While Elon Musk and other naysayers have condemned hydrogen, the energy is expected to see a breakthrough over the new decade: a 50 percent cost reduction — making it highly competitive with traditional fuel and low-carbon alternatives.
That comes from a new study by Hydrogen Council and McKinsey & Co., Path to Hydrogen Competitiveness: A Cost Perspective. The report outlines three core market drivers: a steep drop in production costs, higher load utilization cutting distribution and refueling costs, and additional cost drops from scaling up of end-use equipment manufacturing.
The study looked at 25,000 data points gathered and analyzed from 30 global companies with cost reductions expected across several different hydrogen applications. These sectors include long-distance and heavy-duty transportation, industrial heating, heavy industry feedstock, and others, which make up about 15 percent of global energy consumption.
Writers of the study see the need for supportive government policies to be adopted in key geographies, along with investment support of around $70 billion in the lead up to 2030 in order to scale up and produce for a much more cost-competitive fuel. The study makes the argument that while it’s a sizable spend, it would account for less than 5 percent of annual global spending on energy. Another comparison was offered. Last year, Germany invested about $30 billion to support renewable energy.