Renewable hydrogen production technology has a significant early market opportunity, especially as innovation and infrastructure continue to develop, noted SunHydrogen.
In August 2022, the Inflation Reduction Act, which earmarks $369 billion for renewable energy and climate projects, was enacted in the United States and is already reshaping the hydrogen market and the broader clean energy market as it is now known.
“Among its features, the law boasts a 10-year extension of tax credits for solar and wind and incentives to support new technologies, with hydrogen and energy storage being the biggest beneficiaries,” according to Morningstar’s chief U.S. markets strategist Dave Sekera.
Specifically, the bill includes a new tax break that will grant up to $3 per kilogram of low-carbon hydrogen, with the exact amounts of the tax break to be determined by calculating the greenhouse gas emissions of a given project.
Also, the passage of the Inflation Reduction Act came on the heels of a summer of rising gas prices and gasoline demand.
While supply chain challenges and geopolitical conflicts continue to affect fuel prices around the world, the hydrogen market is garnering support and interest from consumers and governments alike, SunHydrogen says.
Another factor currently driving the global hydrogen market is the need to reduce sulfur content in petroleum products.
U.S. federal and state governments have adopted several programs, including the Tier 3 program, to reduce sulfur content in gasoline, motor oil and diesel fuel.
In particular, there is a growing demand for petroleum products from developing countries.
Hydrogen is used in various refining processes, such as hydrocracking and hydrodesulfurization, to break down larger molecules into lighter ones and produce more usable products.
SunHydrogen said hydrogen generation is expected to become a $1 trillion per year market by 2050.
Today’s fossil fuels cannot sustain future energy needs environmentally or economically, and hydrogen fuel technologies are being adopted across all sectors as the world moves toward renewable alternatives.
More than 110 countries have set targets to achieve net-zero emissions by 2050, and governments are looking to clean energy sources such as hydrogen to help them meet their goals, according to the United Nations.
In addition, Goldman Sachs estimates that nearly 25% of the world’s energy will come from clean hydrogen alone by 2050.