The document discusses the evolving hydrogen market, emphasizing its potential role in the energy transition, particularly in hard-to-decarbonize sectors. It outlines various hydrogen types, including grey, blue, and green hydrogen, and highlights investment trends focusing on green hydrogen projects, while noting the technological and regulatory challenges that affect development timelines and costs. Regional differences in energy infrastructure and political acceptance are identified as key factors shaping hydrogen adoption strategies.

1. Page: 1 | Hydrogen Market Outlook Private and Confidential
LONDON ABERDEEN NEWYORK HOUSTON SYDNEY
Hydrogen Market Outlook
January 2022
Executive Insights Report

2. Page: 2 | Hydrogen Market Outlook Private and Confidential
As a clean burning fuel, Hydrogen is expected to play an important role in the energy transition, particularly for hard to
abate sectors; however, it should only be deployed where appropriate, and the potential electricity requirement for green
hydrogen should also be considered
Introduction
• Hydrogen has a range of potential applications, many of them in sectors
that are considered hard to decarbonize; as a result, the sector is seen as
an important part of the energy transition, and receiving increasing
investment
• Grey and brown hydrogen are the most common form of hydrogen today,
and are key inputs into petrochemicals and other industrial process; Energy
transition scenarios forecast a role for low carbon hydrogen, with green
and blue hydrogen the most discussed today, while purple and turquoise
variants could also be key to commercial, low emission hydrogen
• At present, investment in hydrogen is focused on pilot projects and
technology development, with at scale green hydrogen generation not
expected until the 2030s; Potential cost reduction mechanisms in hydrogen
production exist by repurposing oil and gas assets - simultaneously
contributing to the phase-out of oil and gas.
• Grey hydrogen will dominate to 2030 regardless; regional variations will be
driven by differing energy infrastructure and political and regulatory
approaches, highlighted in two illustrative scenarios – in reality, we will
need a mix of both scenarios to meet the challenge
• Identified projects suggest that the green scenario will proliferate at least
initially; green hydrogen projects are more politically palatable, particularly
in Europe, while blue hydrogen requires the commercialisation of CCUS
technology
• Forecasts suggest blue hydrogen could be more cost effective than green
hydrogen; however, both are dependent on the costs of inputs, and falling
costs of renewable electricity combined with increasing gas prices as
hydrocarbons are phased out could change this dynamic
• Fear of regulatory lockout has focused investment on green hydrogen, and
as further technological developments are required for the
commercialisation of blue hydrogen, the local resource base is also driving
the choice between green and blue hydrogen
• H2 produced from electrolysis is only Green if produced from renewable
energy, and if produced from Coal or Natural Gas power, emissions will be
higher; the potential supply of renewable energy may not be able to cover
the increased demand from green hydrogen in the mid-term, alternative
technologies should be considered
• There are opportunity costs to the role out of green hydrogen where the
required renewable energy could be used to meet existing power demand,
and could lead to the continued reliance on unabated coal and gas power;
alternative technologies such as pyrolysis-based turquoise hydrogen could
present attractive alternatives
• Before hydrogen is applied to new applications, low emission hydrogen
needs to displace existing grey hydrogen, with additional uses in those
sectors where emission abatement has limited alternatives; Using
hydrogen is inappropriate where the involved energy conversion losses
favour proven direct electrification, e.g. battery-powered cars and light-
duty vehicles

3. Page: 3 | Hydrogen Market Outlook Private and Confidential
Hydrogen has a range of potential applications, many of them in sectors that are considered hard to decarbonize; as a
result, the sector is seen as an important part of the energy transition, and receiving increasing investment
Introduction
Transport
Power Generation
Chemicals
Products
Buildings
Industry
HEAT
FUEL
FEEDSTOCK
▪ Metallurgy
▪ Steel
▪ Food
▪ Glass
▪ Fuel refining
▪ Fertilisers
▪ Plastics
▪ Peaking power plants
▪ Electricity storage
▪ Vehicles
▪ Ships
▪ Planes
▪ Trains
▪ Residential
▪ Commercial
▪ Steel
▪ Aluminium
▪ Cement
▪ Paper
▪ Food

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Hydrogen Variety
Energy Source Coal or Lignite Natural Gas Natural Gas or Coal
Any Renewable
Electricity Source
Nuclear Energy Methane
Technology Status Mature Early-Stage Technologies
Prototype and
Demonstration
Process Gasification
Steam Methane
Reformation
Steam Methane
Reformation with
Carbon Capture and
Storage
Electrolysis of Water Electrolysis of Water Pyrolysis
kg of CO2 per kg of
H2
>12.0 9.0 – 12.0 0.0 – 0.6 0.0 – 0.6 1.0 – 4.0 0.0 – 0.6
2022-2026 Number
of Projects
- 6 18
Pecém Port Green
Hydrogen Plant
6 2
2022-2026 Project
Value (Million USD)
- $1,600 $12,000 $97,000 $107 $110
Example Project -
Greifswald
Hydrogen Plant
Wabash Valley Blue
H2 and Ammonia
Project
185
Hydrogen to
Heysham (H2H)
Project
Claremont Waste-
to-Hydrogen Facility
Grey and brown hydrogen are the most common form of hydrogen today (often produced as a by-product of other
processes), yet energy transition scenarios forecast a role for low carbon hydrogen with future global projects heavily
leaning toward green hydrogen - or alternatively, cheaper, low emission pink and turquoise variants could be key
Types of Hydrogen Production
Brown Grey Green Purple
Blue Turquoise

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At present, investment in hydrogen is focused on pilot projects and technology development, with at scale green hydrogen
generation not expected until the 2030s; Potential cost reduction mechanisms in hydrogen production exist by repurposing
oil and gas assets - simultaneously contributing to the phase-out of oil and gas.
Hydrogen is expected to account for 5% to 10% of global energy by 2050
EJ, 2015-2050
Hydrogen Production is not expected to increase at scale
until the 2030s
Source: BP 2021
0
50
100
150
200
250
300
350
400
2015 2018 2025 2030 2035 2040 2045 2050
EJ
Oil and Gas Coal Hydrogen

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Grey hydrogen will dominate to 2030 regardless; regional variations will be driven by differing energy
infrastructure and political and regulatory approaches, highlighted in two illustrative scenarios – in reality, we
will need a mix of both scenarios to meet the challenge
How might this play out in different growth path scenarios?
0
10
20
30
40
50
60
70
80
90
100
2015 2020 2025 2030
MT/y
Blue Hydrogen Scenario
Source: IEA 2020, FCH 2019, Calash 2021
GLOBAL HYDROGEN PRODUCTION FORECAST, BLUE HYDROGEN DOMINANT
• Steam methane reforming/autothermal reforming is the most efficient hydrogen
production method.
• CCUS feasible and politically accepted, sufficient CO2 is required to be produced.
• Electrolysis mainly for regional production (e.g. refuelling stations in residential
hours) and powered directly from renewables.
• Regions with existing oil and gas infrastructure likely take blue hydrogen dominant
route.
0
10
20
30
40
50
60
70
80
90
100
2015 2020 2025 2030
MT/y
Grey Hydrogen Byproducts Blue Hydrogen Green Hydrogen
Green Hydrogen Scenario
• Significant drop in cost of electrolysis and cost of renewable electricity.
• Sufficient renewable capacity to power electrolysers.
• There are benefits from regional production and providing services to the grid.
• Little political acceptance of CCUS.
• Regions with limited oil and gas infrastructure likely to take a more green hydrogen
dominated route.
GLOBAL HYDROGEN PRODUCTION FORECAST, GREEN HYDROGEN DOMINANT

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Identified projects suggest that the green scenario will proliferate at least initially; green hydrogen projects are
more politically palatable, particularly in Europe, while blue hydrogen requires the commercialisation of CCUS
technology
Investment is underway, with a focus on green hydrogen outside of North America
HYDROGEN PRODUCTION CAPEX BY PROJECT TYPE AND STATUS 2022 -2027
Europe and South America Lead Hydrogen investment,
with investment driven by green hydrogen
0
10
20
30
40
50
60
South
America
Europe North
America
Australasia Middle
East
Africa Asia
Billion
USD
Blue Green Grey Other Under Development Future
South America has the largest volume of
potential projects, including Magallanes
Green Hydrogen Project ($10bn, Chile)
and Sierra Grande ($8.4bn, Argentina).
Source: EIC 2021
HYDROGEN PRODUCTION CAPEX BY PROJECT TYPE AND STATUS 2028 -2027
$0
$10
$20
$30
$40
$50
$60
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Billion
USD
Investment is expected to accelerate from 2022
The Hydrogen Council estimates that scaling up the
hydrogen economy will take investments of $20
billion-$25 billion each year through 2030.
The Middle East has the largest
volume of projects that have
advanced to active development.

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Forecasts suggest blue hydrogen could be more cost effective than green hydrogen; however, both are dependent on the
costs of inputs, and falling costs of renewable electricity combined with increasing gas prices as hydrocarbons are phased
out could change this dynamic
Today blue hydrogen is estimated to have a lower cost than green
PEM Grid electricity
PEM Dedicated Offshore
PEM Excess Electricty
SMR CCUS 300MW
Biomass gasification CCUS
Biomass gasification CCUS (Net Carbon Price)
-$50
$0
$50
$100
$150
$200
$250
2020 2025 2030 2035 2040 2045 2050
$/MWh
H2
COMPARISON OF LCOH ESTIMATES ACROSS DIFFERENT TECHNOLOGY TYPES AT
CENTRAL FUEL PRICES COMMISSIONING FROM 2020 TO 2050, $/MWH H2
Green Hydrogen is only cost competitive with blue when it uses excess electricity that would otherwise be wasted; However,
both forecasts rely on costs of inputs, which could be highly vitiable, as seen in 2020-2021
Source: BEIS 2021

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Fear of regulatory lockout has focused investment on green hydrogen, and as further technological developments are
required for the commercialisation of blue hydrogen, the local resource base is also driving the choice between green and
blue hydrogen
If Blue Hydrogen has a lower cost, why is investment currently focused on Green Hydrogen?
The $40bn
Mauritanian
green hydrogen
project by CWP
aims to export
to Europe and
North America.
Regulatory uncertainty
is deterring investors
away from blue and
toward green hydrogen.
Japan is highly focused on
securing access to hydrogen
feedstocks, both through
domestic production and
imports.
With large scale gas
resources and CCS
incentivised through
tax credit schemes in
North America,
developments are
accelerating in the
blue hydrogen space.
Despite large coal bed
methane resources,
investment is focused on
green hydrogen capacity with
high wind and solar potential.
Hydrogen is seen as a route to
diversify economy away from oil and
gas; current investment focused on
green hydrogen, but likely to see
blue hydrogen development.
= Blue hydrogen
= Green hydrogen
How certain markets positioning themselves
Many regional governments
are taking decisive steps to
ensure green hydrogen drives
future export revenues.
Momentum is fuelled by
major private sector initiatives
such as Chile’s H2Chile and
Argentina’s H2ar consortium.
Market Focus

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-300
-200
-100
0
100
200
300
400
500
600
Fossil based
SMR
Natural gas
SMR
Fossil based
SMR + CCS
Coal
gasification +
CCS
Grid intensity
100g CO2/kWh
electrolysis
Natural gas
SMR + CCS
100%
renewable
energy
electrolysis
Methane
pyrolysis with
renewable heat
source
Waste
gasification +
CCS
Biomethane
ATR + CCS
Wood
gasification +
CCS
gCO2
per
kWh
Other
Green
Blue
Grey
H2 Produced from electrolysis is only Green if produced from renewable energy; If produced from Coal or Natural Gas the
emissions will be higher, while the potential supply of renewable energy may not be able to cover the increased demand
from green hydrogen in the mid-term, alternative technologies should be considered
The Carbon Emission Intensity of H2 is Variable…
ESTIMATED LIFECYCLE EMISSION INTENSITY FOR H₂ PRODUCTION
IN GCO2 PER KWH
Source: Agora Energiewende 2021, UK Parliament 2020, Journal of Sustainable
Development 2021, CCC 2018, Energy for Humanity 2021, CarboniItensity 2021
CO2 emissions vary by production method
The UK’s average grid carbon intensity in the first
20 days of 2022 was 175gCO2/kWh, while July
2021 saw a grid intensity of 210gCO2/kWh
Pyrolysis can be inherently carbon
negative as CO2 is captured in a char
rather than being released as a gas.

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There are opportunity costs to the role out of green hydrogen where the required renewable energy could be used to meet
existing power demand, and could lead to the continued reliance on unabated coal and gas power; alternative technologies
such as pyrolysis-based turquoise hydrogen could present attractive alternatives
Green Hydrogen Requires Electricity
ESTIMATED ELECTRICITY REQUIRMENT BY H₂ PRODUCTION ROUTE IN kWh
PER GRAM H₂
Electricity Requirements are an important consideration when
considering the global role out of hydrogen
0
10
20
30
40
50
60
70
Electrolysis Pyrolysis SMR
kWh
per
kg
of
H
2
-82% lower electricity
requirement for Pyrolysis
Source: Mines Paristech 2021
While Pyrolysis Technologies
are currently in Prototype and
Demonstration stage, they
have the scope to significantly
reduce electricity
requirements.
While blue hydrogen requires
limited electricity, it does
require the development of at
scale CCS
To produce all of 2020 H2 from
electrolysis would require 62% of total
global renewable power generation

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Before hydrogen is applied to new applications, low emission hydrogen needs to displace existing grey hydrogen, with
additional uses in those sectors where emission abatement has limited alternatives; Using hydrogen is inappropriate where
the involved energy conversion losses favour proven direct electrification, e.g. battery-powered cars and light-duty vehicles
Hydrogen Should be Deployed in Hard to Abate Sectors
Industry Transport Power Buildings
Easy Wins
Hard to abate sectors with
Limited alternatives
• Reaction Agents (DRI
steel, Cement)
• Feedstock (Ammonia,
Chemicals)
• Long Haul Aviation
• Maritime Shipping
• Long term storage for
variable renewable
energy backup
• Grid balance for
intermittent
renewables
• District heating
Challenging
Sectors that require
hydrogen over the long run,
but the extent of this need
is unclear today
• High Temperature Heat • Short Haul aviation and
shipping
• Heavy duty Trucks
Inappropriate
Sectors with lower cost and
mature low carbon
alternatives
• Low Temperature Heat • Passenger vehicles
• Light duty vehicles
• Heating Individual
buildings
Source: Agora Energiewende 2021, Calash 2021

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