydrogen. However, it also highlights challenges such as a slowdown in new offtake agreements. The report offers several recommendations for governments to support this transition.
Current Sector Trends
The IEA report notes that the momentum for hydrogen offtake agreements—long-term contracts between a producer and a buyer—slowed in 2024. New deals fell to 1.7 Mtpa, down from 2.4 Mtpa in 2023. Most of the current activity and investment is concentrated in the refining, chemicals, and shipping sectors. While there have been delays in European steel projects, new projects for refining and fertilizers are progressing in Europe and India. In the shipping industry, the rapid adoption of new fuels like methanol is creating an urgent need for expanded bunkering infrastructure.
Strategic Role of Ports
The report emphasizes the critical role of ports in the transition to low-emissions hydrogen. A small number of ports—just 17—handle over 60% of global marine fuel demand, making them ideal locations for concentrating infrastructure upgrades. Many of these ports already have the necessary infrastructure for handling chemical products and are located near refineries and chemical plants, making them natural hubs for the adoption of low-emissions hydrogen.
Policy Recommendations
The IEA has updated its policy recommendations to help governments support the growth of the hydrogen sector:
- Maintain Support Schemes: Governments should continue to provide support for low-emissions hydrogen production, especially for shovel-ready projects 🛠️. These projects have already completed the necessary planning and permits and can quickly move forward to bridge the cost gap between fossil-based and low-emission hydrogen.
- Accelerate Demand Creation: Policies and support schemes are needed to stimulate demand for hydrogen in key sectors, particularly among existing hydrogen users and in industrial hubs. This can help de-risk investment in supply.
- Expedite Infrastructure: It’s essential to remove barriers to deploying hydrogen infrastructure. This includes creating clear regulatory frameworks, offering financial mechanisms, and streamlining permitting processes.
- Enhance Public Support: Governments should strengthen public financing to reduce the technology risk for early-stage projects. Export credit agencies and public finance institutions can offer guarantees for these projects to make them more bankable.
- Support Developing Economies: Advanced economies should partner with developing nations that have the potential for low-cost, low-emissions hydrogen production. This cooperation can help these countries develop new domestic uses (like fertilizer production) and open up export opportunities, boosting their energy security and economic growth.
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Source: Safety4sea
