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Hydrogen in Asia

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Lots of opportunities, lots of challenges

The Asian region is the world’s largest producer and consumer of hydrogen – China leads the way. Eight economies in the region have national hydrogen strategies, with 10 more in development. Hydrogen’s key promise in Asia’s energy transition lies in decarbonising hard-to-abate areas, including transport and heavy industry.

However, like the rest of the world, less than 1% of hydrogen in Asia is ‘green’ (made from renewables), with the bulk being ‘grey’ – produced using fossil fuels. A key challenge is the high cost of green hydrogen, at around 3-6 times more than ‘grey’. Recent global cost pressures and a fall in fossil fuel prices, alongside relatively cheap renewables and improvements in battery technology, have shifted the economic reality against planned green hydrogen investments. As a result, only 12% of planned green hydrogen production by 2030 has secured end demand.

More policy support is needed to shore up green hydrogen’s viability. For starters, to account for 20% of Asia’s electricity demand as outlined in the IEA’s net zero emissions scenario, our estimates suggest Asia’s hydrogen sector may require USD1.1trn in renewables investment by 2050, especially solar and wind.

[Asia] could potentially become one of the biggest importers of low-emissions hydrogen and hydrogen-based fuels

IEA, Global Hydrogen Review 2023, page 104

Still, Asia is uniquely positioned to overcome hydrogen’s challenges. This reflects the region’s high potential demand, its ability to utilise existing supply chains and trade agreements, and China’s comparative advantage in electrolyser supply. And, while the region is not ‘one size fits all’, markets where hydrogen has potential include:

China – a global leader in both hydrogen production and consumption, with demand stemming mostly from domestic refineries and the chemical industry.

Japan and Korea – likely to be major green hydrogen importers and can leverage strengths in areas like hydrogen fuel cells, marine transportation and EVs.

Australia – potentially the world’s largest exporter of low-emissions hydrogen by 2050.

India – one of Asia’s markets with major upside potential for hydrogen.

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