The future of green hydrogen shifts to further away

Green hydrogen has been touted as a crucial fuel for a carbon-neutral future, but new analysis from BloombergNEF released on December 23 suggests it will remain far more expensive than anticipated for decades to come.

Previously, BloombergNEF had projected significant drops in the price of green hydrogen, which is produced using electrolysers powered by renewable energy to split water into hydrogen. However, in its latest forecast, the firm has raised its cost estimate for 2050 by more than three times, citing higher expected costs for the electrolysers themselves.

The firm now predicts that green hydrogen will decrease from its current price range of $3.74-$11.70/kg to between $1.60/kg and $5.09/kg per by 2050.

In contrast, “gray” hydrogen, the most widely used form today, produced from natural gas with carbon emissions released into the atmosphere, costs between $1.11/kg and $2.35/kg. Prices for gray hydrogen are expected to remain relatively stable through mid-century.

China and India are expected to be the only markets where green hydrogen may reach cost parity by 2040. This forecast challenges US President Joe Biden’s goal of reducing hydrogen costs to $1/kg by 2031 – a target many experts consider essential for the fuel’s widespread adoption.

Sluggish demand has recently seen major energy companies like Equinor, Shell, and Origin Energy cancel hydrogen-related projects.