Hydrogen Power Capacity To See Mere 7% Rise In 4 Years, Says IEA Study

A new report from the International Energy Agency (IEA) has thrown light that renewable power capacity dedicated to hydrogen-based fuel production is forecast to grow by 45 GW between 2023 and 2028, representing only an estimated 7% of announced project capacity for the period.

The report also stated that China, Saudi Arabia, and the United States account for more than 75% of renewable capacity for hydrogen production by 2028. Despite announcements of new projects and pipelines, the progress in planned projects has been slow. The forecasts have been in negative for all regions except China.

The main reason is the slow pace of bringing planned projects to final investment decisions due to a lack of off-takers and the impact of higher prices on production costs. The development of an international hydrogen market is a key uncertainty affecting the forecast, particularly for markets that have limited domestic demand for hydrogen.

Apart from this IEA report also delved into emerging economies, led by Brazil, and found it to be dominating the global biofuel expansion, which is set to grow 30% faster than over the last five years. Supported by robust biofuel policies, increasing transport fuel demand, and abundant feedstock potential, emerging economies are forecast to drive 70% of global biofuel demand growth over the forecast period. Brazil alone accounts for 40% of biofuel expansion to 2028.

Stronger policies are the primary driver of this growth as governments expand efforts to provide affordable, secure, and low-emission energy supplies. Biofuels used in the road transport sector remain the primary source of new supply, accounting for nearly 90% of the expansion. Electric vehicles (EVs) and biofuels are proving to be a powerful complementary combination for reducing oil demand.

Globally, biofuels and renewable electricity used in EVs are forecast to offset 4 million barrels of oil equivalent per day by 2028, which is more than 7% of forecast oil demand for transport. Biofuels remain the dominant pathway for avoiding oil demand in the diesel and jet fuel segments. EVs outpace biofuels in the gasoline segment, especially in the United States, Europe, and China.