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1、REPORTIn Support ofSCALING HYDROGEN FINANCING FOR DEVELOPMENTPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedSCALING HYDROGEN FINANCING FOR DEVELOPMENTREPORTIn Support ofABOUT ESMAPThe Energy Sector Management Assistance Program(ESMAP)i

2、s a partnership between the World Bank and over 20 partners to help low-and middle-income countries reduce poverty and boost growth through sustainable energy solu-tions.ESMAPs analytical and advisory services are fully integrated within the World Banks country financing and policy dialogue in the e

3、nergy sector.Through the World Bank Group(WBG),ESMAP works to accelerate the energy transition required to achieve Sustainable Development Goal 7(SDG7)to ensure access to affordable,reliable,sustainable,and modern energy for all.It helps to shape WBG strategies and programs to achieve the WBG Climat

4、e Change Action Plan targets.Learn more at:https:/esmap.org February 2024|International Bank for Reconstruction and Development/The World Bank1818 H Street NW,Washington,DC 20433Telephone:202-473-1000;Internet:www.worldbank.orgFor the World Bank(WB),the findings,interpretations,and conclusions expre

5、ssed in this work do not necessarily reflect the views of The World Bank,its Board of Executive Directors,or the governments they represent.For the Organisation for the Economic Co-operation and Development(OECD),the report is published under the re-sponsibility of the Secretary-General of the OECD,

6、and the opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD.Neither the World Bank nor OECD guarantee the accuracy completeness,or currency of the data included in this work and does not assume responsibility for any erro

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16、433,USA;email:pubrightsworldbank.org.Production CreditsProduction Editor|Heather AustinDesigner|Circle Graphics,Inc.Front Cover|Courtesty of HIF Chile;Exec.Summary:Courtesy of Walmart ChileAll images remain the sole property of their source and may not be used for any purpose without written permiss

17、ion from the source.SCALING HYDROGEN FINANCING FOR DEVELOPMENTiiiContentsAbbreviations viiPreface viiiAcknowledgments xKey Findings xiiExecutive Summary xvAbout this Report xxv1.Clean Hydrogen:Status,Projections,and Scenarios 1Key Points 1Recent Developments and Outlook in the Short to Medium Term 2

18、Long-Term Clean Hydrogen Scenarios 4Markets for Clean Hydrogen 6Investment Needs Through 2030 8Hydrogen Deployment 9Business Models and Project Case Studies:Lessons from Global Best Practices 142.Technical and Economic Cost Assessment 23Key Points 23A Breakdown of Clean Hydrogen Production Costs Tod

19、ay 24Closing the Clean Hydrogen Cost Gap 343.Financing the Clean Hydrogen Value Chain:Risks and Derisking Mechanisms 43Key Points 43Risks Hindering the Availability of Financing for Clean Hydrogen Projects in EMDCs 44Category A.General Risks Related to Investing in Large Infrastructure Assets 48Cate

20、gory B.Risks Specific to Investing in Clean Hydrogen Projects 524.Growing the Market:Funds,Policies,and the Role of Multilateral Development Banks 65Key Points 65Addressing Clean Hydrogens Financing Needs,Given Global Finance Metrics 66Enhancing Credibility with a Clean Hydrogen Strategy 69Mitigatin

21、g Institutional and Political Risks 69Policy Options to Decrease Costs and Mitigate Risks 71Policies to Mitigate Demand and Offtake Risk:Portfolio Obligations and Adoption Targets 74The Role of Multilateral Development Banks 77ivCONTENTS5.Actions to Accelerate Clean Hydrogen for International Develo

22、pment 85Key Points 85Capacity Building and Knowledge Sharing 86International Coordination 87Policies and Institutional Frameworks to Accelerate Project Development 89A Proposal for Lighthouse Projects 90References 91SCALING HYDROGEN FINANCING FOR DEVELOPMENTvList of Figures,Tables,and BoxesFiguresFi

23、gure1.1:Hydrogen in the Global Energy Transition and Decarbonization Scenarios 5Figure1.2:Global Hydrogen Consumption across End-Use Sectors 6Figure1.3:Investment Needed to Develop Announced Projects Covering the Hydrogen Value Chain Through 2030 and Project Investment Volume Growth 202023 8Figure1.

24、4:Emerging Markets and Developing Countries Investment Needs Through 2030 9Figure1.5:Breakdown of the Global Clean Hydrogen Project Pipeline by Country Group and Project Phase Through 2030 10Figure1.6:Clean Hydrogen Project Announcements in the Middle East&North Africa,by Country 12Figure2.1:Leveliz

25、ed Cost of Hydrogen Estimates for Renewable Hydrogen Production,20302050 27Figure2.2:Breakdown of the Best-in-Class Renewable Hydrogen Projects with LCOH of$3/kg,2023 28Figure2.3:Impact of Capital Costs on the Production of Renewable Hydrogen 32Figure2.4:The Cost of Transporting Hydrogen,by Various

26、Modes,Based on Distance 33Figure2.5:Reduction in Production Cost of Renewable Hydrogen,20232030 35Figure2.6:Drop in Import Cost of Renewable Hydrogen,202330 36Figure2.7:Estimation of Financing Gap Under Various Assumptions,202330 39Figure3.1:Top Risks,if Mitigated,Would Enable Clean Hydrogen Project

27、s to Secure Financing in EMDCs 47Figure3.2:Risks,Costs,Financing Over the Life Cycle of a Clean Hydrogen Project 62Figure3.3:Financial and Policy De-risking Mechanisms Lowering the Cost of Producing Hydrogen from$5 to$3/kg 63Figure4.1:Multilateral Development Bank Support Options to Accelerate Clean

28、 Hydrogen Projects 80Figure5.1 Four-Part International Action Plan to Facilitate Private Investment in Clean Hydrogen 86viCONTENTSTablesTable1.1:Clean Hydrogen Projects with a Final Investment Decision in EMDCs,as of January 2023 3Table1.2:Renewable Ammonia Plants Under Construction in EMDCs 7Table1

29、.3:Categorization and Examples of Business Models 15Table2.1:Cost of Capital for Utilities Powered by Renewable Energy,by Capital Component and Region,202021 33Table3.1:Risks Affecting the Financing of Clean Hydrogen Projects 45Table3.2:Financial De-risking Instrument Offered by Multilateral Develop

30、ment Banks and Export Credit Agencies to Mitigate Political and Regulatory Risks 50Table3.3:Financial and Policy De-risking Instruments Offered by Multilateral Development Banks to Mitigate Offtake Risks 53Table3.4:Commercial Insurance Covering Specific Technology Risks 55Table3.5:Financial De-riski

31、ng Instruments Offered by MDBs to Mitigate Operational Risks 57Table3.6:Top 10 Risks and Proposed Financial and Policy De-risking Mechanisms 60BoxesBox1.1:Prospects for International Trade in Clean Hydrogen 4Box2.1:Comparing Expenses and Potential Revenues for Hydrogen 37Box4.1:The World Banks$3 Bil

32、lion Development Policy Support to Indias Green Hydrogen Program 81Box4.2:Financing Chiles Green Hydrogen Industry:A Case Study on Innovative Financing to Spur the Nascent Industry 82SCALING HYDROGEN FINANCING FOR DEVELOPMENTviiAbbreviationsBOP balance of plantCAPEX capital expenditureCBAM Carbon Bo

33、rder Adjustment MechanismCO2 carbon dioxideCOP28 28th Conference of the Parties(to the United Nations Framework Convention on Climate Change)DFIdevelopmentfinanceinstitutionECA export credit agencyEMDC emerging markets and developing countriesEPC engineering,procurement,and constructionESMAP Energy

34、Sector Management Assistance ProgramEU European UnionFEED Front-end engineering and designFIDfinalinvestmentdecisionGDP gross domestic productFX foreign exchangeGHG greenhouse gasGt gigatonneGW gigawattH4D Hydrogen for Development Partnershipkg kilogramkW kilowattkWh kilowatt hourkt kilotonneLCOH le

35、velized cost of hydrogenMDB multilateral development bankMW megawattMWh megawatt hourMt million tonneOECD Organisation for Economic Co-operation and DevelopmentO&M operations and maintenancePV photovoltaic(solar)R&D research and developmentRFP request for proposalSAF sustainable aviation fuelSCDI So

36、uthern Corridor Development InitiativeUN United NationsWACC weighted average cost of capitalWTP willingness to payAll currency is in United States dollars(US$,USD),unless otherwise indicated.viiiPREFACEPrefaceThisflagshipreport,preparedbytheWorldBankincollaborationwiththeOrganisationforEconomic Co-o

37、peration and Development(OECD)and the Global Infrastructure Facility(GIF),and with the support of the Hydrogen Council,is intended to inform deliberations at the 28th Conference of the Parties(COP28)to the United Nations Framework Convention on Climate Change(UNFCCC).The report is a contribution to

38、the Breakthrough Agenda adopted at COP26.1The World Bank is currently closely involved in the roll-out of the global hydrogen economy,aspartofabiggerinternationalefforttosupportthistransition.TheBanksprincipalcomponentsthe International Bank for Reconstruction and Development,International Finance C

39、orporation,and Multilateral Investment Guarantee Agencyare in close consultations with client countries and private sector players on how to realize their hydrogen ambitions.To date,the World Bank Board has approved$1.65 billion in clean hydrogen loans in 2023.The Hydrogen for Development Partnershi

40、p(H4D),established at the 27th conference of parties(COP27)through the work of the Energy Sector Management Assistance Program(ESMAP)at the World Bank,provides client countries with practical advice and technical assistance on how to develop policies in order to advance clean hydrogen effortsintheir

41、respectiveeconomies.Thisreportsanalysisprovidesdetailedinformationontheglobalhydrogenmarketandthecostofproducinghydrogen.Itquantifiesthegapbetweenthecostsoffinancingcleanhydrogenprojectsandthebenefitssuchaprojectcanbeexpectedtoyieldintheshort term.Thestudyexploresmeasurestominimizetheneedforgovernme

42、ntfinancingbymakinghydrogeninvestmentsattractivetotheprivatesector.Chiefly,thosemeasuresinvolvemanagingandmitigatingrisk.Majorriskcategoriessuchasthoserelatedtoofftakehavebeenidentifiedthroughanextensivesurvey.This study reviews best practices for accelerated clean hydrogen deployment in emerging ma

43、rketsanddevelopingcountrieswithaneyetokeyrisksinallprojectstages.Differenttypes of risk are analyzed and split into project-enabling factors and factors that must be managed to reduce the cost of capital.The potential of each type to reduce the cost of hydrogenisquantified.1 https:/www.irena.org/Pub

44、lications/2023/Sep/Breakthrough-Agenda-ReportSCALING HYDROGEN FINANCING FOR DEVELOPMENTixThereportlaysouthowmultilateraldevelopmentbanksanddevelopmentfinanceinstitutions can help to accelerate and de-risk clean hydrogen projects.However,at this stageofthecleanhydrogenindustrysdevelopment,financialde

45、-riskingisinsufficient.Policies are necessary to de-risk investments and increase the volume and scale of projects coming on stream.We will continue to work closely with our client countries and our development partners,includingfinancinginstitutionsandtheprivatesectortoacceleratecleanhydrogendeploy

46、ment.Welookforwardtoanimpactfulhydrogeninvestmentandfinancingagendabased on the insights and recommendations generated by the deliberations at COP28 and beyond.xAcknowledgmentsThis report was prepared by the Energy Sector Management Assistance Program(ESMAP)of theWorldBanksEnergyandExtractives(EEX)G

47、lobalPracticejointlywiththeOrganisationfor Economic Co-operation and Development(OECD),the Global Infrastructure Facility(GIF)and with support from the Hydrogen Council.The inter-agency team was led by Dolf Gielen(Senior Energy Economist,ESMAP).The primary authors consisted of Priyank Lathwal,Silvia

48、 Carolina Lopez Rocha,Michelle Hallack,Sandhya Srinivasan(World Bank),Deger Saygin,Joseph Cordonnier,Moongyung Lee(OECD),and Giulia Motolese(GlF).The team would like to thank Demetrios Papathanasiou(Global Director,EEX),Chandrasekar Govindarajalu(Practice Manager,ESMAP),and Gabriela Elizondo Azuela(

49、Practice Manager,Latin America and Caribbean;former Practice Manager,ESMAP)for their managerial guidance and invaluable support.The authors are grateful for the project database information,risk perspectives,and cost offinancinginformationprovidedbytheHydrogenCouncilanditsmembers,aswellastheparticip

50、ation of all involved in the process,led by Daryl Wilson and Steven Libbrecht,with support of consultants at McKinsey&Company.The authors appreciate the support provided by Breakthrough Agenda,especially Paul Durrant(U.K,Department for Energy Security&Net Zero,DESNZ).The authors are thankful for the

51、 guidance provided by the World Bank Review Committee:Sebastian A.Molineus(Director,Strategy and Operations,Infrastructure),Thomas Kerr(Lead Climate Change Specialist),Michael Kobina Kane(Senior Infrastructure Finance Specialist),and Dominik Englert(Senior Transport Economist).The authors would like

52、 to thank the members of the OECD Working Party on Finance and Investment for Environmental Goals for the feedback provided at their meeting on 2829 September 2023.The authors are grateful for the operational support provided by Ignacio Berreta Sartini and the design support provided by Jehison Hern

53、andez Mujica.Furthermore,the authors greatly appreciate the valuable insights received from World Bank colleagues:R.Balaji,Ignacio de Calonje,Don Purka(International Finance Corporation,IFC);Roxana Liciu,Alan Narayadu and Marcus Williams(Multilateral Investment Guarantee Agency,MIGA);and Waleed Al-H

54、addad,Husam Mohamed Beides,Virginia Brandon,Janina Franco,Vijay Gavarraju,Nadine Ghobrial,Surbhi Goyal,Philipp Hauger,Arthur Kochnakyan,Auguste Tano Kouame,Safaa El Tayeb El-Kogali,Aurelien Kruse,Hiroaki Machii,Chiara ACKNOWLEDGMENTSSCALING HYDROGEN FINANCING FOR DEVELOPMENTxiOdetta Rogate,Rico Salg

55、mann,Joonkyung Seong,Satheesh Sundararajan,Carolyn Turk,Xiaodong Wang,Mara Warwick,Marina Wes,Michael Peter Wilson(World Bank).For this report,the following individuals and organizations contributed to the content and affordedvaluablesuggestions:ChloeZhang(InternationalMonetaryFund,IMF);AyodejiAdebo

56、la,Rhoda Mshana,Freda Opoku,Wale Shonibare,Eisuke Tachibana(African Development Bank,AfDB);Joyce Kubai(African Green Hydrogen Alliance,AGHA);Oliver Ferrage,Wei Huang,Kazuhiro Nomoto,Yuanjiang Sun(Asian Infrastructure Investment Bank,AIIB);Trevor Brown and Kevin Rouwenhorst(Ammonia Energy Association

57、);Fiona Simon and Katerina Aleksoska(Australian Hydrogen Council);Falk Boemeke,Christine Falken-Grosser,Juergen Friedrich,Florian Knobloch,Christian Storost(Federal Ministry for EconomicAffairsandClimateActionofGermany,BMWK);DanielaKrahlandBenjaminLaag(Federal Ministry for Economic Cooperation and D

58、evelopment of Germany,BMZ);Cecilia Wallmark(Center for Hydrogen Energy Systems Sweden,CH2ESS);Bradford Willis(Climate Champions Team);Daria Nochevnik(COP28 Special Advisor on Hydrogen);Monica Gasca and Juan Giraldo(Colombian Hydrogen Association,H2Colombia);Dean Bialek and Alexandre Chavarot(CWP Glo

59、bal);Cristian Carraretto(European Bank for Reconstruction and Development,EBRD);Ruud Kempener(European Commission,EC);Roland Schulze(European Investment Bank,EIB);Frank Wolak(Fuel Cell and Hydrogen Energy Association,FCHEA);Patricia Oliveira(Dutch Entrepreneurial Development Bank,FMO);Kaashifah Beuk

60、es(Freeport Saldanha Bay);Sam Bartlett,Ines Marques,Jonas Moberg,Joe Williams(Green Hydrogen Organisation,GHO);Jens Burgtorf,Heino von Meyer,Christoph Michel,Frank Mischler,Pablo Tello and Rodrigo Vasquez(German Development Cooperation,GIZ,International PtX Hub);Matias Catueo and Marco Lilini Real(H

61、ydrogen Argentina,H2AR Consortium);Camila Varela and Ola Hansen(H2 Green Steel);Timo Bollerhey and Susana Moreira(H2Global);Jan Kisela,Navjot Singh,Michael Whiteley(HSBC);Jorgo Chatzimarkakis,Marie Espitalier-Nol,Stephen Jackson,Maria Assumpci Rojo Torrent(Hydrogen Europe);ToniBeukes,JonathanMetcalf

62、e,MarcoRaffinetti,PatrickStein-Kaempfe(HyphenAfrica);Emanuele Bianco,Abdullah Fahad,and Faran Rana(International Renewable Energy Agency,IRENA);Toyoda Kohei and Hidaka Yoshitaka(Japan Bank for International Cooperation,JBIC);Toshihiro Aida(Japan Hydrogen Association,JH2A);Pradipta Parhi(JP Morgan Ch

63、ase);Frank Wouters(Middle East and North Africa(MENA)Hydrogen Alliance);Gregory Dolan(Methanol Institute);Juan Manuel Albisetti,Hugo Brouwer,Bernd Scholtz and Ivo Stoel(MinistryofForeignAffairsoftheNetherlands);HanFeenstra(MinistryofEconomicAffairsandClimatePolicyoftheNetherlands);PelineAtamer,Matth

64、ewGriffiths,KumiKitamori,Virginie Marchal,Krzysztof Michalak(Organisation for Economic Co-operation and Development,OECD);Constantino Frate Junio,Hugo Santana de Figueiredo Junior,Fabio Grandchamp,Duna Gondim Uribe,Rebeca do Carmo Oliveira,Shoaib Naqshbandi,Yanna Peixoto de Vasconcelos Guimar(Comple

65、xo Industrial e Portuario do PECEM);Benjamin Bartle,Shravan Bhat,Sascha Flesch,Oleksiy Tatarenko(Rocky Mountain Institute,RMI);Sara HormigoCarnero(SpanishMinistryofEconomicAffairsandDigitalTransformation,MINECO);Petra Schwager and Eun Ji Park(United Nations Industrial Development Organization,UNIDO)

66、;Timothy Walters(U.S.Department of Energy);Ryan B.Dudek and Sara Kelly(U.S.Department of State);Paddy Padmanathan(Zhero Net).xiiKEY FINDINGSKey Findings STATUS.Clean hydrogenhydrogen2 produced from renewable energy,and fossil fuel with safe and responsible carbon capture and storagecan play an impor

67、tant role in the global transition from polluting fuels to low-or no-carbon energy,helping to achieve universal accesstoaffordableandreliableenergyby2030(SustainableDevelopmentGoal7).Hydrogen is an energy carrier that can be used to store,move,and deliver energy and,if produced from clean sources,is

68、 particularly promising for use in hard-to-decarbonize sectors such as steel production,long-haul transport,and others.The challenge today,however,is that current global production of clean hydrogen is limited,representing less than 2 percent of total hydrogen production.While clean hydrogen trade c

69、an change the geopolitics and security aspects of energy,this is a very capital-intensive industry.Therefore,to increase the number of clean hydrogen projects globally,they need to be commercially attractive.Toachievethis,afocusonfinancingandriskmitigationisneededtocreateviableinvestment opportuniti

70、es.In response to strong country interest,$1.65 billion in World Bank funding has been approved for green/renewable hydrogen loans so far in 2023,with more to come.Presently,39 percent of all global clean hydrogen projects under development are in emerging markets and developing countries(EMDCs).How

71、ever,so far only six large renewablehydrogenprojects(100MWcapacity)inEMDCshavereachedthefinalinvestment decision(FID)stage.OUTLOOK.To meet global climate goals,emerging markets and developing countries must play a key role and supply half of global production,equivalent to 20 Mt/year by 2030.That is

72、 equivalent to 100 NEOM projects,the largest hydrogen project under construction in Saudi Arabia,projected to come onstream in 2026.Production of ammonia,methanol,and steel are among the main hydrogen applications.Modeling studies suggest that 25 to 31 percent of hydrogen production will be traded i

73、nternationally by2050.However,fundingneedsaresignificanttorealizethisvision.EMDCsrequirearound$100 billion per year in investments between now and 2030 a huge sum that makes private sector participation critical.ACTION PLAN.A four-point action plan to accelerate clean hydrogen deployment in EMDCs is

74、 suggested.It centers on a series of renewable hydrogen lighthouse projects designedtoincreaseinvestorconfidence.Weproposea10GWinitiative,aimingtodevelopprojects(between100MWand1GWinsize)acrossdifferentnationsanddifferentsettingstodemonstrateviabilityforallstakeholders,reducefinancingcostpremiums,an

75、dcreatescalablesolutions.Givenitsurgency,theeffortshouldbeginwithpromising projects currently in the global pipeline,keeping in mind aspects such as 2 Hydrogen is the most abundant element in the universe and occurs naturally on earth in compound form with other elements in liquids,gases,or solids.H

76、ydrogen combined with oxygen is water(H2O).SCALING HYDROGEN FINANCING FOR DEVELOPMENTxiiitechnologyandapplicationdiversity,replicability,andcosteffectiveness.Ageneralcapacity-buildingandknowledge-sharingeffortisalsoneededtobringgovernmentsupto speed on clean hydrogen opportunities and challenges.HYD

77、ROGEN COST.The information presently available on costs and prices for clean hydrogenisinsufficienttoguidepolicymakingandinvestmentdecisions.Moretransparentprice information should be created.For renewable hydrogen(hydrogen produced from renewablepowersuchaswindandsolar),todayslowestproductioncostis

78、$3/kgforbest-in-class projects;that cost can rise to more than$10/kg under less favorable conditions.In most locations,these costs are well above those for conventional hydrogen(generated from fossil fuel energy without carbon capture)and blue hydrogen(generated fromfossilfuelenergywithcarboncapture

79、).Theexternalfinancialsupportneededtoclosecleanhydrogenseconomicviabilitygapisestimatedbetween$10and$40billion peryearbetweennowand2030.Thisamountisknownasthefinancinggap,i.e.,thegapbetween product value and production cost.The wide range stems from the uncertainties andchallengesthatsurroundthehydr

80、ogenindustrysdevelopment.DE-RISKING.LargecleanhydrogenprojectsinEMDCsfacehighfinancingcostsderivedfrom actual and perceived risks,deterring investors to enter this nascent industry.Six key categoriesofriskshavebeenidentified,inorderofpriority:(1)offtakerisks;(2)equallyweighted political and regulato

81、ry risks;(3)infrastructure risks;(4)permitting risks;(5)technology risks;and(6)macroeconomic risks.The three categories of risks that were given a lower priority are:design,construction,and completion risks;operational and maintenancerisks;andsupplyrisks.Implementingcost-effectiveandefficientde-risk

82、ingmechanisms could substantially decrease the weighted average cost of capital,making projects economically viable and thus accelerating deployment and reducing the financinggap.Onlythroughapplicationofdedicatedriskmitigationmechanismscanlarge-scalecleanhydrogenprojectsinEMDCsachievefinancialviabil

83、ity.ItiscriticalthatEMDC governments choose reputable partners for project development.FIRST MOVERS.Policiespromotingcleanhydrogeninafewfirst-movercountriescanspurdevelopmentelsewhereandbegintodecreasecosts.Governmentswillingnesstoshareandabsorbrisksiscriticaltoacceleratinginvestment.Benefitsawaitth

84、ecompetitiveEMDCsthatchoosetoparticipateinthisprocessasfirstmovers.CleanhydrogenproductioninEMDCs would strengthen the international value chain,yielding substantial socioeconomic developmentbenefitsandincreasingcountriesenergysecurity.Multilateraldevelopmentbanks(MDBs)anddevelopmentfinanceinstituti

85、onshaveastrategicroletoplayinsupportingEMDCswillingtobecomefirstmovers.Theycansupportgovernmentstoattractprivate sector investment by improving enabling conditions,de-risking investments,reducingcosts,andpromotingadequatefinancinginstruments.Moreover,theycansupportcountriesindefiningpolicyframeworks

86、thatcatalyzelocalsocioeconomicbenefitsand climate mitigation to align with national development agendas.Better coordination among participating international institutions will reduce transaction costs and speed up approvals such as through the harmonization of approval and due diligence procedures.S

87、CALING HYDROGEN FINANCING FOR DEVELOPMENTxvExecutive SummaryClean Hydrogen Will Be a Key Part of the Future Global Energy SystemClean hydrogen3 is widely seen as a key component of the global energy transition,notably for its potential to decarbonize hard-to-abate sectors,such as heavy industry(ceme

88、nt,steel,and chemicals),and heavy-duty transport(trucking,shipping,and aviation).A global hydrogen economy will change the geopolitics of energy and could become an engine for sustainable economic growth in emerging markets and developing countries(EMDCs).Several EMDCs are well positionedtobecomefir

89、stmoversinthedevelopmentofthisnewvaluechain,bothfordomesticconsumption and for export.Many countries have already issued strategies and roadmaps to operationalize their ambitions.As a next step,well-aligned policies adapted to those strategies are necessarytoleverageprivatefinancingandmitigatetheris

90、ksoffirstmoversinvestments.The cost of clean hydrogen is a major sticking point in its widespread adoption and deployment.While most attention to date has focused on innovation strategies to lower technologycosts,financingcostshavereceivedlessattention.Thisreportanalyzestheimportanceofthecostoffinan

91、cing,identifiestheprojectrisksthatdriveupsuchfinancingcost,and proposes risk-mitigation measures.The report describes how governments can supportdeploymentbyreducingthecostsofbothtechnologyandfinancing.Successful projects in the coming years will typically require a combination of strong sponsors,ro

92、bustregulation,long-termofftakearrangements,andfinancialsupport.Governmentshaveakey role to play in this early phase.Hydrogen policies on both the supply side and the demand sidemustbewellintegratedforthegreatesteffectandefficiency.Acarefulselectionofearlyhydrogen projects can reduce the need for go

93、vernmentfinancing.Clean Hydrogen Production Must Grow Twenty-Fold by 2030Realizinghydrogenspotentialmeansfirstreplacingtodaysfossilfuel-basedhydrogenproductionwithacleanervariety.Tomeetthe2050climategoals,todayslevelsofcleanhydrogen production must increase 20-fold(40 Mt)through 2030.Today,less than

94、 3“Clean hydrogen”includes hydrogen produced from fossil fuels coupled with carbon dioxide capture and storage(combustion based)or carbon storage(pyrolysis based).These are also known as low carbon hydrogen or“blue hydrogen.”Hydrogen produced from water electrolysis using renewable electricity or fr

95、om biomass is known as renewable hydrogen or“green hydrogen.”“Conventional hydrogen”refers to fossil fuel-based production without carbon dioxide capture and storage.EXECUTIVE SUMMARYxvi2 million tonne(Mt)of clean hydrogen is produced each year.Current projections suggest that of the 40 Mt of clean

96、hydrogen production needed by 2030,an estimated two-thirds would come from renewables while the rest would be of the low carbon variety.Clean hydrogen today is more expensive than conventional hydrogen produced from fossil fuels.This cost gap is the main factor why clean hydrogen projects are often

97、viewed as unviable.Rule of thumb cost estimates for best-in-class projects with optimistic assumptions in favorable locations is$1/kilogram(kg)to produce conventional hydrogen,$2/kg for low carbon hydrogen,and$3/kg for renewable(green)hydrogen,respectively,though clean hydrogen(hydrogen from fossil

98、fuels with carbon capture/storage)can already compete under certain favorable circumstances.Costs vary widely,however,especially for renewable hydrogen.Some EMDCs can be among the lowest-cost producers of clean hydrogen worldwide owing to their favorable renewables resource endowment.Moreover,their

99、resourcepotentialisverysignificant.Thisisakeyreasonwhytheyshouldbepartofearlyhydrogendevelopmentefforts.Existingcountrycostrankingsfromliteratureandmodellingstudiesareoflimitedvalueaschangingprojectspecifics,marketdynamics,andenablingenvironmentscanaffectcostsignificantly.Thereisaneedtodevelopmoreac

100、curatehydrogen cost and pricing information for today and the coming years.When hydrogen is traded internationally,the transportation cost can be as great as the production cost.That is a major reason why there is no international hydrogen commodity market.Nosignificantshippingcapacityforliquidhydro

101、genexistsatpresent.Instead,hydrogen is being shipped in the form of ammonia,a globally traded commodity.Other synthetic hydrocarbon shipping options are being explored,and costs are projected to fall inthecomingyears.Pipelinetransportationcanbesignificantlycheaperthanshippingfordistances up to sever

102、al thousand kilometers.EMDCs Will Need$100 Billion in Investment Annually for Projected Growth in Clean HydrogenExisting hydrogen import policies,national plans,project pipelines,and model analyses indicatethat25to50percentofcleanhydrogenproductionislikelytocomefromEMDCs.4 The upper end of the range

103、 was used for this analysis(20 Mt of clean hydrogen production from EMDCs in 2030).These projections are uncertain;policy and regulatory frameworks will have a profound impact on choices of production locations and volumes forfirstmovers.4China,theworldslargesthydrogenmarket,setuptwolargerenewablehy

104、drogenprojectsin2023.The country is aiming for 5 Mt of renewable hydrogen by 2030,2025%of total EMDC production.However,Chinascleanhydrogensupplyambitionsneedfurtherelaboration,andnomassiveexportsareforeseen.GiventhemagnitudeandparticularcharacteristicsofChinashydrogenpolicies(thecountry has ambitio

105、us hydrogen vehicle plans,notably at the subnational level),the country is treated separately from other EMDCs in this analysis.SCALING HYDROGEN FINANCING FOR DEVELOPMENTxviiScenario studies and the project pipeline suggest that EMDCs have the potential to attract clean hydrogen investments in the o

106、rder of$100 billion per year between now and 2030,more than a ten-fold increase from present levels.Renewable hydrogen,which is more capital intensivethanotherforms,willaccountfor80percentofthecleanhydrogenproductioninvestmentandfinancingneeds.5Theexternalfinancialsupportneededtorealizetheseinvestme

107、ntsinEMDCsandtoclosethe economic viability gap is estimated between$10 and$40 billion per year between now and2030.Thisamountisknownasthe“financinggap.”6 These amounts stand out in light ofthefactthatdevelopmentfinancingworldwidepresentlytotalsjust$200billionperyear.A number of strategies can be dep

108、loyed to mobilize these investments,however,individual projects costing billions or tens of billions of dollars can pose particular challenges.Itwillbeessentialtomobilizeprivatesectorfinancingforcleanhydrogentominimizedependenceonscarceinternationalandpublicfinancialsupport.InitiativessuchastheWorld

109、BanksrecentlylaunchedPrivateSectorInvestmentLab7,theblendedfinanceprinciples5Allinvestmentandfinancingnumbersinthispublicationincludetherenewablepowercomponent,which is not included in some other sources.6The“financinggap”referstothedifferencebetweentheleveloffinancingneededandthelevelthatiscommerci

110、allyjustifiable.Thegapiscalculatedbasedonthedisparitybetweenproductvalueandproductioncost.Thegapisequalto10-40%oftotalfinancingneeds.7 The Private Sector Investment Lab aims to address obstacles to private sector investment in emerg-ingmarkets,withafocusonrenewableenergyandclimategoals.Itbringstoget

111、herprivatefinanceleaders and experts to develop solutions for mobilizing private capital to combat climate change and reducepovertyintheseregions.TheMDBsblendedfinanceapproachisdescribedhere.FIGUREES.1Key Characteristics of Renewable Hydrogen Production by ComponentGreen H21 Mt/yrElectrolyzer10 GWRe

112、newables20 GWInvestment$30 BILLIONSource:Authors analysis.EXECUTIVE SUMMARYxviiiembraced by multilateral development banks(MDBs),and the Blended Finance Principles of the Organisation for Economic Co-operation and Development8,as well as public-private partnershipstomobilizemoreprivatefinancewillbec

113、rucialtogetinitialprojectsofftheground.The EMDC Project Pipeline is Full of Projects Stuck in Early StagesAround39percentoftodaysprojectpipelineisinEMDCs,withimportantactivityconcentratedin the Middle East,Latin America,India and China,followed by sub-Saharan Africa and other Asia.But translating hi

114、gh-quality renewable endowments into hydrogen production investments remains a challenge.The main challenge for EMDCs is to push projects toward the front-end engineering design(FEED)stage.ThereisarelativelylowrepresentationofEMDCs(7percent)atthatstage,comparedwithdevelopedcountries(93percent).Todat

115、e,veryfewlargeprojectshaveenteredthefinalinvestmentdecision(FID)stageworldwide.Thevalueofcleanhydrogenprojects in EMDCs that have reached the FID stage is less than$20 billion.TheshareofinvestmentsinEMDCsis44percent,includingChinas18percentshare.However,the44percentfigureislargelydependentonafewproj

116、ects,suchasNEOM in Saudi Arabia.Because risk-mitigation measures are not far advanced,cost of capital is high and it ischallengingtofindofftake;manyannouncedprojectsarestuckinearlystagesofdevelopment,struggling to complete the FEED studies.Low-Cost Financing Must Be Combined with Lower Investment Co

117、stsProjections of falling production costs for renewable hydrogen depend critically on two factors:lower installed costs of electrolyzer systems9 and competitive costs of renewable power.From the export perspective,transportation costs are also critical.The production costs of clean and conventional

118、 hydrogen are expected to converge around 2030,provided greenhouse gas emissions are priced properly and the unit investment cost for renewable hydrogen maintains its downward trend.The convergence also depends on 8TheOECDsBlendedFinancePrinciplesareapolicytoolfordonorgovernments,developmentcooperat

119、ionagencies,philanthropies,andotherstakeholderstodesignandimplementeffectiveandtransparentblendedfinanceprograms.MoredetailsareavailablefromOECDsBlendedFinanceGuidance and Principles.9 An electrolyzer system consists of an electrolyzer stack and balance of plant(BOP).SCALING HYDROGEN FINANCING FOR D

120、EVELOPMENTxixwhether the cost of capital declines as technology matures,as project developers gain experience,andasfinanciersbecomemorecomfortablewithcleanhydrogenprojects.These factors can be mutually reinforcing.To achieve 2030 convergence,a virtuous circle is needed in which governments support f

121、irstmoversprojectsbyfinancingthetechnology,education,andscaleneededtoaccelerate deployment and create a viable market.Thenear-termprospectsforreductionsinelectrolyzercostremainuncertain.Todayscostsvarysignificantlybymarket,basedonvariationsincostsinChina,Europe,India,andtheUnited States.The same unc

122、ertainty can be observed for the cost of electricity used to produce renewable hydrogen.The costs incurred by renewable electricity and the hours of electrolyzer operation will depend on the carbon standard that hydrogen production must meet.Initially,theinterpretationof“lowcarbon”shouldbeflexibleen

123、oughtoyieldaffordablehydrogen;the standard can be tightened in later years as the costs of renewable electricity and electrolyzers fall and as demand rises.But internationally traded hydrogen and hydrogen derivatives may have to comply with global standards and regulations,which canbecomplexandchall

124、enging.Cleanhydrogendefinitionsandstandardsthathaverecently been set in Europe and ongoing discussions in the United States can provide relevant insights.EMDCs will have to balance standard setting and continue their dialogue withofftakers.Therelativecostdifferentialbetweencleanandconventionalhydrog

125、enislesspronouncedfor hydrogen derivatives,such as ammonia,steel,methanol,and jet fuel.Moreover,the ease of transporting these commodities creates an opening for the deployment of clean hydrogen in EMDCs,and the increase in value added makes a strong development case.Bringing manufacturing companies

126、,shipping,and airline companies,for example,on board can accelerate hydrogen production in early stages and enable EMDCs to internalize a larger share of the hydrogen value chain.Thecostofcapitalaffectsboththelevelizedcostofelectricityandthelevelizedcostofhydrogen production.Rich resource endowments

127、 in EMDCs compensate somewhat but not entirelyfor the higher cost of capital in EMDCs.Even high-quality projects with reputable partners and accompanied by sovereign risk guarantees typically require double-digit cost of capital in EMDCs.Managing Risk Well Will Accelerate Clean Hydrogen DeploymentCe

128、rtain essential factors must be present before a clean hydrogen project can make it to theFIDstage.Secureofftakeintermsofvolume,price,andprojectdurationmustbeinplace.Infrastructure to handle hydrogen,water,electricity,carbon dioxide,and hydrogen derivatives must also be in place when production begi

129、ns.In addition,the product must be recognizedascleanhydrogenbyestablishedstandardsandcertificationsystems.EXECUTIVE SUMMARYxxFIGUREES.2Top 10 Identified Risks for Clean Hydrogen Projects in EMDCsPost-FIDriskscenteronconstructionoverruns,offtakedefault,technologyissues,politicalrisk,andexchangerisks,

130、allofwhichaffectthecostofcapitalandthuscompetitiveness.Once a project has reached the FID stage,targeted policies and risk-mitigation measures that reduce the cost of capital can decrease the cost disparity between conventional and clean hydrogen.Some risks are country and actor dependent.These incl

131、ude the creditworthiness and credibility of the project sponsor;of the contractor responsible for engineering,contracting,andprocurement;oftheprimarytechnologyprovider;andoftheofftaker.Allofthese,of course,feature prominently in any risk assessment.Some aspects of political risk can bemitigatedthrou

132、ghwell-establishedmechanismsofferedbyMDBsanddevelopmentfinanceinstitutions(DFIs),suchaspoliticalriskguarantees.Clean hydrogen also carries perceived technology risks.Such risks can be mitigated by insurance or guaranteesfor example,from export credit agencies in countries that produceelectrolyzers.F

133、irst-moverriskisalsosignificant,whereproductioncostsareprojected to fall in the coming years and product prices are likely to rise.Source:Authors analysis.OfftakePolitical and RegulatoryInfrastructureTechnologyPermitting and ComplianceMacroeconomicSub-categories of risksUncertain cleanhydrogen marke

134、tdemandLimited supportinginfrastructureUncertainty abouttax and incentivesUncertain technologyperformance(electrolyzersand system integration)Permitting risks(environmental and social)Rising interest ratesand exchange ratesPolitical riskLimited credibleoff-takersUncertainty abouthydrogen priceLack o

135、f existinghydrogen trading marketOfftake0%10%20%30%40%50%60%Frequency of risk mentioningSCALING HYDROGEN FINANCING FOR DEVELOPMENTxxiGovernments Can Reduce Risk by Building Enabling FrameworksGovernments will play a vital role in the realization of clean hydrogen projects for the rest ofthisdecade.T

136、heymustcreateenablingpolicyframeworksandfindsolutionstoclosethefinancinggapforearlyprojects.Effectivegovernmentpoliciescanlessentheneedforpublicfinancialsupportbycreatingtherightenabling environment for investments,increasing pricing transparency,and reducing risk.Developed countries have already la

137、unched extensive mission-oriented strategies,with more than$100billioninannouncedsubsidies.EMDCsdonothavethesamefinancingpower.However,carefulselectionofearlyhydrogenapplicationsoranexport-orientedstrategybenefitingfrompartnershipswithcountriesofferingend-userincentivescansubstantiallyreducefinancin

138、gneeds.Above all,governments must carefully choose the projects they wish to support in light of theprojectsqualityandlikelihoodofsuccess.Developmentofhydrogenhubsthatclustersuppliers and producers can reduce the size of individual projects and eliminate the need for extensive transportation infrast

139、ructure.Whereas export projects are likely to be very large,smallerscaleopportunitiesexistforhydrogenusenationally,suchasinrefineriesorfor fertilizer production.National uses can complement exports.Given the complexity of the hydrogen sector,governments should consider the appointment or establishme

140、nt of an agency responsible for national hydrogen development.Adequate policies,regulation,andfinancialinstrumentswillbeessentialtolowerrisksandtoattractpatientcapitalsuchaspensionfundsandsovereignwealthfunds.Inthiscontext,refinancingprojects upon completion is a way to lower the cost of investment

141、capital and to unlock sources of funding with a higher risk appetite.International Financial Institutions Can Accelerate Hydrogen FinancingMDBs and DFIs should strengthen their support for EMDCs that are taking steps to advance the energy transition on their territoryfor example,through support for

142、carbon pricing schemes and rapid rollout of renewable power generation.Equally deserving of support are knowledge sharing,capacity building,and promotion of internationalcooperation.Here,examplesincludecertificationschemesimplementation,evolution of the market and pricing models,technical standards,

143、and use of a single platform for channelling clean hydrogen development and climate funding and support.The World BanksHydrogenforDevelopmentPartnership,establishedatCOP27andmanagedbyWB/ESMAP,is an example of suchaneffort.Forgovernmentswillingandabletobecomefirstmovers,MDBsandDFIscanprovideguarantee

144、s and deploy instruments to mitigate risks.This type of support includes technical EXECUTIVE SUMMARYxxiiassistance,developmentpolicyfinancing,infrastructureloans(e.g.,forportsandpipelines),facilitationofofftakearrangements(includingdemandaggregation),andstrengthenedmatchmaking between EMDC governmen

145、ts and international hydrogen initiatives.MDBs and DFIs are well positioned to support so-called lighthouse production projects designed to encourage further investment in EMDCs.This type of support includes(1)prioritizing and enhancing the quality of project proposals;(2)supporting the initial stag

146、es of project development;(3)pooling international development funding for investments to lower financingcostsandraiseinvestorconfidence;(4)participatinginblendedfinancearrangements;(5)offeringrisk-mitigationinstruments;and(6)monitoringandquantifyingtheclimatechangeanddevelopmentbenefitsofcleanhydro

147、genprojects.To date,international support has concentrated on making EMDCs attractive sites for hydrogen production by improving the enabling environment for incoming investment(most of it export oriented)and ensuring the adequacy of essential infrastructure.But such supply-side assistance could be

148、strengthened on the demand side by devising the right mix of tax incentives,regulations,and policies to entice local companies to decarbonize their activities through the use of clean hydrogen.Stimulating local demand would widen the path to clean hydrogen investment by lessening the logistics and i

149、nfrastructure costs associated with export-oriented investment.Better coordination among participating international institutions can reduce transaction costs and speed up deploymentfor example,through harmonization of approval and due diligence procedures.MDBs should consider developing a joint str

150、ategy to ensure that limitedamountsofconcessionalanddevelopmentfinancingareusedtotheirmaximumeffect,notablyforprojectsintheearlystagesofdevelopment.Advancing Support for Renewable Hydrogen FinancingCOP28 will provide an opportunity to discuss support for renewable hydrogen lighthouse projects facili

151、tated by MDBs and DFIs acting in concert.Lighthouse projects are necessary to accelerate the scaling up of the clean hydrogen market.Active government and financinginstitutionsupportwillbeneededtooperationalizeapilotprogram,tentativelywith a 10-gigawatt(GW)electrolyzer capacity reaching the operatio

152、nal stage.Such a programcanincreaseinvestorconfidenceinvariousEMDCsettings,leadingtolowerfinancingcostsandeasieraccesstocapital.Givenitsurgency,theeffortshouldscreenprojects from the existing pipeline,using criteria such as diversity,replicability,project size,andcosteffectiveness.SCALING HYDROGEN F

153、INANCING FOR DEVELOPMENTxxiiiScaling Up Clean Hydrogen FinancingSolutions for Development and Decarbonization2 Mt/yr.clean H2 produced globally in 2022 100 MW capacity)in EMDCs have reached the FID stage,three of them in China.Announced projects in EMDCs would require$450 billion in investment betwe

154、en now and 2030.The projected hydrogen growth need translates into an investment need of$100 billion per year between now and 2030.Clean ammonia projects amounting to 133 Mt have been announced in EMDCs.Of the total capacity,only 1.6 Mt is under construction(representing 1.2percent of the announced

155、projects).A quarter of the 4.5 Mt e-methanol projects that are expected worldwide by 2027 is set to be produced in EMDCs.Total global renewable steel production capacity announced as of August 2023 could amount to 40 Mt by 2030,which would imply hydrogen demand of around 4 Mt.Capacity announcements

156、in developing countries are growing fast.Modeling studies suggest that 25 to 31percent of hydrogen production will be traded internationally by 2050,roughly half through pipelines and half as hydrogen or hydrogen-derived commodity shipments.The prospect of such trade is a production opportunity for

157、EMDCs.Some EMDCs are developing substantial capacity to produce clean hydrogen.Apart from China,several countries of the Gulf Cooperation Council stand out(Oman,Saudi Arabia,United Arab Emirates).Others include Brazil,Chile,Egypt,and India.Colombia,Mauritania,Namibia,and South Africa are still at an

158、 earlier development stage while the ONE CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOSCLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS2project pipeline is significant in these countries.Central Asia,the rest of Sub-Saharan Africa,and most Southeast Asian countries are lagging.The capacity under dev

159、elopment represents less than 10 Mt of hydrogen by 2030,but the number of projects under development is growing.Based on a large number of cases,four business models appear to drive hydrogen development.The case studies point to certain best practices that may help to design successful projects and

160、portfolios.Recent Developments and Outlook in the Short to Medium TermGlobally,about 100 Mt of hydrogen is produced and consumed each year.This accounts for nearly 2.5percent of global final energy consumption and 1 Gt of energy-related CO2 emissions.Around 98percent of hydrogen is produced from fos

161、sil fuels without CO2 capture.Three-quarters of this amount is produced from natural gas,and one-quarter from coal(almost exclusively in China)(World Economic Forum 2023).Todays hydrogen consumption is dominated by refining(for oil desulfurization and hydrogenation of heavy products)and production o

162、f synthetic nitrogen fertilizer(for use as a feedstock in ammonia manufacturing).These two market segments are of similar size and account for about two-thirds of current global hydrogen use.Decades of experience with CO2 capture from fossil fuel-based hydrogen production provide a good starting poi

163、nt for low carbon hydrogen production.Around 1percent of all hydrogen is currently produced from fossil fuels with CO2 capture and storage.An estimated seven projects exist where the CO2 from natural gas steam reforming during hydrogen production is captured and used for enhanced oil recovery.Thirte

164、en similar projects are under consideration in the Middle East,several with contracts for engineering,procurement,and construction in place(Moati 2023).In Texas(USA),hubs are being planned that could produce 5 to 7 Mt of low carbon hydrogen by 2035(McKinsey&Company 2022).Global projections for 2030

165、total 11 Mt of low carbon hydrogen.The advancement of the low carbon hydrogen industry is prompted by growing experience with underground CO2 storage.Todays steam methane reforming technology may yield 70percent capture rates.New technologies such as auto thermal reforming or partial oxidation can,t

166、heoretically,can achieve 90 to 99percent CO2 capture efficiency at economically attractive costs,but practical experience is still limited,as is experience with permanent CO2 storage.Other remaining challenges include the fact that the production and transport of natural gas for low carbon hydrogen

167、production can result in significant methane emissions,another potent greenhouse gas.Therefore,a thorough technical assessment to control and prevent methane emissions must be implemented as a precondition for low carbon categorization.SCALING HYDROGEN FINANCING FOR DEVELOPMENT3As of mid-2023,only 0

168、.5 GW of dedicated electrolysis capacity was in operation,while 1.2 GW was under construction(EH2 analytics 2023).This operational capacity can produce less than 0.1 Mt of clean hydrogen per year(0.1percent of total global hydrogen production).Existing projects are at megawatt(MW)scale(Table1.1).How

169、ever,dedicated electrolyzer capacity is expected to ramp up quickly in the coming years,with GW-scale applications.The future of renewable hydrogen is closely intertwined with the future of renewable power.Renewable power is the prime cost component of renewable hydrogen,which is viable only because

170、 of the rapidly declining cost of solar and wind power generation.But replacing the conventional hydrogen produced today with hydrogen produced from renewable energy would require the entirety of the solar and wind power generation capacity in operation today.The growth of hydrogen produced from ren

171、ewable sources will have a profound reciprocal effect on the growth of renewable power.The average size of renewable hydrogen production plants is growing fast.In July 2023,Sinopecs Kuqa Plant came into operation with a capacity of 260 megawatts(MW)and 20 kilotonnes(kt)per year,while a 390 MW and 30

172、 kt per year plant is scheduled to come into operation later this year.Chinas largest renewable hydrogen project in Songyuan a$4 billion,640 MW ammonia/methanol facilityhas broken ground,as discussed further on in this chapter.Many gigawatt-scale projects have been announced around the world but onl

173、y a few are under construction,such as Saudis NEOM project,scheduled to come online in 2026(Box1.1).The projects are assembled from modular electrolyzers with a capacity of 5 to 10 MW each.Despite this modularity,the economies of scale favor a rapid scale-up as cost-reduction synergies are achieved

174、in power and gas treatment.TABLE1.1Clean Hydrogen Projects with a Final Investment Decision in EMDCs(excluding China),as of January 2023NAMECOUNTRYCOMMISSIONINGAPPLICATIONELECTROLYZER CAPACITY(MW)Power-to-Gas CoquimboChile2022Grid injection0.15NTPC-Technip-L&T MeOH Project,VindhyachalIndia2022Methan

175、ol5Simhadri MicrogridIndia2022Power0.24GAIL Vijaipur ProjectIndia2023Other industry10Unigel,Phase I(Camacari)Brazil2023Ammonia60Renewable Falcon,Phase IArgentina2024Synfuels6.7Haru OniChile2022Synfuels1.2Egypt Renewable OCI/Fertiglobe/ScatecEgypt2022/2024Ammonia10(phase 1)/100NEOMSaudi Arabia2026Amm

176、onia2,000Source:IEA 2022 and World Bank Data.CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS4BOX1.1PROSPECTS FOR INTERNATIONAL TRADE IN CLEAN HYDROGENThe global potential for production of renewable hydrogen is more than 46 Gt per year,exceeding global primary energy consumption by a factor of nine(

177、Franzmann etal.2023).However,the production cost varies by region and country.Because of these cost differences,trade and economic specialization makes economic sense.For clean hydrogen,low-cost natural gas in combination with carbon storage and the availability of high-quality,low-cost renewable en

178、ergy resources are critical factors.Three recent trade studies project that 25 to 31percent of hydrogen production will be traded internationally by 2050,roughly half through pipelines and half as hydrogen or hydrogen-derived commodity shipments(Hydrogen Council&McKinsey 2023;AFRYs Global Hydrogen T

179、rade Model 2022;International Renewable Energy Agency 2022).These projections make a strong case for the engagement of EMDCs in the global hydrogen economy.Long-Term Clean Hydrogen ScenariosA variety of scenarios describe how clean hydrogen deployment should or could develop in the medium(2030)and l

180、ong term(2050).This report reviews eight leading scenario studies that explore the role of hydrogen in the global energy transition.Seven are normative 1.5C scenarios;one is a forecast(DNVGL;Figure1.1).In Figure1.1,the eight bars on the left show the scenario results for 2030,while the eight bars on

181、 the right show results for 2050.The contributions of low carbon and renewable hydrogen are shown separately.Supply projections for 2030 range from 11 Mt to 90 Mt per year.The range is narrower in relative terms in 2050,from 235 to 240 Mt(Shell and DNV GL)to 682 Mt(Hydrogen Council).In any scenario,

182、demand for clean hydrogen in 2050 is much greater than total hydrogen demand today.The clean hydrogen projections for 2050 translate into 5 to 15percent of total final consumption.Hydrogen is thus part of the broader energy transition and should be SCALING HYDROGEN FINANCING FOR DEVELOPMENT5included

183、 as part of a portfolio of decarbonization solutions.There is unanimity that renewable hydrogen will dominate by 2050,with the share of renewable hydrogen varying from 62percent(Goldman Sachs 2022)to nearly 100percent(BloombergNEF 2023).Three scenariosthose of BloombergNEF,the International Renewabl

184、e Energy Agency,and the Hydrogen Councilproject a renewable hydrogen production of about 500 Mt by 2050.The World Bank estimates that scaling up clean hydrogen worldwide requires an accumulated investment of$25 trillion between 2023 and 2050nearly$1 trillion each year.10 Around half of this investme

185、nt is for hydrogen production,a quarter for infrastructure,and a quarter for end-use investments.10 This is similar to the studies from Goldman Sachs and Financial Times.010040200300400500600700800DNVGLIEAShellBPGoldman SachsBNEFHydrogen Council&McKinseyHydrogen Council&McKinseyIrenaDNVGLIEAShellBPG

186、oldman SachsBNEFIrenaHydrogen Supply(MtH2/yr)Low carbon hydrogen Renewable hydrogen20302050FIGURE1.1Hydrogen in the Global Energy Transition and Decarbonization ScenariosSources:(Shell 2023;International Renewable Energy Agency 2023;International Energy Agency 2023;Goldman Sachs 2022;DNV 2022;BP 202

187、3;Hydrogen Council&McKinsey 2023;International Energy Agency 2023).CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS6Markets for Clean HydrogenThe assumptions of high-and low-demand scenarios have been assessed in detail.The Shell/DNV GL and Hydrogen Council-Net Zero scenarios were used to produce Fig

188、ure1.2.For 2020,nearly all hydrogen is fossil fuel based;for 2050,all hydrogen is clean.The analysis shows the importance of applications in industry and transport.Hydrogen is difficult to transport because of its physical characteristics,so most hydrogen is processed and consumed on site.It is like

189、ly that local processing into derivatives(discussed below)will remain dominant in the near future;for that reason,the hydrogen economy has an important industrialization and development dimension.Transport applications will include significant hydrogen derivatives such as ammonia,methanol,and sustai

190、nable aviation fuels(SAF).Hydrogen use in transport holds great potential,but its prospects are relatively uncertain compared to competing direct electrification and biofuel options.In terms of industrial applications,clean hydrogen can also be used in refineries,but this application is likely to fa

191、de in coming decades under the 1.5C scenario as oil demand falls.The production of ammonia,largely for fertilizer today,may grow as a shipping fuel and clean energy vector.Methanol production as a shipping fuel and feedstock for olefins may also grow.Finally,the use of hydrogen in the production of

192、iron,steel,and sustainable aviation fuels is likewise projected to grow.OtherIndustryTransportHydrogen Demand(MtH2/yr)2050 low20202050 high8007006005004003002001000FIGURE1.2Global Hydrogen Consumption across End-Use SectorsSource:Shell/DNV GL and Hydrogen Council&McKinsey Net Zero scenario.Note:The

193、industry and transport use cases include hydrogen derivatives such as ammonia,methanol,and synthetic jet fuel.SCALING HYDROGEN FINANCING FOR DEVELOPMENT7The four major hydrogen derivatives are ammonia,methanol,steel,and aviation fuel.Given their importance for global hydrogen sector developments the

194、y are discussed separately.Ammonia.The Ammonia Energy Association maintains a database of clean ammonia projects(Ammonia Energy Association 2023).The database shows that 45 Mt of renewable ammonia capacity and 20 Mt of low carbon ammonia production capacity should be operational by 2030.In total,133

195、 Mt clean ammonia projects are under development in EMDCs(excluding China),half of all such projects under development worldwide.Of these,1.6 Mt of capacity is under construction(Table1.2).Combined,all projects currently under development worldwide represent hydrogen demand of around 40 Mt(the proje

196、cts targeting 2030 represent 13 Mt),indicating the importance of ammonia for global hydrogen deployment through 2030.Methanol.The Methanol Institute(Methanol Institute 2023)reports that 63 e-methanol projects are under development as of 2023;all are set to begin operations by 2027.These projects wil

197、l produce 6.2 Mt e-methanol,representing 1.5 Mt of hydrogen demand.They include two projects in the Magallanes region of Chile(one being Haru Oni,at a total of 626 kt per year).Fifteen projects are under development in China,two in India(27 kt total),and one in South Africa(120 kt).In total,known e-

198、methanol projects in EMDCs account for less than 1 Mt methanol in 2030.Steel.Worldwide,42 hydrogen-powered steelmaking projects have been announced(Leadership Group for Industry Transition 2023).At least three renewable steel plants are being constructed in the Middle East,with more under developmen

199、t in Brazil,Namibia,and South Africa,among other countries.Green steelmaking is being deployed on a commercial scale in Sweden and Spain(see below).Elsewhere in Europe and in China,a large number of renewable steel projects are under development.Renewable steel capacity could total 40 Mt by 2030,rep

200、resenting a hydrogen demand of around 2 to 4 Mt.Around half would be in EMDCs(excluding China).TABLE1.2Renewable Ammonia Plants Under Construction in EMDCs(excluding China)PROJECT NAMECAPACITY(KILOTONNES)COMMISSIONINGOman Acme Duqm105202425Brazil UNIGEL Camacari(Phase 1)102023Morocco GAP Jorf Lasfar

201、1.42024India Renewable Himachal Pradesh1002024Vietnam Tra Vinh1342026Saudi Arabia NEOM1,2002026Source:Ammonia Energy Association(2023).CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS8Aviation Fuel.Blending mandates and production goals worldwide have the potential to trigger at least 12.8 Mt sustain

202、able aviation fuel supply by 2030.The majority will be biofuel,of which around 1 Mt will be e-fuel,which translates into less than 0.5 Mt per year of hydrogen demand worldwide.E-fuels are expected to ramp up quickly after 2030.Investment Needs Through 2030The number of renewable and low carbon hydro

203、gen production projects in the pipeline grew from 230 in 2022 to 435 in 2023.Among these projects,the vast majority center on renewable hydrogen(412 projects,versus 23 low carbon hydrogen projects).About a quarter of all projects115are in EMDCs(excluding China)(Figure1.3).The Hydrogen Council estima

204、tes global clean hydrogen production financing needs between now and 2030 at$700 billion(excluding China and the renewable power generation component);only 4percent of the required capital has been committed thus far.If renewable power in included,EMDC will need an investment of$700 billion between

205、now and 2030,which translates into$100 billion per year(Figure1.4).This compares with$450 billion of investments implied in the project pipeline.Only a fraction of these projects has reached the investment decision stage.About 20 clean hydrogen projects in EMDCs outside China have reached the FID st

206、age.Table1.1 provides data on some of these.A much larger number are at various stages Project announcements in 2022Project announcements in 2023investments required to developprojects announced through 203020222023$117B$48B$46B$34B$21B$19B$18B$17BEuropeLatinAmericaNorthAmericaOceaniaMiddleEastAfric

207、aChinaJapan,SouthKorearest ofAsiaFIGURE1.3Investment Needed to Develop Announced Projects Covering the Hydrogen Value Chain Through 2030(billions of U.S.Dollars),and Project Investment Volume Growth 202023Source:The figure was adapted from Hydrogen Council 2022.Note:Dark blue represents project inve

208、stments in 2022;light blue,project announcements in 2023 across the value chain.Excludes the renewable power component.SCALING HYDROGEN FINANCING FOR DEVELOPMENT94003002001000900800700600500Investment Needs(US$billion)FIDAnnouncedinvestmentsInvestmentgapTotal investmentneedsProductionInfrastructureE

209、nd useFIGURE1.4Emerging Markets and Developing Countries Investment Needs Through 2030Source:World Bank analysis based on Hydrogen Council and McKinsey(2023).of preparation.These projects include production processes,as well as enabling infrastructure and end-use projects.The largest and most advanc

210、ed of the projects announced in developing countries is the$8.5 billion NEOM project in Saudi Arabia,which has reached financial closure.Oman has recently signed six agreements worth$20 billion with international developers to build renewable hydrogen production plants inside the country.Around 65 p

211、rojects have been announced across the Middle East and North Africa(MNA)region.The World Bank is currently supporting deployment efforts in more than 10 countries,including Brazil,Chile,India,Mauritania,and Namibia.Hydrogen DeploymentGlobal demand for hydrogen projects is high,but progress varies by

212、 region.So far,investment decisions are not commensurate with the 1.5C pathways.At the end of January 2023,1,046 clean hydrogen projects around the globe with a size in excess of 1 MW(production,infrastructure,and end-use)were in various stages of development(Hydrogen Council&McKinsey 2023).Less tha

213、n 10percent of all announced projects around the globe(production,CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS10infrastructure,and end-use)reached FID between 2022 and 2023,which represent$29 billion of investments(excluding the renewable power component).Most of these projects will be implemente

214、d in North America($10 billion),Europe($7 billion),China ($5 billion),and MNA($5 billion).Companies around the globe have announced hydrogen production projects that would potentially produce about 25 Mt per year of renewable hydrogen and about 13 Mt per year of low carbon hydrogen by 2030.Sixty-six

215、 clean hydrogen production projects have reached the FID stage,30percent more than the previous year.These projects represent 2.1 Mt per year of clean hydrogen supply:1.1 Mt of low carbon hydrogen(all in North America)and 1 Mt of renewable hydrogen(35percent from China,about 20percent from North Ame

216、rica and the Middle East,and 10percent from Europe).In 2022,the number of announced production projects increased by 47percent,and the number of projects at the FEED stage increased by 12percent,while projects that had reached the FID stage increased by just 9percent.Projects that had moved beyond t

217、he FID stage are slated to produce 1.5 Mt per year of hydrogen;another 1.5 Mt was at the FEED study stage.Figure1.5 shows the breakdown of projects by stage,differentiating high-income countries,EMDCs,and China.It shows that EMDCs are well represented in the early stages but underrepresented in the

218、FEED and FID stages.More specific comments on the main stages of the projects follows.Investment(US$billion)High IncomeEMDCChinaShare of investment in EMDCs currently in each project phaseAnnouncedFeasibilityFEEDFID+All stagesTotal43%47%3%7%$148B62%31%7%61%33%6%$105B50%47%3%$37B93%7%0%$29B57%26%18%$

219、319B$195B$105B$19BHighincomeEMDCChinaFIGURE1.5Breakdown of the Global Clean Hydrogen Project Pipeline by Country Group and Project Phase Through 2030(in US$billion)Source:Hydrogen Council(2023);McKinsey(2023).Note:Investment numbers exclude the renewable power component.FID+refers to any project at

220、or beyond the FID stage.SCALING HYDROGEN FINANCING FOR DEVELOPMENT11Feasibility Stage The vast majority of gigawatt-scale projects have not yet moved beyond the stage in which feasibility is determined,indicative of the relative immaturity of the industry.Almost all gigawatt-scale projects announced

221、 in EMDCs are designed for export,implying that the opportunities and challenges of these projects depend on the development of an international market(Box1.1).Estimates of unit investment cost vary widely because the definition of project boundaries varies from project to project,notably whether re

222、newable power supply will be included and,if it is,at what cost.Front-End Engineering Design Stage(FEED)Most FEED projects are less than 300 MW in scale.The number of large-scale projects in advanced stages of maturity is limited.So far,only one project(Hyphen)of more than 1 gigawatt(or more than$1

223、billion)is at the FEED stage.FEED-stage information is often not publicly announced.For that reason,the data appearing in this report should be viewed as indicative rather than exact.Because the market for hydrogen is still limited,real-world information on hydrogen pricing and production costs is s

224、carce and in flux.More and better information is needed for policy makers,investors,and financiers.Final Investment Decision Stage(FID)One small low carbon hydrogen plant is in operation in the EMDCs(excluding China).The Al Reyadah plant in the United Arab Emirates produces 0.2 Mt hydrogen per year

225、from an investment of$140 million.$6.2 billion has been committed in FID projects in EMDCs,exclusive of the capital cost of renewable power supply.If the latter is included,the commitment rises to$18 billion.Across the EMDCs(excluding China),there are only five renewable hydrogen projects of more th

226、an 10MW,three of which have an electrolyzer capacity of more than 100 MW.As noted,only one product of more than 1 GW is in the FID stage.In EMDCs,only three existing post-FID renewable hydrogen projects with an investment volume of more than$100 million will be operational by 2030.These are NEOM in

227、Saudi Arabia(2GW electrolyzer),a green ammonia plant in Ba Tri,Vietnam(240 MW electrolyzer),and the Greenko green ammonia plant in Una,India(140 MW electrolyzer).These are trailed by the UNIGEL Camacari project in Brazil(60MW,$80 million).More than half of the investments that have reached the FID s

228、tage in EMDCs are for production of hydrogen(55percent).Much less investment has been made in infrastructure and end uses,both of which are needed to create an effective market.CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS12One of the most active regions is MNA,where 76 clean hydrogen production p

229、rojects were at various stages of development as of April 2023(Figure1.6).More than$70 billion in hydrogen projects have been announced since mid-2020.Egypt,Oman,Saudi Arabia,and the United Arab Emirates are at the vanguard of the growing renewable hydrogen economy in the region.Around two-thirds of

230、 proposed projects focus on ammonia production.The total clean hydrogen production capacity under development is 13 Mt by 2030;government targets account for about 4 Mt by that same year.Chile and Brazil are the leading countries for hydrogen in Latin America,with Colombia emerging.H2Brazil has iden

231、tified 42 hydrogen projects in the country,mainly concentrated in export hubs(Pecem in Ceara,Rio Grande do Norte,Bahia,and Porto do Acu).In Chile,important developments are concentrated in the north(Antofagasta)and south(Magallanes).Chile is home to some 36 renewable hydrogen projects.In Colombia,28

232、 hydrogen projects with 15 GW electrolyzer capacity are under development.11 Total regional production estimates range from 2.2 to 6.3 Mt per year by 2030.Renewable H2 projectsLow-carbon H2 projectsProjects with undisclosed color1)Includes some yellow H2 projectsMoroccoAlgeriaIsraelKSABahrainUAEMaur

233、itaniaTunisiaEgyptJordanQatarOman942224221111131101)1)121)IBRD 47560|OCTOBER 2023Total of 76 projectsacross MENAwith 85%projects geared towards producing renewable hydrogenFIGURE1.6Clean Hydrogen Project Announcements in the Middle East&North Africa,by Country (as of Q3 2023)Source:Dii and Roland Be

234、rger 2023.11 Hydrogen Colombia(2023)Colombia,a strategic country for hydrogen future.Projects report 2023.SCALING HYDROGEN FINANCING FOR DEVELOPMENT13India is targeting 5 Mt of renewable hydrogen production by 2030.Initially aimed at export,discussions are ongoing to obligate national consumption in

235、 industries such as refineries and steelmaking.Mauritania,Namibia,and South Africa are the most active countries in Sub-Saharan Africa in terms of gigawatt-scale projects.Namibia has one major project(Hyphen)that has reached FEED stage,and several others in the pre-FID stage.In Mauritania,four megap

236、rojects are being developed,while in South Africa,seven projects are under development.The World Bank is actively engaged in all three countries.Hydrogen efforts are spreading with activity in Angola,Djibouti,Democratic Republic of Congo,Ethiopia,Kenya,Uganda,and Zambia.China is a particular case be

237、cause of the existing size of its hydrogen economy(National Energy Administration China 2023;Chinese Government Network 2021).Of the 34 Mt hydrogen that China produced in 2021,80.3%was produced from fossil fuels,18.5%was industrial by-product(coke oven gas etc)and 1.2%was from electrolysis.This incl

238、udes 0.1%from dedicated water electrolysis for hydrogen production(World Economic Forum,2023).As of the end of 2022,China has planned more than 300 renewable hydrogen production projects,36 completed and operational projects,and the cumulative annual renewable energy hydrogen production capacity is

239、approximately 56,000 tonnes.Among them,23 new renewable hydrogen energy projects were completed and operational by 2022(China Hydrogen Alliance,2022).Two large production projects are scheduled to come onstream in 2023(see elsewhere in this Chapter).By 2025,the goal is to develop a hydrogen system w

240、here consumption is located close to demand,be it industrial by-product or renewable hydrogen production.The aim is to produce 50,000 hydrogen fuel cell vehicles per year and to develop an adequate refueling infrastructure.The target is 100200 kt renewable hydrogen production per year yielding 12 Mt

241、 CO2 emissions reduction per year(National Development Plan 20212035).By 2030,the annual demand for hydrogen is expected to reach 37 Mt,accounting for approximately 5percent of final energy consumption;renewable hydrogen production is projected to grow to 5 Mt,with 80 GW electrolyzer capacity.Accord

242、ing to the“China Hydrogen Energy and Fuel Cell White Paper”(2020)the number of hydrogen refueling stations in China will reach 1,500 in 2035 and more than 10,000 in 2050.By 2050 the production capacity of fuel cell systems target is 5.5 million units per year,the number of hydrogen refueling station

243、s is 12,000,and the fuel cell vehicles stock will reach 30 million units.Under the 2060 carbon neutrality vision,the annual demand for hydrogen will be expected to increase to about 130 Mt,70percent of which is renewable hydrogen.The industrial sector accounts for the largest proportion of hydrogen

244、use,about 78 Mt,accounting for 60percent of the total hydrogen demand;the transportation sector uses 41 Mt of hydrogen.CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS14Business Models and Project Case Studies:Lessons from Global Best PracticesProject developers expectations about how a hydrogen supp

245、ly project can add value to its business varies.Depending on the business model,the design and scope of a project and its size may differ substantially.Because project developers have vastly different financing capabilities,their need for government support varies.A large number of case studies was

246、categorized and assessed for this report,the goal being to identify best practices that may inform new projects.Only the highlights are presented here,followed by details of four projects.Key lessons include the following:Offtakers should be involved in the supply project,notably those further down

247、the line,where sensitivity to the price differential between conventional and clean hydrogen is less.The utility of this lesson is apparent in hydrogen steel production projects that involve car makers,or fuel projects being developed in cooperation with shipping companies.The model can be extended

248、to aviation and other sectors.Production of hydrogen derivatives adds complexity,but it yields products that are easier to transport and where the price increase compared with conventional production is smaller in relative terms.Involve financially strong partners in initial projects.This refers to

249、the equity owners and project developers,but also to the engineering,procurement,and construction contractors and offtakers.Consider replicable project designs.Evidence reveals key success factors such as locations with good solar and wind resources in combination with good infrastructure;they endea

250、vor to develop similar projects.Experience from one project informs others and helps to create economies of scale.Consider the presence and accessibility of fundamental infrastructure,including electrical grids and transportation networks.These reduce project capital requirements and enhance economi

251、c viability.Ensure the presence of resources to parry the risks that emerge at different stages of project design and production.Effective policies and public support play a pivotal role in addressing immediate risks,but each risk requires separate solutions.In the early stages of the market,upfront

252、 capital grants may be needed to meet initial capital expenditure requirements.Governments can better gauge the viability of a project if they understand its business drivers.Basic business models are categorized in Table1.3,which does not purport to be comprehensive,as hundreds of companies are act

253、ive in the hydrogen field.There may be some overlap between models 1 and 2;this is a subject for further work.To expand on the general categorization,four case studies are presented below.The case studies illustrate important best practices in their financing structures,offtake arrangements,and sele

254、ction of partners.Also,these projects are at an advanced stage of development,which makes it possible to make fact-based observations.SCALING HYDROGEN FINANCING FOR DEVELOPMENT15TABLE1.3 Categorization and Examples of Business ModelsMODEL 1MODEL 2MODEL 3MODEL 4DECARBONIZING EXISTING PROCESSESEXPORT

255、MODELUTILITIES AND OEMs GOING DOWNSTREAM TO CREATE LARGER MARKETSHYDROGEN HUBS Oil refineries deploying clean hydrogenExamples:Adnoc,Ecopetrol,Exxon Mobil,Reliance,Saudi Aramco,Shell,Sinopec Gas producing and transporting companies deploying clean hydrogenExamples:Gassco,Qatar Energy,SNAM Fossil fue

256、l-based power producers deploying hydrogen or ammonia in existing power plantExamples:Utilities in Japan and Korea Ammonia producers deploying clean hydrogenExamples:Fertiglobe,OCI,Yara Existing fossil fuel companies moving into clean hydrogen production Examples:BP Australia,Equinor/Scatec Egypt,Sa

257、sol South Africa,Shell Oman,Total Eren Mauritania New players entering the clean hydrogen industry Examples:CWP Mauritania,Hyphen Namibia,Renewable Solutions(TSG)Vietnam OEMS and renewable project developers:Examples:Electricity utilities ACWA power(NEOM Saudi Arabia,Cambodia,Uzbekistan),Engie,Iberd

258、rola Orsted(offshore wind projects)and Vestas(wind turbines)plan to go into offshore hydrogen production;some Chinese photovoltaic manufacturers and the Chinese wind turbine manufacturer Enlit have entered hydrogen manufacturing.Hydrogen hubs are networks of hydrogen producers,consumers,and local co

259、nnective infrastructure to accelerate the use of hydrogen as a clean energy carrier and feedstock.The hubs are not single facilities but refer to a collection of linked assets that will work together to develop the domestic hydrogen economy.Examples:The Mission Innovation hydrogen Valleys platform c

260、ounted 83 hydrogen valleys or hubs worldwide across 33 countries with a total investment volume of$140 bln as of September1st https:/h2v.eu/NEOM Ammonia(Saudi Arabia)NEOM Green Hydrogen Company(NGHC,https:/ building the worlds largest green hydrogen plant to produce green ammonia at scale in 2026.Lo

261、cated in Oxagon,Saudi Arabia,the$8.4 billion plant includes 4 GW of renewable energy generation and will produce 219,000 tons of carbon-free hydrogen per year using electrolyzer technology provided by ThyssenKrupp Nucera.Ammonia will be generated using Air Products air separation technology.Baker Hu

262、ghes will provide hydrogen compression units.NGHC is a joint venture in the form of a public-private partnership between ACWA Power (a private power generation developer and investor from Saudi Arabia),Air Products (a global provider of industrial gases and engineering,procurement,and construction c

263、ontractor)and NEOM(a private company from Saudi Arabia building a$500 billion urban project).The joint venture was formed as a vehicle to develop,build,own,operate,and finance the project.NGHC is funded by a mix of 27percent cash contributions and shareholder loans from the sponsors,and 73percent no

264、n-recourse project financing,according to Air Products financial statements.Financial closing was announced in May 2023,including$6.1 billion in non-recourse financing from 23 local,regional,and international banks and financial institutions.This is divided into$5.8 billion in senior debt,with the r

265、emainder from mezzanine debt facilities.The Saudi government has played a fundamental role in the financing,contributing CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS16more than 40percent of the total financing.This includes$1.5 billion from the National Infrastructure Fund and$1.25 billion in fin

266、ancing from the Saudi Industrial Development Fund.The project has several additional competitive advantages,the main one being the production of low-cost electricity,owing to the availability of abundant and high-quality renewable resources(wind and solar).The complementarity of these resources onsi

267、te plays an important role and is a condition that the developer takes into account when searching for new project locations.Access to European and Asian markets is another competitive advantage.Logistics play a relevant role in green hydrogens cost structure,and NGHC will have access to a large-sca

268、le seaport in the Red Sea.In addition,NGHC has solid de-risking instruments.One of the projects main advantages is that equity providers are also in charge of carrying other project risks,such as a technology risks(Air Products,ACWA Power)and project completion risks.The integration of technologies

269、along the value chain is provided by major industry players,such as Thyssenkrupp Nucera(electrolysis),Topsoe(green ammonia),and Baker Hughes(hydrogen compression).Offtake risk has been mitigated by the 30-year offtake agreement signed by Air Products.The long-term agreement allowed the partnering co

270、rporations to structure non-recourse,project financing debt,thus minimizing guarantee and liquidity risks.Country risk is also being partially mitigated through the participation of the Saudi government as an equity investor(through NEOM)and as main provider of project financing.NGHC will produce gr

271、een ammonia in an end-to-end processing facility covering all technologies in the value chain from renewable power generation and desalinated water to hydrogen and green ammonia production.The scale of the project,aided by favorable power resource availability,suggest that NGHC will be able to produ

272、ce green hydrogen at costs lower than$3/kg,which makes the project highly competitive,and to produce green ammonia at around$700/tonne.H2 Green Steel(Sweden)H2 Green Steel,founded in 2020 by Vargas(also the founders of Northvolt),is establishing a large-scale green steel production facility in Boden

273、,Northern Sweden.The company is focusing on using green hydrogen in industrial applications with the purpose to speed up the decarbonization of high emitting sectors.It chose green steel as its initial application for its advanced technical and commercial readiness compared with other alternatives.T

274、he project includes a 800 MW electrolysis capacity,to be supplied by OEM ThyssenKrupp Nucera,a direct reduced-iron plant capable of producing 2.1 Mt per year,a steel melt shop,and downstream production lines capable of producing 2.5 Mt of finished steel products annually.The latter should ramp up to

275、 almost 5 Mt before 2030 in a phase 2 investment.Affordable and stable renewable electricity is vital for H2 Green Steel,influencing the decision to position energy-intensive plants near Swedens hydropower resources and SCALING HYDROGEN FINANCING FOR DEVELOPMENT17fast-growing wind power capacity.Eff

276、icient logistics infrastructure and deep-sea harbors are crucial for the steel trade.Other factors considered by the company were a transparent and credible permitting processes,regulatory stability,and positive community engagement,all of which reduce country risk for lenders.The projects positive

277、reception by the local municipality and Swedens high awareness and engagement in climate change in general,had an impact on investment decisions.H2 Green Steel follows a typical industrial governance structure,utilizing a holding company for equity investors and establishing individual project compa

278、nies for each new project.As the company will focus on industrial offtake of green hydrogen,it may concentrate on hydrogen production,potentially exploring vertically integrated projects with green electricity suppliers and green hydrogen offtakers.H2 Green Steel is financing its initial project thr

279、ough a blend of equity at the holding level and debt at the level of the Boden project,targeting a gearing ratio similar to other capital-intensive industry and infrastructure projects.The full financing of the project is greater than 5 billion Euros with the debt package from a large bank consortiu

280、m covering 3,5 billion Euros.The companys equity investors are,in addition to the Boden project,investing in the overall ambition to decarbonize heavy industries.More than 50percent of project Bodens planned first 57years phase 1 production,is already contracted.The plan is to start operation in lat

281、e 2025 reaching full production in 2026.Hyphen Hydrogen Energy(Namibia)Namibias government has an ambitious plan to develop green hydrogen for deployment of renewable energy at scale,facilitating both energy independence and green economic growth in the country led by industrialization.In August 202

282、1,the government issued a request for proposals to develop green hydrogen production facilities in two parcels of land in the Kharas region,which has the highest resource potentials worldwide for the combined production of wind-and solar-based electricity.The request for proposal(RFP)was part of the

283、 Southern Corridor Development Initiative(SCDI),the umbrella program for the development of a green hydrogen industry in southern Namibia.The government was responsible for designing and administering the tender in an open and transparent manner.In evaluating the tenders,the government drew on inter

284、national expertise from two advisors appointed by the European Union Global Technical Assistance Facility on Sustainable Energy and the United States Department of Energy.Although SCDI is a government-led process,public financing of such large projects is constrained by the size of the Namibian econ

285、omy.The government aimed to hold a 24percent equity share in the project,allowing international actors to acquire stakes.However,most of the financing would be sourced from debt instruments.Hyphen Hydrogen Energy,a partnership between its two shareholders,Nicholas Holdings and Enertrag,was selected

286、by the Namibian government in November 2021 to develop a large-scale vertically integrated greenfield green hydrogen project in the Tsau/Khaeb CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS18national park(SCDI area).The allocated area is owned by the government and co-located with the deep-water po

287、rt of Lderitz.The companys governance structure is based on a public-private partnership.The financial closure is expected in 2024,and the Namibian government,potentially through the Welwitschia Sovereign Fund,aims to be a strategic equity partner.Development finance institutions and commercial lend

288、ers have shown substantial interest in blended finance solutions to facilitate the projects financial closure.This approach addresses the challenges of accessing local currency debt instruments and paves the way for the project to reach its financial goals.Hyphen Hydrogen Energy is a Namibian regist

289、ered green hydrogen development company working with the government to develop Sub-Saharan Africas largestand only fully vertically integratedgreen hydrogen to green ammonia project.Government support has been a critical enabler for the development of the Hyphen project.The government has defined it

290、s ambition,set a clear strategy for the development of its green hydrogen industry,initiated the request for proposals,and is providing the land.A clear master plan fostered confidence in the project despite it being a complex cross-ministerial endeavor.In addition,the government facilitated an earl

291、y stakeholder engagement to address the environmental,social,and governance issues.In addition,the government established the Green Hydrogen Council,comprising key ministers responsible for the countrys green hydrogen strategy.The transformative impact potential of this project on Namibia and its ec

292、onomy is considerable.The total project capital investment of more than$12 billion is roughly equivalent to the countrys annual gross domestic product(GDP).This project alone will cut 5 to 6 Mt(annually)of global CO2 emissions.(Namibias total emissions in 2021 were 4.01 Mt.)The project will be built

293、 on 4,000 km2 of land.Hyphen is targeting annual production of 1 Mt of green ammonia to become available by the end of 2027,expanding to 2 Mt by the end of 2029.Much of the green ammonia produced will be exported to the international market and the ammonia demand centers of Europe,South Korea,and Ja

294、pan.The project integrates approximately 5 GW of wind and solar energy capacity with 3 GW of electrolyzer capacity.As a part of the project,Hyphen will develop a common user infrastructure,encompassing a desalination plant,water pipelines,electricity transmission lines,hydrogen pipelines,and an ammo

295、nia storage and export facility.The establishment of the common user infrastructure will benefit all subsequent projects,facilitating the scale-up of hydrogen production in the SCDI project portfolio and potentially leading to up to 3 Mt of green hydrogen production per annum.This represents one-fif

296、th of Namibias total green hydrogen production potential of 15 Mt per year(510percent of expected global hydrogen demand in 2030).This project is designed to act as a catalyst for the establishment of an entirely new industry in Namibia.Located in the south,it is one of what could become dozens of e

297、quivalent-sized hydrogen projects across Namibias three hydrogen valleys along the countrys 1,500km coastline.SCALING HYDROGEN FINANCING FOR DEVELOPMENT19The country has the potential to produce up to 15 Mt of green hydrogen each year and to sustain 200,000 direct jobs,making it one of the largest p

298、otential producers of renewable hydrogen globally.With no international precedent for the development of a large-scale green hydrogen project between a host government and a developer available,the government and Hyphen worked closely together over 16months to develop a concession agreement that can

299、 be considered a global benchmark for equitable and environmentally sustainable green hydrogen projects.The concession agreement,which governs the process under which Namibias first renewable hydrogen project will be operated for a 40-year term,was signed in May 2023.This agreement sets out the proj

300、ects financial obligations to the government for the duration of the concession term(land rentals,environmental levies,royalties).It also crucially details the process of enabling a legislative and fiscal regime for the build-out of the entire Namibian renewable hydrogen industry.The Namibian govern

301、ments 24percent equity interest in the project will be held through SDG Namibia One,a blended financing infrastructure fund that will initially be wholly owned by the government.The government has raised 40 million from the Dutch government to fund the costs of the project through financial close an

302、d has secured a letter of intent from the European Investment Bank of 500 million in funding,which should be sufficient to fund 100percent of the governments equity requirements for phase one of the project.Green Solutions(Vietnam)Green Solutions is an energy company in Vietnam founded in 2016,under

303、taking multiple local projects,including a liquefied natural gas terminal,biomass plants,wind and solar power plants,and green hydrogen production plants.The company is developing two green hydrogen projects in southern Vietnam,each with 260 MW of electrolyzer capacity.The projects will produce hydr

304、ogen using surplus renewable electricity,with the first project in Tra Vinh Province expected to generate 48,000 m3 of hydrogen per hour.The corresponding green hydrogen output of 32 kt will be used to produce 220 kt of ammonia each year.The projects reached the FID stage in 2021 and are set to be o

305、perational by early 2026.Each project will be carried out by a special purpose vehicle with Green Solutions as the parent company and majority shareholder.The special purpose vehicles will focus on project development,construction,and operations,while the financing and commercial discussions with of

306、ftakers will be done at the Green Solutions group level.Green Solutions intends to export most of its green hydrogen and has received interest from potential offtakers in Japan,South Korea,Singapore,and Europe.The company is also exploring local market development and is developing port infrastructu

307、re with ECONNECT Energy.CLEAN HYDROGEN:STATUS,PROJECTIONS,AND SCENARIOS20For its first projects,Green Solutions is working on project finance solutions with a flexible mix of equity and debt.The company remains the majority shareholder and intends to raise debt from development finance institutions

308、at concessional rates.For future projects,it will explore flexible co-investment opportunities for renewable electricity production,green hydrogen,and green ammonia plants.In addition,as the green hydrogen and green ammonia markets become more mature,Green Solutions plans to issue green bonds to fin

309、ance future projects or raise capital by undertaking an initial public offering in a well-established stock market.TWO TECHNICAL AND ECONOMIC COST ASSESSMENTSCALING HYDROGEN FINANCING FOR DEVELOPMENT23Key Points The information presently available on costs and prices for clean hydrogen is insufficie

310、nt to guide policymaking and investment decisions.More accurate information is urgently needed.Clean hydrogen prices vary widely by region and project type.The production cost of conventional hydrogen is correlated with the price of natural gas,which is volatile.As a reference value,$1/kilogram(kg)i

311、s commonly used for conventional hydrogen produced under favorable conditions;this price can rise to$2/kg in regions with higher gas prices.12 For low carbon hydrogen(produced from gas or other fossil fuels),the production cost is$2/kg.Finally,for renewable hydrogen(i.e.,hydrogen produced from renew

312、able power,such as wind and solar),todays lowest production cost is$3/kg for best-in-class projects with an average of$5/kg;that cost can rise to more than$10/kg where renewable resources are inadequate,and equipment and financing costs are high.Policymakersparticularly in emerging markets and devel

313、oping countries(EMDCs)that are in the process of developing and implementing national hydrogen strategiesmust consider the developments of real projects and not design policies based on optimistic projections or theoretical project scenarios.Presently,achieving$3/kg production cost for renewable hyd

314、rogen is only possible with a combination of factors,including very low-cost renewable power supply,low capital cost of electrolyzers,and access to low-cost financing.Renewable hydrogen production could fall to as little as$2/kg if the costs of renewable power generation electrolyzers decrease.Howev

315、er,the trends in the last two years suggest stable or even rising costs.Global cumulative investment of$1 trillion(including in renewable power supply)is needed to reach a clean hydrogen production capacity of 40 Mt per annum by 2030.Adding the costs of related infrastructure and end uses,this amoun

316、t may double to$2 trillion.Realizing these investments could create significant socioeconomic benefits and make a compelling case to transition to renewable hydrogen in EMDCs.A quarter to half of the total global financial support needed between now and 2030 to scale up clean hydrogen would be direc

317、ted to EMDCs.If we account for production,transport,and end use,the central estimate for the global gap between the financing needed and the financing available is$0.5 trillion(with a best-case scenario of$174 billion).The EMDCs share of the financial support need translates to$10 to 40 billion annu

318、ally between now and 2030.The wide range stems from the uncertainties and challenges that surround the hydrogen industrys development.Transport and storage costs will affect the competitiveness of renewable hydrogen in countries considering importing hydrogen.Intercontinental shipping of hydrogen ca

319、n double the landed cost of renewable hydrogen.Pipeline supply is a more cost-effective solution over distances up to several thousand kilometers,especially in the European TWO TECHNICAL AND ECONOMIC COST ASSESSMENT12 These reference cost data exclude any environmental external costs related to natu

320、ral gas.However,the cost of CO2 treatment can push the cost up to$2 per kg.TECHNICAL AND ECONOMIC COST ASSESSMENT24context.High transport costs may lead to the relocation of industrial production of green hydrogen derivatives such as renewable ammonia and green steel production.National governments

321、can reduce the financial support required for the development of domestic hydrogen markets through:(1)innovation,(2)careful choice of project location,(3)developing and supporting niche markets willing to pay a premium for clean hydrogen,(4)pricing the externalities of emissions greenhouse gases,and

322、(5)access to low-cost financing.Early action could set in motion a virtuous cycle of cost reductions and lower needs for financial support.A Breakdown of Clean Hydrogen Production Costs TodayThere is no single estimate of the cost of clean hydrogen today.Real-world hydrogen cost metrics are complex,

323、and generalized comparisons can be misleading.This assessment takes cognizance of existing metrics such as the levelized cost of hydrogen(LCOH)while pointing to their limitations for making financial decisions.What is known to be true is that costs vary widely by region,country,and project.In the mo

324、st-favorable production locations,LCOH is estimated at$1/kg for conventional hydrogen,$2/kg for low carbon hydrogen,and$3/kg for renewable hydrogen.Especially the cost of renewable hydroegn vary widely and can be much higher,depending on local circumstances.Beyond these generalities,comparing result

325、s from various studies requires a good understanding of how costs have been calculated.Simplified LCOH calculations tend to underestimate the real-world costs of project implementation,which may include“project-specific infrastructure needs,taxes,royalties,concession payments and local content requi

326、rements”(Agora 2023).More clarity and a uniform basis for comparison are needed.In a promising development,the European Energy Exchange features a new real-time listing of renewable hydrogen trading prices in Germany every week(European Energy Exchange 2023).Trading prices do indicate a combination

327、of LCOH and market circumstances,but robust policymaking and investment decisions require real LCOH data,as well as data on transport costs.LCOH can be misleading for policymaking and investment decisions because it excludes transport costs,which vary from one region to another.If shipped interconti

328、nentally,the transport costs can be double the production cost of best-in-class renewable hydrogen projects.Eventually,clean hydrogen will be a widely traded commodity.For that reason,the costs of transport and storage must be added to the production cost.For the end user,after all,what matters is t

329、he delivered cost of the commoditythe supply cost.Therefore,for a country with a choice between producing renewable hydrogen domestically or importing it,SCALING HYDROGEN FINANCING FOR DEVELOPMENT25the cost of transport can make production at home the economically preferable solution.These costs mus

330、t be assessed on a case-by-case basis.Accurate cost information is also scarce because very little clean hydrogen is traded today.A significant body of literature discusses hydrogen production,and end-user costs.Its overwhelming focus is production costs;analyses rarely address the costs of transpor

331、t,storage,and processing.Since most hydrogen is presently produced and consumed on site,trading generally occurs under bilateral contracts that tend to be confidential.So,there is little information about the actual cost of producing hydrogen from real projects.Most of the available literature uses

332、modeled cost estimates.A comparison of modeled cost estimates with the few real-life project data available suggests that desktop research underestimates actual costs(Agora 2023).Site-specific analyses to produce renewable hydrogen and its derivatives at the regional level is needed to produce relia

333、ble cost estimates that reflect the actual conditions in countries.Data from real projects would be even better.Transparent markets exist for hydrogen derivatives such as ammonia,the price of which is determined chiefly by hydrogen production costs.Ammonia prices rose to unprecedented levels in the last two years but fell recentlyto around$275 per tonne in end-June 2023 from a peak of more than$1,