Green hydrogen needs $9trn from investors to hit net zero by 2050

Investors are likely to push the green hydrogen market to surpass the value of the liquid natural gas trade by 2030 and grow it to $1.4 trillion per year by 2050. 

However, over $9 trillion from investors entering the global clean hydrogen supply chain will be needed to help meet the world’s net zero targets by 2050, according to a new report. 

"Decisive climate action" can help make green hydrogen competitive in less than 10 years and has the potential of supporting around 2 million jobs globally per year between 2030 and 2050, Deloitte analysts said.

Green hydrogen, produced by splitting hydrogen atoms from water molecules using electrical currents, is poised to help drive the bulk of the growth, according to the research.

New commitments

The report follows a growing number of new commitments to green hydrogen. 

CPP Investments, Canada's biggest pension fund with and AUM of close to CAD 600 billion, committed C$143 million to a Dutch green hydrogen firm in July this year. 

Similarly, German firm Augustus Global Investments has invested  $500 million to build green hydrogen plants in Indonesia. 

While market growth will be important for industrialised economies, clean hydrogen represents a major sustainable growth opportunity for developing countries, which, with targeted and significant investment, could account for nearly 70% of the $1.4 trillion market in 2050, the firm said.

The research shows that clean hydrogen can deliver up to 85 gigatons in reductions to cumulative CO2 emissions by 2050, more than twice global CO2 emissions in 2021. 

“There is a compelling opportunity for investors to accelerate the transition to green energy," said Simon van Wyk, sustainability & climate spokesperson for Deloitte.

He said inter-regional trade is key to helping unlock the full potential of the clean hydrogen market, supported by diversified transport infrastructure. 

To help scale up a robust and clean hydrogen investments, the report calls for "national and regional strategies to lend credibility to the market, develop a robust and shared certification process for clean hydrogen to help ensure transparency, and coordinate internationally to help mitigate political friction and promote a level playing field."

Moreover, it calls for the establishment of clear targets and markets for clean hydrogen-based products and offer "pointed instruments," such as fiscal incentives and subsidies, to help reduce the cost difference between clean and fossil-based technologies and help businesses integrate clean hydrogen into their value chains

According to the report, major supply chain investment will be needed to help optimise the global value of clean hydrogen.

For Africa to meet the net zero requirements in terms of infrastructure alone, this will entail more than $200 million per annum, or more than $3 trillion by 2050, according to the African Development Bank.

"Clean hydrogen can be a significant contributor to a low carbon economy across Africa for local supply as well as export potential," Deloitte wrote.

"These green infrastructure projects can play a substantial role supporting job creation given Africa’s working-age population is projected to increase to almost 1 billion by 2030," the report concluded.