Europe leads hydrogen race, with UK and US scrambling to catch up
Europe will be the runaway leader for green hydrogen projects over the next five years, with the UK and US still playing catch-up, new research from Pillsbury suggests.
The international law firm’s latest report, exclusively shared with Morning Wire, suggests the UK will struggle to gain ground on the continent.
Meanwhile the vast subsidies on offer in the US’s Inflation Reduction Act (IRA) will stimulate production of new projects but the report suggests the US will still take some time to catch up with Europe’s established advantage.
Europe, not including the UK, will be home to 53 of the 108 upcoming new green and low carbon hydrogen projects between 2023 and 2028, Pillsbury estimates, equating to 48GW of power.
Some 10 are expected in the US, one fewer than in the UK (11), while Australia (14) will experience a boom in development ahead of any other single country.
Since 2021, when Pillsbury first published its hydrogen map, the number of tracked production projects at any stage of development has increased by almost 50 per cent.
As it stands, there are 94 operational zero and low-carbon hydrogen production projects across the globe already producing hydrogen, meaning capacity will more than double by 2028.
Globally, 326 clean hydrogen production projects have been announced and are at various stages of development.
In terms of GW electricity produced from hydrogen energy in the next five years, Australia is front of the pack with almost 28GW due to come online by 2028.
The Netherlands comes in second with nearly 7GW; Ireland nearly 4GW; and China and Spain joint fourth with 2GW each.
Germany is already home to 25 of the current operational projects, with the UK tied with the US and Japan at seven each.
The figures are a setback to US aspirations to compete with Europe in green hydrogen production – with a collective offering of $370bn (£305bn) for renewable projects in the US’s IRA passed last year.
Elina Teplinsky, Pillsbury’s global energy industry leader, said: “The EU was the first to roll out measures to support the development of hydrogen, so we’re ultimately seeing the market reap what it sowed.”
However, she believed the numbers still reflected “strong recent growth” and pointed to the $7bn hydrogen hubs programme as an indicator of its ambitions, with seven hydrogen projects announced earlier this month.
“At present, North America and the UK are certainly playing catch-up to Europe, given Europe had started well ahead of the pack with policies supporting the creation of a hydrogen economy. Thoughtful implementation of existing hydrogen incentives, however, could see the gap closed quickly,” she explained.
The UK is also under pressure, with the country targeting 10GW of green and blue hydrogen generation by the end of the decade, but failing to stimulate comparable activity to Europe.
While the UK announced in March that 15 applicants would share £37.9m under the UK’s first hydrogen funding support, Germany has confirmed it would spend over $20bn to develop its hydrogen industry between 2024 to 2027 – with over $4bn allocated for next year alone.
Gavin Watson, partner in Pillsbury’s London office, said: “Unless things change, which doesn’t look likely in the immediate term given the divided political landscape, the UK will continue dropping down the pecking order, and possibly quite quickly.”
“It’s two years since the UK unveiled its hydrogen strategy, but we still lack a coherent regulatory framework to give the sector much needed certainty.”
A Department for Energy Security and Net Zero spokesperson said: “The UK is a global leader in low carbon hydrogen backed by international investors, with 20GW of potential projects in the pipeline.
“Our consultation showed industry strongly support our model as it gives investors long term certainty to scale up the deployment of hydrogen production while delivering value for money for the taxpayer.
“Since 2010, we’ve made nearly £200bn available in a range of low carbon technologies which has seen over 40 per cent of our power come from renewables – twice as much as the US.”