- DNV reduces its mid-century clean hydrogen forecast by 45% compared with its 2022 outlook due to slower than expected policy implementation.
- Clean hydrogen is still expected to grow 100 fold by 2060, helping to avoid more than 2 gigatonnes of CO2 emissions annually.
- Global hydrogen investment is projected to reach US$3.2 trillion by 2060, with China expected to account for 35% of new production and demand.
DNV has revised its long term outlook for clean hydrogen, citing slower than expected policy implementation and regulatory uncertainty as key factors delaying large scale market development.
While early expectations pointed to rapid growth in the hydrogen sector, the reality has been more challenging. Clean hydrogen projects continue to depend heavily on government mandates, subsidies and carbon pricing mechanisms to remain competitive against conventional fossil based hydrogen.
According to DNV’s latest Energy Transition Outlook: Hydrogen to 2060 report, the slower pace of policy delivery has prompted the company to reduce its mid century clean hydrogen forecast by 45% compared with its 2022 assessment. Despite this adjustment, DNV maintains that hydrogen will remain an essential component of global decarbonisation efforts, particularly in sectors that are difficult to electrify.
The global hydrogen market is currently valued at approximately US$240 billion, producing around 100 million tonnes of fossil based hydrogen annually. This production is responsible for about 1.3 billion tonnes of CO2 emissions each year.
Looking ahead, DNV forecasts that clean hydrogen production will increase 100 fold by 2060, helping to reduce more than 2 gigatonnes of emissions annually from hard to electrify industries. Total hydrogen volumes are expected to grow by 170%, supported by cumulative investments of US$3.2 trillion, including spending on dedicated renewable power generation for off grid hydrogen production.
Energy security is emerging as a major driver of hydrogen investment, particularly in countries that rely on imported energy. Renewable hydrogen and its derivatives are expected to strengthen security of supply while providing long duration energy storage solutions for industries where direct electrification remains difficult.
DNV also highlights opportunities for hydrogen in supporting food security. Coal based hydrogen used in ammonia and fertiliser production is expected to remain important in the medium term, while cleaner hydrogen pathways continue to gain market share.
The report identifies China as the leading force behind future hydrogen demand and production growth. The country is expected to account for 35% of all new hydrogen production and consumption over the coming decades, supported by plans to scale up clean hydrogen deployment under its Fifteenth Five Year Plan.
At the same time, industries are expected to diversify hydrogen supply chains through a mix of domestic production and imports as they seek to reduce dependence on traditional fossil fuel sources.
DNV forecasts that current geopolitical pressures will accelerate final investment decisions for hydrogen projects. Following the installation of 1.5 million tonnes per year of renewable electrolysis based hydrogen production capacity in 2025, a further 10 million tonnes per year is expected to be added by 2030. Europe and China are projected to account for approximately half of this new capacity.
The report stresses that policy support remains critical to unlocking large scale deployment. Clean hydrogen continues to face a significant cost disadvantage compared with unabated fossil hydrogen and will require financial incentives, mandates and carbon pricing frameworks to drive adoption.
Beyond economics, DNV notes that building confidence in hydrogen safety and sustainability will be essential. Lessons from pilot projects are helping developers improve system design and operational practices, but the transition from demonstration projects to large scale facilities presents new technical and safety challenges.
The company argues that stronger standards, certification frameworks and industry collaboration are needed to attract investment and build trust across the value chain. It also calls for governments to convert high level hydrogen strategies into practical legislation, regulations and technical guidelines.
As countries refine their regulatory frameworks, DNV expects early adopter nations to play a leading role in establishing international consensus on safety and sustainability standards that can support long term market growth.
Link to the full report HERE
Author: Bryan Groenendaal
