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The global hydrogen generation market size stood at USD 142.33 billion in 2019 and is projected to reach USD 208.86 billion by 2027, exhibiting a CAGR of 5.2% during the forecast period.
Hydrogen is the most abundantly available element in terms of industrial gases and is present in the atmosphere in the gaseous state. It is produced when natural gas is heated with steam, which further produces a mixture of carbon monoxide and hydrogen. Similarly, it can also be produced by electrolyzing water. Other methods of hydrogen generation include biomass gasification, wherein the plant matter is heated under pressure in the presence of air or oxygen & steam and reacted to produce hydrogen and carbon dioxide. Hydrogen is a renewable fuel that can be efficiently manufactured and transformed into electricity to cater to the increasing energy demand. The storage of hydrogen can be done in different forms such as gaseous, liquid, and metal hydrides. Its possession of chemical properties such as high efficiency, lightweight, easy transportation, and low boiling point make hydrogen more suitable for industrial applications. It is used in the transportation of fuels owing to its pollution-free combustion products, which are set to be the emerging need in the coming future.
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Rapid Shift towards Cleaner Energy Sources is a Prominent Trend
There has been an increase in the global population and the developing nations in Asia Pacific are rapidly expanding their economies. Renewable energy is the fastest-growing of all energy sources. The increasing international demand for clean hydrogen will play a vital role in the global transition to sustainable energy in the future. It helps to reduce carbon emissions from industries and transportation, and also helps to provide long-term energy storage at scale. Giant industrial players, such as Engie, had planned an explicit cost target for green hydrogen production to reach grid parity with grey hydrogen by 2030.
The formulation of energy policy achieves a big difference through continuous measures such as emission levels and minimum CO2 prices.
Hence, the shifting trend towards cleaner sources of energy will increase the production of hydrogen in the coming years.
Increasing Demand From Transportation Sector is a Current Trend
An increase in the demand for fuel cell-based electric vehicles and buses, especially in Asia Pacific and North America are surging the demand for hydrogen. In December 2019, an investment of USD 40 billion was noticed in companies building solutions for electric vehicles across the globe. Growing investment in fuel cell technology would drive the hydrogen generation market growth.
Hence, the increasing adoption of hydrogen fuel cells & the growing investment for the development of hydrogen infrastructure in the automotive industry would drive the demand for the generation of hydrogen.
Increasing Demand for Decarbonizing Energy End-use to Fuel Growth
Decarbonization limits the rising global temperatures and reduces carbon emissions. It has raised concerns for green energy technology, such as hydrogen and other related products. Hydrogen is a clean energy fuel and is estimated to reduce the dependence on oil in the long term, which further helps to reduce the emission of greenhouse gases and other pollutants. It can be produced on a large scale from all the energy resources such as biomass, solar energy, nuclear energy, wind energy, and clean fossil fuels. Adding low-carbon energy generation capacity increases the energy demand, which has important environmental implications since alternative energy sources have a significant environmental impact. Increasing investments in the energy efficiency projects and renewable energy to decarbonize the energy systems would result in the growing demand for hydrogen in the forecasted period.
Government Regulation For Desulphurization to Drive Market Growth
Desulfurization is the process of using hydrogen gas to reduce the sulfur content in hydrocarbons. It reduces the emissions of sulfur oxides, which are responsible for acid rain. The refining industry is the prominent user of hydrogen gas, which requires this gas to desulfurize fuels and break up heavy hydrocarbons. Stringent emission legislation and the application of heavier hydrocarbons would propel the demand for hydrogen gas.
Such regulations allow variable refinery outputs while achieving emissions reductions. Hence, stringent government regulations to limit the sulfur content in fuels are set to drive this market in the estimated period.
High Energy Consumption Of Hydrogen Generation Technologies to Restrain Growth
Hydrogen is produced from various technologies, including steam methane reforming, partial oil oxidation, coal gasification, and water electrolysis. Electrolysis of water requires electricity for the production of hydrogen, which makes it more expensive than the fuels it would replace. Hydrogen is costlier than fossil fuels. Globally, the cost of producing it ranges between USD 4 and USD 12 per kg, as compared to gasoline which is priced at USD 1.60 to USD 4.8 per gallon.
The high cost of hydrogen for its production is the biggest barrier. It cannot be commercially viable as a fuel until the cost reduces. Costs are currently high as the production technologies are relatively new and lack economies of scale along with its rising demand. Hence, the high energy consumption of generation technologies for hydrogen would restraint the market growth during the projected period.
On-Site Segment to Dominate Owing to its Cost-effective Nature
Based on type, this market is segmented into on-site and portable. The on-site segment is dominating the market owing to its cost-effective nature. It is majorly used for transportation, as compared to the other low-cost feedstock such as water, biomass, and coal. Moreover, the portable segment is also set to generate high market share due to the increasing number of vehicles powered by a hydrogen internal combustion engine or a fuel cell. Hence, the increasing on-site production of hydrogen would drive the growth of this segment in the coming years.
Steam Methane Reforming Segment to Dominate Backed by Its High Energy-efficiency
In terms of technology, the market is segmented into steam methane reforming, water electrolysis, partial oil oxidation, and coal gasification. The steam methane reforming segment is holding the largest market share owing to its high energy-efficiency and cost-effective nature for producing hydrogen. This technology also allows flexible utilization of feedstocks and optimized designs for lowest operating expenditure (OPEX), and highest efficiency.
The partial oil oxidation segment holds the second largest hydrogen generation market share owing to the increasing demand from the automotive industry for automobile fuel cells and some other commercial applications. The market share of the coal gasification segment is growing due to its technical advantages, such as an increase in the overall efficiency of the process and economic benefits. The water electrolysis segment is growing at a steady rate owing to the established technology producing zero-emission. Its production efficiency is also very low. Hence, the provision of energy-efficient and cost-effective solutions for producing hydrogen from the steam methane reforming segment is expected to boost the growth of this market during the forecasted period.
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Ammonia Production Segment to Lead Stoked by High Usage of Hydrogen in Ammonia Plants
In terms of application, the market is segmented into ammonia production, petroleum refinery, methanol production, transportation, power generation, and others. The ammonia production segment is dominating the market as a large quantity of hydrogen is consumed in ammonia plants. Moreover, ammonia production has large scale penetration owing to their easy adoption along with the economic feasibility. The petroleum refinery segment holds the second largest market share owing to the wide application of hydrogen to lower the sulfur content of diesel fuel. The methanol production segment is also set to showcase high market share, as hydrogen is used in producing methanol, which is further used as a fuel in the internal combustion engines and direct methanol fuel cells.
The transportation segment is also estimated to grow significantly in the coming years owing to an increase in the sale of fuel cell vehicles including fuel cell electric vehicles and fuel cell buses in China, Japan, South Korea, and the U.S. The power generation segment is also anticipated to exhibit considerable share, as hydrogen is used in fuel cells to generate power using a chemical reaction rather than combustion. Hence, the ammonia production segment is expected to propel the growth of this market during the projected period.
Asia Pacific Hydrogen Generation Market Size, 2019 (USD Billion)
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This market is segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East and Africa. The market is forecasted to gain momentum in Asia Pacific owing to the increasing refinery operations to cater to the growing demand for fuels from countries such as India, South Korea, and China.
The countries from North America are putting efforts to shift their focus from fossil fuels to renewable fuels. They are also engaging in the introduction of stringent regulations to reduce the application of unconventional fuels that is leading to excessive greenhouse gas emissions. This would drive the demand for generation of hydrogen.
Hence, the growing investment and ambitious targets for producing hydrogen would augment the growth of the market in the projected period.
The European countries are investing in the development of hydrogen projects and achieving the targets set by the European Commission to cater to the increasing demand for clean and sustainable energy in the future. As per the Hydrogen Roadmap Europe report published by Fuel Cells and Hydrogen Joint Undertaking, the increasing adoption of hydrogen-powered vehicles from the transportation segment and heating application from buildings have showcased booming opportunities for the growth of hydrogen production with an annual investment worth USD 8.95 billion across Europe in the ambitious scenario. Hence, the growing demand for clean energy would drive the demand for hydrogen generation in this region during the projected period.
The countries from the Middle East & Africa are consistently focusing on an emission-free environment. Therefore, they are investing in hydrogen-fueled vehicles.
Hence, the increasing investments in clean energy projects and the rising focus on the emission-free environment would propel the demand for generation of hydrogen during the projected period in this region.
Air Liquide Holds Leading Position Owing to Increasing Investment in Hydrogen Projects
The competitive landscape of the hydrogen generation market depicts significant advancement in the gas generation industry, which improves quality, efficiency, and increases productivity. The increasing adoption of hydrogen generation for ammonia production, methanol production, and petroleum refineries, are the major applications. In January 2019, Air Liquide had acquired the Canadian company Hydrogenics Corporation with a stake of 18.6%, with a strategic investment of USD 20.5 million for generating hydrogen from PEM (Proton Exchange Membrane) electrolysis technology.
However, the regional and domestic players such as Taiyo Nippon Sanso (Japan), Teledyne Energy Systems (US), Xebec (Canada), HTEC Hydrogen Technology & Energy Corporation (Canada), Advanz Hydrogen Generation (Canada) and other regional players have entered in the competitive market for providing hydrogen generation services. This is projected to positively impact the global market as these companies are anticipated to gain their share during the forecast period.
An Infographic Representation of Hydrogen Generation Market
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The hydrogen generation market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, products, and upcoming developments of the product. Besides this, the research report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market over the recent years.
Value (USD Billion)
Fortune Business Insights says that the global hydrogen generation market size was USD 142.33 billion in 2019.
The global market is projected to reach USD 208.86 billion in 2027.
Registering a CAGR of 5.2%, the market will exhibit steady growth in the forecast period (2020-2027).
The steam methane reforming segment is expected to be the leading segment in this market during the forecast period.
The increasing demand to decarbonize energy end-use and stringent government regulation for desulphurization are the major drivers of the market. However, high energy consumption of generation technologies for hydrogen would restrain the market growth.
The market in Asia Pacific was valued at USD 49.34 billion in 2019.
Air Liquide, Air Products, Iwatani Corporation, Hydrogenics, Linde, and Praxair, Inc are the top companies in the market.
Hydrogen is used as a feedstock and as a fuel for electric vehicles to curb the carbon emission. It is also used in a wide range of industries that include refining petroleum, treating metals, producing fertilizer, and food processing.
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