Developers around the world are planning to produce 14 million tonnes (Mt) of clean hydrogen a year for export by 2030, but the annual import demand for green and blue H2 will not exceed 4.3Mt globally, according to analysis from research house BloombergNEF (BNEF).

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“This means up to two thirds of these projects may not go ahead, could be delayed, or need to find local offtakers to justify their economics,” it says in a new report for subscribers, entitled Hydrogen Export: Tough Competition Ahead.

The analyst had previously stated in a separate report that while the EU plans to import 10Mt of green hydrogen annually by the end of the decade, it will actually only import about 2.5Mt by then.

BNEF expects the first large-scale international shipments of hydrogen — mainly in the form of ammonia — to begin in 2025, with global H2 export capacity possibly reaching one million tonnes in 2026.

“However, we expect H2 export will not scale up significantly until 2030. Import demand will likely take some time to pick up after local H2 [demand] becomes insufficient, and infrastructure build-out could take at least three to four years as well.”

Only 1.1Mt of the 24Mt of clean hydrogen planned for export — 10Mt of which does not have a shipment date — is slated to be blue H2 (derived from fossil fuels with carbon capture and storage), with the remainder (95.5%) being green hydrogen produced by renewables-powered electrolysers.

BNEF also states that 87% of that 24Mt of clean hydrogen is due to be shipped in the form of ammonia (NH3), with 2% in other forms (including liquefied H2, synthetic fuels or liquid organic hydrogen carrier). The remaining 11% has not specified a shipment method.

“The choice of ammonia is logical, given its favourable physical properties compared to hydrogen and the fact that it is already traded in large volumes by ship today, while hydrogen is not,” says the report.

It adds: “Governments target over 15Mt/year of hydrogen imports in the long term, but for now these goals lack policy support to become reality. More realistically, global H2 imports may reach 4.3Mt/year by 2030.”

It breaks that figure down into 2.5Mt/year for Europe, 1Mt/year for Japan and 0.8Mt/year for South Korea, adding that more demand may come from Singapore and/or Taiwan by the end of the decade.

National competitive advantages

BNEF also looked into which regions would have a competitive advantage, concluding that the US, Australia, Saudi Arabia and the United Arab Emirates (UAE) all have “high potential to export hydrogen”, while pointing out the US does not have plans to become a major H2 exporter.

The analyst argues that Oman and South America both have “medium potential”, with Canada and Egypt having “low potential”.

“Saudi Arabia and UAE are well-positioned for H2 exports. Both countries already export grey ammonia and have many readily accessible ports and facilities for that purpose,” the report explains.

“Their national oil companies, Saudi Aramco and ADNOC, have good access to land, money and existing offtake partnership with Germany and Japan. However, none have a large project pipeline proposed by 2030, and they might still be deciding between blue and green hydrogen post 2030.

The report adds that Australia “has solid government funding, good port infrastructure, and some offtake MoUs [memoranda of understanding] signed with German and Japanese companies”.

And it says that while the US has few hydrogen projects currently targeting export, “it is well-positioned to compete with other regions as a result of the Inflation Reduction Act (IRA) tax credits for H2 projects, which have the potential to to make the US the cheapest hydrogen producer globally”.

However, it adds: “A key uncertainty is whether the US will be willing to extend the IRA tax credits to exporting projects, due to potential political backlash against US taxpayer money being used to benefit other countries.”

The study goes on to say that Oman is being let down by a low renewables target, which is “far from enough” to meet its hydrogen plans, and points out that planned export projects in Chile and Brazil are far from existing ammonia export terminals.

“Some ports are technically feasible to retrofit but require large investments, which seems challenging given the small amount of government funding.”

Similarly, Canada does not have the port infrastructure in place, while Egypt — despite a series of hydrogen-related announcements at the recent COP27 — suffers from a “lack of state funding and stable macroeconomic environment”.

BNEF explains that while ammonia terminals could technically be built at most ports, costs would be far lower for exporters if NH3 handling infrastructure was already in place — or if existing equipment for processing other chemicals could be modified.

The research house points out that it is not simply a matter of clearing some space at a port. Ammonia export terminals require jetties and moorings to “fix vessels” in place; loading arms and platforms for handling NH3, and liquefaction, storage “and other chemical-processing facilities”.

“Jetties and loading arms are capital-expensive and require certain geographical conditions in ports,” the report explains. “Ammonia also has different properties than other chemicals — it is liquefied at minus 33°C under atmospheric pressure, is corrosive to nickel [used in steel for LNG facilities], and requires extremely high safety standards and risk control systems as it is very toxic to humans”.

Converting existing liquefied natural gas (LNG) terminals to ammonia would cost $50-100m each, it adds, pointing to estimates from consultant Black & Veatch.