- The global refining industry could create 50 million tonnes of hydrogen demand annually.
Wood Mackenzie has estimated that the global refining industry could create a demand for low-carbon hydrogen of about 50 million tonnes per year. The firm said that the sector is capable of making such demands and, in 2020, used 32 million tonnes of hydrogen. This amount accounted for 30-35% of the global hydrogen demand in the same year.
More than 65% of this demand is, however, unlikely to be substituted with green or blue hydrogen as it is met by hydrogen as a by-product. Therefore, the potential demand for low-carbon hydrogen is envisaged to be up to 10 million tonnes per year by 2050.
If fossil fuels are in combustion applications for heat and steam generation, then a larger market for hydrogen could be created. This would raise the potential to up to 40 million tonnes per year by 2040 for a total potential demand of up to 50 million tonnes per year by that year, explained Sushant Gupta, Wood Mackenzie’s research director. The use of low-carbon hydrogen could help reduce carbon emissions in the refining sector by up to 35%.
“In addition to falling costs for low-carbon hydrogen, higher carbon prices, financial incentives and stronger policy support will be necessary to accelerate adoption by the refining sector,” said Gupta.
Given the current high and volatile gas prices and in the aftermath of the war in Ukraine, green hydrogen is cheaper than fossil fuel-based grey hydrogen, according to Mackenzie. However, concerning combustion applications, a much bigger cost reduction or a much higher carbon price is needed for low-carbon hydrogen to compete than the levels required to compete with on-purpose hydrogen.