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The green hydrogen economy

Predicting the decarbonisation agenda of tomorrow

Quantifying the opportunity in green hydrogen

An analysis of the future economics of renewable energy identifies the most promising markets for importing and exporting

Green hydrogen—produced through renewable resources such as solar and wind—holds significant promise in meeting the world’s future energy demands. However, the economics of green hydrogen are challenging today, primarily because the underlying costs and availability of renewable energy sources vary widely. Recently, PwC analysed the green hydrogen market worldwide and identified potential demand growth, cost trajectories per country and the most promising export and import markets. The results give policymakers and industry leaders guidance on how the future market for green hydrogen could evolve.

Key findings:

  • Demand growth will grow at a moderate, steady pace through niche applications until 2030.
  • After 2030, demand growth will accelerate, particularly from 2035 onward.
  • Hydrogen demand by 2050 could vary from 150 to 500 million metric tonnes per year, depending on global climate ambitions and the development of sector-specific activities, energy-efficiency measures, direct electrification and the use of carbon-capture technologies.

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The current situation

Right now, almost all hydrogen produced worldwide is “grey,” which means it is produced from natural gas. Without a price on carbon emissions, grey hydrogen is inexpensive (€1 to €2 per kilogram), but it compounds the challenge of improving environmental sustainability. Green hydrogen, in contrast, uses renewable electricity to power electrolysis that splits water molecules into hydrogen and oxygen. Because green hydrogen doesn’t require fossil fuels, it is a better long-term solution to help decarbonize economies. Yet green hydrogen—currently costing €3 to €8/kg in some regions—is more expensive than grey.

The most attractive production markets for green hydrogen are those with abundant, low-cost renewable resources. In parts of the Middle East, Africa, Russia, the US and Australia, for example, green hydrogen could be produced for €3 to €5/kg today. In Europe, production costs vary from €3 to €8/kg. The low end of these ranges can be achieved most easily in locations with access to low-cost renewable energies plants.

Yet production costs will decrease over time, due to continuously falling renewable energy production costs, economies of scale, lessons from projects underway and technological advances. As a result, green hydrogen will become more economical. The challenge is anticipating those trends and acting in time.

hydrogen

Analysing the future market

PwC evaluated the production cost trajectory of green hydrogen worldwide, giving us a better understanding of early movers and potentially large suppliers across countries and regions.

The key results of our analysis include the following:

  • Through 2030, hydrogen demand will grow at a moderate, steady pace through many niche applications across the industrial, transport, energy and buildings sectors.
  • Through cross-sector collaborations, new alliances will form to develop hydrogen projects.
  • Hydrogen production costs will decrease by around 50% through 2030, and then continue to fall steadily at a slightly slower rate until 2050.
  • By 2050, green hydrogen production costs in some parts of the Middle East, Africa, Russia, China, the US and Australia will be in the range of €1 to €1.5/kg.
  • Over the same time period, production costs in regions with limited renewable resources, such as large parts of Europe, Japan or Korea, will be approximately €2/kg, making these markets likely importers of green hydrogen from elsewhere.
  • Even regions with good renewable resources but densely populated areas will import hydrogen, as land constraints limit the production of green electricity for direct use and conversion to hydrogen.
  • Many large countries—such as the US, Canada, Russia, China, India and Australia—have regions for both competitive and non-competitive hydrogen production, which could prompt them to develop in-country trading.
  • Export and import hubs will develop around the world, similar to current oil and gas hubs, but with new players in renewable-rich regions.

Discover the development of renewable hydrogen in our two data tools below

1.50-8 Euro

8 €/kg

7 €/kg

6 €/kg

5 €/kg

4 €/kg

3 €/kg

2 €/kg

1 €/kg

0 €/kg

1Strongly export-oriented

2Slightly export-oriented

3Neutral

4Slightly import-oriented

5Strongly import-oriented

+ -

1 = Strongly export-oriented, 2 = Slightly export-oriented, 3 = Neutral, 4 = Slightly import-oriented, 5 = Strongly import-oriented,

  • 2020
  • 2030
  • 2040
  • 2050

PwC research | based on an analysis of various renewable energy sources and electricity generation / hydrogen equipment cost reductions worldwide

PwC research | based on an analysis of national hydrogen strategies and announced hydrogen projects

Cost-development of renewable hydrogen (LCOE)
Country 2020 2030 2040 2050
Afghanistan 4.52 2.40 1.44 1.14
Albania 5.74 3.23 2.08 1.54
Algeria 4.37 2.33 1.40 1.11
Andorra 5.50 2.99 1.61 1.31
Angola 4.37 2.58 1.40 1.11
Antigua and Barbuda 4.75 2.76 1.49 1.19
Argentina 4.29 2.42 1.32 1.27
Armenia 5.49 2.99 1.85 1.54
Australia 4.67 2.60 1.41 1.12
Austria 6.58 3.63 2.29 1.96
Azerbaijan 5.66 3.07 1.89 1.58
Bahrain 4.69 2.48 1.24 1.18
Bangladesh 5.55 3.02 1.86 1.55
Barbados 4.76 2.77 1.50 1.20
Belarus 5.07 3.43 2.49 2.44
Belgium 4.08 2.71 2.14 2.10
Belize 5.10 2.93 1.58 1.27
Benin 4.96 2.86 1.54 1.24
Bhutan 5.22 2.86 1.78 1.48
Bolivia 4.55 2.43 1.55 1.27
Bosnia and Herzegovina 6.21 3.33 2.13 1.59
Botswana 4.39 2.59 1.40 1.11
Brazil 4.67 2.47 1.47 1.18
Brunei 5.51 3.00 1.61 1.54
Bulgaria 6.25 3.35 2.14 1.83
Burkina Faso 4.83 2.80 1.51 1.21
Burundi 5.19 2.84 1.54 1.23
Cambodia 5.42 2.95 1.59 1.52
Cameroon 5.08 2.79 1.51 1.21
Canada 3.91 2.62 1.87 1.36
Cape Verde 4.83 2.80 1.51 1.21
Central African Republic 5.01 2.76 1.49 1.19
Chad 4.21 2.26 1.13 1.07
Chile 3.68 2.13 1.06 1.01
China 4.15 2.23 1.35 1.06
Colombia 4.94 2.85 1.77 1.47
Comoros 4.93 2.60 1.54 1.24
Congo, Democratic Republic of the 5.01 2.76 1.49 1.19
Congo, Republic of the 5.52 3.00 1.62 1.31
Costa Rica 4.92 2.84 1.53 1.23
Cote d'Ivoire 4.97 2.86 1.54 1.24
Croatia 6.18 3.32 2.13 1.58
Cuba 4.76 2.77 1.50 1.20
Cyprus 5.04 3.03 1.97 1.67
Czech Republic 5.39 3.58 2.57 2.52
Denmark 3.65 2.37 1.63 1.59
Djibouti 4.60 2.44 1.46 1.16
Dominica 5.18 2.96 1.60 1.29
Dominican Republic 4.63 2.70 1.46 1.17
East Timor (Timor-Leste) 5.09 2.80 1.51 1.45
Ecuador 5.23 2.86 1.78 1.24
Egypt 4.25 2.28 1.37 1.08
El Salvador 4.66 2.72 1.47 1.17
Equatorial Guinea 5.75 3.11 1.67 1.36
Eritrea 4.48 2.38 1.43 1.13
Estonia 4.63 3.09 2.21 2.17
Ethiopia 4.42 2.35 1.41 1.12
Fiji 5.56 3.02 1.63 1.55
Finland 6.33 4.28 3.15 2.85
France 4.48 3.02 2.18 1.90
Gabon 5.66 3.07 1.65 1.34
Georgia 5.73 3.10 1.91 1.59
Germany 4.91 3.22 2.28 2.23
Ghana 5.04 2.90 1.56 1.26
Greece 5.18 3.09 2.01 1.70
Grenada 4.72 2.75 1.48 1.19
Guatemala 4.65 2.71 1.47 1.17
Guinea 4.75 2.76 1.49 1.19
Guinea-Bissau 4.94 2.85 1.54 1.24
Guyana 5.09 2.80 1.75 1.45
Haiti 4.60 2.69 1.46 1.16
Honduras 4.66 2.72 1.47 1.17
Hungary 6.89 3.90 2.30 2.21
Iceland 2.51 1.93 1.44 1.34
India 4.39 2.59 1.64 1.11
Indonesia 5.09 2.80 1.51 1.45
Iran 4.46 2.62 1.42 1.13
Iraq 4.54 2.66 1.44 1.15
Ireland 3.24 2.18 1.53 1.50
Israel 4.39 2.59 1.40 1.11
Italy 5.74 2.98 1.84 1.77
Jamaica 4.76 2.77 1.50 1.20
Japan 6.39 3.82 2.75 2.50
Jordan 4.31 2.55 1.39 1.10
Kazakhstan 5.54 3.01 1.86 1.55
Kenya 4.48 2.38 1.43 1.13
Kiribati 4.79 2.66 1.44 1.38
Korea, North 6.44 3.82 2.75 2.50
Korea, South 6.44 3.82 2.75 2.50
Kosovo 6.31 3.50 2.22 1.67
Kuwait 4.79 2.53 1.27 1.20
Kyrgyzstan 4.85 2.56 1.52 1.22
Laos 5.70 3.08 1.66 1.59
Latvia 4.72 3.13 2.24 2.19
Lebanon 4.55 2.66 1.44 1.15
Lesotho 4.46 2.62 1.42 1.13
Liberia 5.75 3.24 1.85 1.54
Libya 4.17 2.24 1.35 1.06
Liechtenstein 6.80 3.73 2.34 2.01
Lithuania 5.73 3.61 2.48 2.42
Luxembourg 4.08 2.71 2.14 2.10
Macedonia 5.99 3.35 2.14 1.59
Madagascar 4.48 2.63 1.43 1.13
Malawi 4.66 2.72 1.47 1.17
Malaysia 5.46 2.97 1.60 1.53
Maldives 5.52 2.88 1.79 1.49
Mali 4.61 2.44 1.46 1.16
Malta 5.52 2.88 1.79 1.72
Marshall Islands 5.05 2.78 1.50 1.44
Mauritania 4.53 2.65 1.44 1.14
Mauritius 4.80 2.53 1.51 1.21
Mexico 4.35 2.32 1.39 1.10
Micronesia, Federated States of 5.51 3.00 1.62 1.54
Moldova 6.75 3.84 2.26 1.94
Monaco 5.68 3.07 1.89 1.82
Mongolia 4.74 2.50 1.49 1.19
Montenegro 6.27 3.36 2.15 1.60
Morocco 4.34 2.57 1.39 1.10
Mozambique 4.83 2.80 1.51 1.21
Myanmar (Burma) 5.29 2.89 1.56 1.49
Namibia 4.24 2.52 1.37 1.08
Nauru 5.10 2.80 1.52 1.45
Nepal 4.21 2.01 1.13 1.07
Netherlands 3.81 2.58 1.84 1.81
New Zealand 3.71 2.40 1.64 1.61
Nicaragua 4.68 2.73 1.48 1.18
Niger 4.40 2.34 1.17 1.11
Nigeria 5.03 2.57 1.50 1.20
Norway 3.53 2.33 1.82 1.57
Oman 4.25 2.28 1.13 1.08
Pakistan 4.30 2.55 1.62 1.09
Palau 5.61 3.04 1.64 1.57
Panama 5.00 2.88 1.55 1.25
Papua New Guinea 5.20 2.85 1.54 1.47
Paraguay 5.45 2.97 1.83 1.53
Peru 4.27 2.03 1.37 1.09
Philippines 5.23 2.86 1.55 1.48
Poland 5.02 3.27 2.31 2.26
Portugal 4.91 2.83 1.53 1.23
Qatar 4.68 2.48 1.24 1.18
Romania 6.54 3.74 2.21 1.89
Russia 3.83 2.46 1.67 1.40
Rwanda 5.35 2.92 1.58 1.27
Saint Kitts and Nevis 4.76 2.76 1.49 1.20
Saint Lucia 4.77 2.77 1.50 1.20
Saint Vincent and the Grenadines 4.77 2.77 1.50 1.20
Samoa 5.38 2.94 1.58 1.51
San Marino 6.29 3.24 1.98 1.90
Sao Tome and Principe 5.38 3.06 1.65 1.34
Saudi Arabia 4.26 2.28 1.14 1.08
Senegal 4.76 2.76 1.49 1.20
Serbia 6.71 3.82 2.25 1.93
Seychelles 5.15 2.70 1.59 1.29
Sierra Leone 5.58 3.16 1.80 1.50
Singapore 6.00 3.23 1.74 1.65
Slovakia 6.96 3.94 2.32 1.99
Slovenia 6.58 3.51 2.22 1.67
Solomon Islands 5.53 3.00 1.62 1.55
Somalia 4.42 2.32 1.41 1.12
South Africa 4.30 2.55 1.38 1.09
South Sudan 4.76 2.52 1.50 1.20
Spain 4.88 2.70 1.46 1.16
Sri Lanka 5.43 2.84 1.77 1.47
Sudan 4.32 2.31 1.39 1.10
Suriname 5.09 2.80 1.75 1.45
Swaziland 5.00 2.88 1.55 1.25
Sweden 5.36 3.82 2.91 2.63
Switzerland 3.53 2.33 1.82 1.57
Syria 4.48 2.63 1.43 1.13
Taiwan 6.35 3.78 2.10 1.56
Tajikistan 4.49 2.39 1.43 1.14
Tanzania 4.48 2.38 1.43 1.13
Thailand 5.43 2.96 1.60 1.52
The Bahamas 4.89 2.82 1.53 1.23
The Gambia 4.85 2.81 1.52 1.22
Togo 5.04 2.90 1.56 1.26
Tonga 5.53 3.00 1.62 1.55
Trinidad and Tobago 4.94 2.85 1.54 1.24
Tunisia 5.11 2.94 1.92 1.39
Turkey 4.72 2.49 1.72 1.42
Turkmenistan 4.92 2.84 1.77 1.47
Tuvalu 5.46 2.97 1.60 1.53
Uganda 4.89 2.70 1.46 1.17
Ukraine 6.75 3.59 2.26 1.94
United Arab Emirates 4.61 2.44 1.22 1.16
United Kingdom 3.81 2.58 1.84 1.81
United States of America 4.35 2.57 1.63 1.10
Uruguay 5.61 2.92 1.81 1.51
Uzbekistan 4.91 2.83 1.77 1.46
Vanuatu 5.57 3.02 1.63 1.56
Vatican City (Holy See) 5.85 3.03 1.87 1.80
Venezuela 4.93 2.73 1.71 1.41
Vietnam 5.45 2.85 1.77 1.47
Yemen 4.22 2.26 1.13 1.07
Zambia 4.65 2.71 1.47 1.17
Zimbabwe 4.60 2.69 1.46 1.16
Strength of import and export market by country
Country Final indication
Morocco 1.0
Namibia 1.6
South Africa 2.0
China 3.1
India 3.1
Japan 4.7
Qatar 1.4
Russia 1.6
Saudi Arabia 1.1
Korea, South 4.1
Turkey 3.1
United Arab Emirates 1.5
Austria 4.3
Belgium 4.9
Finland 3.7
France 4.4
Germany 4.7
Greece 3.4
Italy 4.1
Luxembourg 4.3
Netherlands 4.4
Norway 2.3
Poland 4.0
Portugal 3.0
Spain 2.0
Sweden 3.3
Switzerland 4.3
United Kingdom 4.0
Canada 1.5
United States of America 3.1
Australia 1.0
Chile 1.7
Argentina 2.0
Brazil 3.0
Iceland 1.0

Identifying likely exporters and importers

In addition to the economic analysis, we considered national hydrogen strategies, projects that have already been announced, and market trends, thus enabling us to estimate future trade flows. The results are shown in the world map, indicating whether a country is likely to be an exporter, an importer, or self-sufficient.

The results show that countries with large swaths of undeveloped land and abundant renewable energy are developing strategies to produce green hydrogen and export any excess. In contrast, countries with insufficient unused land, dense populations and limited renewable resources are more likely to favour imported green hydrogen. These results match public letters of intent for the sale of renewable hydrogen—for example, from Morocco to Germany or from Australia to Japan.

import-export

The need to take action today

Countries need to start implementing pilot projects as soon as possible, to gain practical experience and capitalise on efficiencies through learning curves and scale effects on production equipment, such as electrolysers. Developing projects today is important to ensure continuous demand growth, which justifies the implementation of the required hydrogen infrastructure to meet future greenhouse gas reduction targets. In addition, the regulatory framework—including subsidies, taxes and levies—has a huge impact on CapEx and OpEx, which can dramatically swing the economics of projects. It is essential that governments around the world pursue hydrogen-supportive policies and create a regulatory framework that encourages investment in production equipment.

Priorities for management teams

Make sure you have the below priorities in place to be prepared for the near future:

  • develop a company-specific hydrogen strategy, including technological requirements, M&A activities and partnerships, and the specific requirements of emerging markets.
  • identify pilot projects, analyse their technical and economic feasibility, and evaluate financing possibilities.
  • optimise the business case through measures such as identifying suitable funding initiatives and the use of by-products.
  • assess legal and regulatory implications on a national and international level.
  • identify suitable R&D as well as project subsidies worldwide.
  • develop and implement hydrogen procurement and trade strategies.
  • understand national and international certification models for green hydrogen and its derivates.
  • integrating hydrogen-related projects into reporting.
Circularity can be centred on three overarching principles (prioritise renewable inputs, maximise product use, recover by-products and waste), which define ten corresponding strategies. The diagram illustrates the continual flow of resources in both the production/distribution phase and the consumption phase.

Contact us

Jeroen Van Hoof

Jeroen Van Hoof

Global Leader, EU&R and P&U, Partner, PwC Netherlands

Tel: +31-88-7921328

Juergen Peterseim

Juergen Peterseim

Alternative Fuels Initiative Lead, PwC Germany

Tel: +49 30 26365409

Olesya Hatop

Olesya Hatop

Global EU&R Clients & Markets Industry Executive, Director, PwC Germany

Tel: +49 211 981 4602