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The Great Hydrogen Debate: 2021 Predictions For The Hydrogen Economy

Yuan-Sheng Yu, Arnold Bos, Runeel Daliah, Christopher Robinson, & Arij van Berkel, Ph.D.
January 27, 2021

This blog is the final blog of The Great Hydrogen Debate, a five-part series to better understand what a hydrogen economy would look like, and the effort required to achieve it. Read our first blog, "The Great Hydrogen Debate: Key questions about the hydrogen economy," our second, "The Great Hydrogen Debate: Will Hydrogen Become The Bulk Energy Carrier Of The Future?" our third, "The Great Hydrogen Debate: How Will Hydrogen Be Transported In A New Global Energy Trade?" and our fourth "The Great Hydrogen Debate: What Industry Will Be The Driver For A Widespread Hydrogen Economy?"

Over the past four weeks, the Lux Research team shared summaries of internal debates on the future of the hydrogen economy. With questions outnumbering answers, we presented our opinions and takes to better understand what a hydrogen economy would look like, and the effort required to achieve it. As a gentle reminder, our goal was not to provide definitive answers but to present key lines of reasoning, highlight tension points, and outline potential scenarios. Below are three highlights:

Will hydrogen become the bulk energy carrier of the future?

"The industrial revolution started with the availability of affordable and powerful steam engines. Ever since, steam has been the lifeblood of the industrial sector, serving as the main carrier for heating in industry, though it is still unclear what technology will provide the carbon-free version in the future. Figuring out how to utilize hydrogen for heat and steam may be the key that unlocks the hydrogen economy."

How will hydrogen be transported in a new global energy trade?

"The scale required for any future hydrogen carrier to match that of the current oil and gas trade is not insignificant. Multiple technologies will emerge, and we are unlikely to see a single commodity energy carrier like we have today. Therefore, any technology pathway being pursued has an opportunity to carve out its own share in a multitrillion-dollar market – and the winning technology may come down to just who can scale the fastest, not who is cheaper or better."

What industry will be the driver for a widespread hydrogen economy?

"There is no clear answer to how the hydrogen economy will emerge, but a true hydrogen economy will be a green hydrogen economy – first, on-site generation and self-consumption, but eventually leading widespread adoption in transportation and power generation. What came first, the chicken or the egg? The group seems to agree that the egg must come first."

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To close out The Great Hydrogen Debate, the team got together one last time to share their 2021 predictions for the hydrogen economy – some safe ones, some bold ones, and even some very opinionated and specific ones, in typical Lux Take fashion. Below are our 10 predictions, in no particular order.

  1. South America emerges as a key hot spot for the hydrogen economy. Discussion on the hydrogen economy has been largely dominated by Japan, South Korea, and Europe. However, South America stands to gain a lot from the hydrogen economy due to its high abundance of cheap renewable energy and key mineral resources. With Chile's announced plans to produce the world's cheapest green hydrogen by 2030, we expect several other nations in the region to step up their efforts and solidify South America as a key player in the hydrogen economy.

  2. The EU Commission rolls out a green hydrogen incentives framework. Europe took the lead on the hydrogen economy with Germany's groundbreaking national hydrogen strategy. This leadership position will continue into 2021 as the EU unveils a regulatory framework to incentivize the use of green hydrogen in industrial processes and other applications as well. This will come as no surprise to the industry, as the EU increased its decarbonization target to a world-leading 55% by 2030.

  3. The U.S. unveils a natural gas-hydrogen transition plan. Not to be mistaken as a national hydrogen strategy, the U.S. will announce a transition plan to mitigate the risk of stranded assets for the more than $500 billion worth of natural gas pipeline projects under construction. With the National Renewable Energy Laboratory (NREL) leading efforts, the HyBlend project will get the green light in 2021 to move from research and development to infrastructure transition by 2030.

  4. Governments worldwide take more concrete steps to phase out ICE vehicles. The partial or complete ban on internal combustion engine vehicles will grow in 2021 – adding to a list of countries that currently includes the U.K., France, and Norway, among many others. While the move will benefit battery electric vehicles the most in the near term, it will reignite interest in fuel cell vehicles, especially for heavy-duty trucks and smaller form factor vehicles.

  5. China announces projects to triple global electrolysis capacity by 2025. China's ability to scale technologies is no secret – from solar and wind deployments to Li-ion battery installations, the country has single-handedly moved the needle on new energy technologies. With growing interest in green hydrogen, China will announce 5 GW of electrolyzer capacity to be constructed before 2025, relying heavily on its domestically developed alkaline electrolyzer technology.

  6. Hydrogen cities begin to emerge across the globe. While these "cities" will likely remain fairly small and serve mostly as pilot trials, we will see a handful of them pop up throughout the world, especially in Japan, South Korea, and Europe. South Korea is already ahead of the game, announcing its plan to create a hydrogen city by 2022 where hydrogen is the primary fuel for cooling, heating, electricity, and transportation. As companies, cities, and countries continue to try and outdo each other in all things hydrogen, new hydrogen cities are inevitable.

  7. Construction of the first hydrogen fueling station along a highway will begin. To date, most hydrogen refueling infrastructure has been build in cities due to high population densities or is private for fleet operators. As interest in fuel cell vehicles shifts to heavy-duty applications, such as long-haul trucking, new hydrogen fueling stations will also shift toward highway corridors.

  8. Overzealous venture capitalists will spur investments in hydrogen-related startups. While venture capitalists have found little success in backing energy startups in the past, the recent rise in share prices for hydrogen startups will likely lead to growing investor interest. Bloom Energy, Plug Power, and FuelCell Energy have seen their share prices increase nearly fivefold in 2020, and we expect venture capitalists to aggressively look for the next big unicorn but likely end up with another Nikola Motor.

  9. Nel or ITM Power will be acquired. In 2019, Cummins acquired Hydrogenics, a leading fuel cell and hydrogen production technology provider. This will unlikely be the last such acquisition, as Nel and ITM Power will likely entertain a series of offers in 2021, with one company unable to turn down a deal. Potential buyers could potentially come from a variety of industries as the growing gap between interest in hydrogen and in-house expertise continues to widen, though a likely sector to make such a move in 2021 will be industrial gas.

  10. General Motors will announce its first (meaningful) supply deal in fuel cells. GM has made it clear that the usage of fuel cells in passenger vehicles is not on its near-term roadmap. However, the company is willing to operate as a component supplier to other companies, such as Nikola, as it continues to develop and plan manufacturing capacity for fuel cells. One promising customer could come in the form of the U.S. military, which values the low temperature and noise of a fuel cell powertrain, in a deal that would include on-site green hydrogen production.

Which prediction seems most likely – or unlikely – to you? Tell us your feedback through our contact us form and let us know.

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