2020 is a booming decade for hydrogen energy.

With the expansion of hydrogen energy manufacturers, the increase of corporate activities and clear policy support, people are optimistic about the growth prospects of hydrogen energy.
More than 50GW of green hydrogen electrolysis projects lay the foundation for the transition from early green hydrogen to full industrialization.
Full industrialization is a question of "when" rather than a question of "if".

With the expansion of hydrogen energy manufacturers, the increase of corporate activities and clear policy support, people are generally optimistic about the growth prospects of hydrogen energy. More than 50GW of green hydrogen electrolysis projects laid the foundation for the transition from early green hydrogen to full industrialization. The "chicken and egg" question surrounding the construction of hydrogen energy infrastructure and the supply of hydrogen seems to have finally been answered. Full industrialization is no longer a question of "if" but a question of "when". HSBC recently released a report to in-depth study the supply and demand trends of the booming hydrogen industry. The report pointed out that 2020 is a decade of prosperity for hydrogen energy. By 2030, HSBC estimates that the total installed electrolyzer capacity will be 126GW, supplying 15 million tons of green hydrogen (to achieve a 22% increase in global pure hydrogen demand in 2018). The demand for green hydrogen comes from many sources. In the energy transition, hydrogen energy can achieve large-scale renewable energy system integration and power generation, achieve cross-type and cross-regional energy distribution, provide buffers for renewable energy systems, help decarbonize transportation, and help Decarbonize industrial energy, help decarbonize building heating and power supply, and serve as raw materials for renewable energy. Hydrogen is the Swiss army knife of energy solutions Hydrogen energy plays a key role in the global transition to a low-carbon economy. The versatility of hydrogen energy and its decarbonization potential make it widely used in transportation, construction and heavy industry. The Hydrogen Council, a global alliance of CEOs dedicated to accelerating the transformation of hydrogen energy, pointed out that hydrogen energy is a "Swiss army knife of energy solutions." Like natural gas, it can be stored and transported, and can be easily converted into electricity, heat, or other products. In many end markets, the decarbonization potential of hydrogen energy can only be realized if its production does not contain carbon. Today, approximately 98% of the world’s pure hydrogen is produced through carbon-intensive methods (ie, “gray” hydrogen) using natural gas or coal as raw materials. The remaining 2% is produced by electrolysis (the chemical reaction that splits water into hydrogen and oxygen), and only this small part is driven by renewable energy (ie zero carbon or "green" hydrogen). The production cost of green hydrogen is 3-4 times that of traditional carbon-intensive methods, which is equivalent to an electricity bill of US$15-30/MWh. Green hydrogen electrolysis projects have surged in the past 12 months and currently exceed 60GW. This gives people more confidence that by expanding the scale of the system, the manufacturing cost will be reduced by about 50% compared to the current level, in order to bridge the cost gap with "gray" hydrogen. Green Hydrogen is a solution for the "decarbonization" of natural gas. Compared with other decarbonization solutions, hydrogen has three advantages: 1. Compatible with existing facilities. Hydrogen can be mixed into the existing power grid, so households do not need to upgrade home appliances. 2. Use existing infrastructure to avoid potential asset waste. 3. Compared with decentralized renewable energy systems, centralized energy based on hydrogen energy can also achieve decarbonization in natural gas networks. Injecting hydrogen into the existing natural gas distribution infrastructure can reduce the overall carbon footprint by 15%. However, the switch to pure gaseous hydrogen requires substantial investment in new infrastructure and policy support to stimulate investment. Application of hydrogen energy in transportation Hydrogen energy provides another electrification technology route for transportation, or becomes a direct competitor of pure electric vehicle (BEV) technology. Hydrogen fuel cell vehicles (FCEV) use fuel cells and on-board compressed hydrogen tanks to provide the energy required for driving. At present, the main fuel type is hydrogen. BEV is the first choice in the passenger car field, 86% FCEV is passenger car In the passenger car field, most traditional equipment manufacturers firmly support BEV, establish new electric vehicle production lines, invest in battery production capacity or sign strategic battery supply agreements. For most automakers, hydrogen energy is a long-term strategy. Although Mercedes-Benz has recently started leasing a small number of plug-in hybrid vehicles with fuel cells, only Toyota, Hyundai and Honda are the main suppliers of FCEVs worldwide. As of 2018, there are 11,200 FCEVs and 5.1 million BEVs in passenger vehicles worldwide. There are 12,952 FCEVs worldwide, of which 86% are passenger cars. By region, the United States accounts for 45% of FCEV passenger vehicles, followed by Japan (23%), China (14%), the European Union (11%, mainly in Germany and France) and South Korea (7%). The rise of FCEV in the heavy transportation field In the field of heavy delivery, the high energy density of hydrogen makes it particularly suitable for trucks, trains and ships that need to transport heavy objects over long distances. Hydrogen buses and trucks are becoming more and more popular in Japan, South Korea and China. As of 2019, there are more than 400 hydrogen-powered buses and buses operating outside of China, while there are more than 2,000 in China. China currently has about 3,900 FCEVs, of which more than 95% of hydrogen vehicles are buses and trucks. Daimler and Volvo announced in April the establishment of a 1.2 billion euro joint venture to develop and produce fuel cell systems for trucks, buses and coaches. This marks the recognition of the commercialization of hydrogen for heavy commercial vehicles. The hydrogen power transmission system solves the weight, cost and expense issues. Electric truck disruptor Nikola said that BEV technology is suitable for short-distance trucks that can travel 250-300 miles per charge, and FCEV is suitable for long-distance trucks that travel more than 350 miles. The high energy density of hydrogen makes FCEV technology more attractive than batteries for long-distance transportation. Hydrogen energy has a bright future in the field of heavy transportation. BEV or FCEV, no longer a multiple choice question Although some manufacturers are seeking BEV solutions in all transportation fields, while others are developing FCEV solutions for small vehicles, as the differences in electrification technology in different end markets are increasing, in the long run, hydrogen energy And the battery is no longer a competitor, more of a supplementary way to electrify the transportation industry. The main difference between BEV and FCEV is that BEV "refuels" by charging, while FCEV "refuels" at the pump in a manner similar to internal combustion engine vehicles. Compared with BEV, FCEV has a shorter "refueling" time and longer driving range, which makes it suitable for long-distance and heavier vehicle markets. However, the relatively low "all-wheel drive" efficiency may be detrimental to the penetration rate of FCEV in the passenger car market. The lack of hydrogenation infrastructure is still the main constraint to the promotion of FCEV. As of 2018, there are 380 hydrogen refueling stations in operation worldwide. Japan (100, 26%) leads, followed by Germany (68, 18%) and the United States (63, 16%). These countries have announced the goal of establishing more than 6000 hydrogen refueling stations between 2025 and 2030. By 2030, Europe has the potential of 3,700 hydrogen refueling stations, and hydrogen fuel infrastructure investment will reach 8 billion euros. HSBC predicts that by 2030, 5-10 million FCEVs will be sold globally, accounting for only 1% (>900 million) of global new car sales. Hydrogen fuel cell vehicles are still a niche market in 2030, and are expected to become mainstream after 2030. The status quo of Green Hydrogen-at 10MW scale and still rising The world's largest green hydrogen project Fukushima Hydrogen Research Field (FH2R) was launched in Japan in March 2020. It uses 20MW solar panels and 10MW electrolytic cells to produce hydrogen, aiming at low-cost green hydrogen production. Many similar or even larger projects are under construction. Several GW-scale projects are in different planning stages, most of which are in Europe. The world’s announced green hydrogen electrolysis projects have reached 51GW and are increasing, with Europe (25935MW) leading, followed by Asia Pacific/Middle East (22625MW), and the Americas (2930MW). The rapid increase in the backlog of projects provides greater possibilities for the launch of global hydrogen production plants in the next ten years, especially after 2025, the pace of development accelerates. Siemens Energy, a leading supplier of electrolyzers, said that as this business reaches industrial scale, today's investment will pay off in 2025. HSBC believes that the current green hydrogen production project will continue to expand in the next 1-3 years, and it is predicted that the global electrolyzer scale will reach 126GW by 2030.

Renewable energy hydrogen production technology is in the pilot stage. In December 2020, Siemens Gamesa Renewable Energy announced the world's first wind power hydrogen production pilot project operating in the "island mode". The project uses a dedicated 3MW turbine to power a 400kW electrolyzer for local hydrogen fueled taxis to "refuel". For Siemens Gamesa, the project marks a strategic step for the company to provide large-scale green hydrogen from 2020. Policy Support In the process of industrialization of hydrogen energy, the government plays a very crucial role. There are already vigorous policies to promote hydrogen energy in Asian markets such as Japan and South Korea. The momentum of green hydrogen is rising, especially in the European Union. The European Union regards hydrogen energy as the main driving force of the economic recovery after COVID-19, and formally adopted the "EU Hydrogen Energy Strategy" on July 8, 2020, which includes phased targets for 2024 and 2030. Since then, many member states have adopted national hydrogen energy strategies to develop hydrogen in their respective economies and promote the further refinement of EU goals. Hydrogen energy has also developed rapidly in the Americas. In November 2020, Chile announced the long-awaited national green hydrogen strategy, becoming a leader in the field of green hydrogen energy in Latin America. In December, Canada also launched a hydrogen energy strategy. Although the United States does not have a national goal for 2030, HSBC expects that the green energy strategy advocated by President Biden will promote the introduction of policies related to green hydrogen energy and fuel cell technology.

HSBC Report: Hydrogen Energy in the 2020's