IEA Cuts 2030 Low-emissions Hydrogen Production Outlook by Nearly a Quarter

PARIS, Sept 12 (Reuters) - A wave of cancellations, cost pressures and policy uncertainty have thinned the low-emissions hydrogen project pipeline and cut 2030 projected development by nearly a quarter, the International Energy Agency said on Friday.

About 37 million metric tons per year of the low-carbon fuel is expected to be produced by 2030, down from 49 million a year earlier as developers shelved or delayed plans, the IEA said in its Global Hydrogen Review.

Actual output is likely to be lower because not all announced projects reach completion, it added.

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However, this means that capacity that is already operating, under construction or at final investment decision is expected to climb more than five-fold from 2024 levels to above 4 million tons per year by 2030, the report said.

Another 6 million tons could be in place by then if governments implement effective demand-creation policies and accelerate infrastructure build-out, the IEA said.

Cost competitiveness remains the central hurdle, as falling natural gas prices have widened the gap in recent months in favour of fossil-based hydrogen, while higher electrolyser prices have weighed on low-carbon projects.

The IEA expects the cost gap to narrow by 2030 as technology costs decline and regions with strong renewables growth and new regulations improve cost structures.

China is the main developer of hydrogen electrolysers, accounting for 65% of global capacity that is installed or at final investment decision and nearly 60% of worldwide electrolyser manufacturing capacity. Low-carbon hydrogen is produced through electrolysis that splits water into hydrogen and oxygen using electricity often derived from renewables.

Manufacturers elsewhere face financial strain due to rising costs and slow uptake, while Chinese firms may also confront future challenges as more than 20 gigawatts a year of existing manufacturing capacity exceeds current demand.

An IEA analysis of installing Chinese-made electrolysers outside China found no significant cost advantage versus other producers once transport costs and tariffs are factored.

Southeast Asia is emerging as a significant hydrogen market, with about 430,000 tons per year of low-emissions hydrogen production by 2030 in announced projects, up from roughly 3,000 tons today.