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McKinsey and Co. names challenges for hydrogen economy

Trend News Agency  


    In order to scale clean hydrogen and fully leverage its decarbonization potential, several key factors need to be addressed, Trend reports with reference to McKinsey and Co.

    These factors were highlighted by McKinsey and Co. experts, emphasizing the importance of cost reduction, infrastructure development, and increased investments.

    Cost reduction plays a crucial role in making hydrogen a competitive fuel option. To achieve this, focusing on production costs is essential. By producing hydrogen in regions abundant in cheaper renewable energy sources, such as wind or solar power, costs can be kept low. However, the availability of suitable land for renewables deployment could become a limiting factor for green-hydrogen producers, potentially affecting location options. Moreover, the construction of renewable generation and green-hydrogen production plants has become more expensive due to rising material and labor costs, as well as constrained supply chains.

    Building a robust infrastructure, especially for hydrogen transportation, is another critical aspect. While pipelines are the most efficient means of transporting hydrogen, substantial investments are needed to build or repurpose existing gas infrastructure. This calls for investment across the hydrogen value chain, including electrolyzer capacity for green hydrogen production and the establishment of hydrogen refueling stations to support hydrogen-powered trucks.

    However, substantial investments are still required to drive the advancement of clean hydrogen. Collaboration among policy makers, industries, and investors is crucial to accelerate progress. McKinsey research has identified a significant investment gap, estimating a requirement of $700 billion by 2030 to achieve a pathway to net-zero emissions. Policy makers can support the hydrogen economy through measures like production tax credits and setting uptake targets, which would enhance investors' confidence in future hydrogen markets. Industries can contribute by increasing capacities, such as scaling up electrolyzer production, and forming strategic partnerships along the value chain. Investors, on the other hand, can play a pivotal role by structuring and financing new ventures and establishing standardized assessment frameworks to manage risks associated with hydrogen projects.

    While challenges exist, the potential for hydrogen in both business and governmental contexts is undeniable. As the energy transition continues, hydrogen is expected to gain increasing attention. By addressing the identified challenges and seizing the opportunities, collaboration among stakeholders can unlock the full decarbonization potential of hydrogen and foster growth in various industries.


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