Based on interviews with 20 major companies including automotive, hydrogen industry leaders, oil and gas companies, and technology firms, McKinsey & Company published a 10-year roadmap for the U.S. Hydrogen Industry. The firm concluded that hydrogen is fundamental to meeting the climate commitments that have been made across businesses, industry segments and geographies; and that we simply cannot get the decarbonization that many are targeting without at-scale hydrogen. They also conclude that hydrogen has a key role to play in maintaining U.S. global energy leadership, advancing the U.S. economy, and decarbonizing the U.S. energy system
The 96-page report provides an excellent background regarding the industry and the technology drivers, and lays out a road map to deploy hydrogen solutions, create positive momentum and realize cross-sector synergies. Achieving the goals of the road map will require concerted action from governments, business, and investors. Other countries, such as Germany, Japan, and China, are developing hydrogen infrastructure and investing in the groundwork for a hydrogen economy. The report forecasts a Base Scenario and an Ambitious Scenario of market absorption through 2050 based on key assumptions, and asserts that the US should not fall behind.
According to the McKinsey modeling estimates, hydrogen can help meet 14% of US final energy demand by 2050, the equivalent of over 2,468 TWh or 8.4 billion MMBTU per year. By 2030, the hydrogen economy in the US could generate an estimated $140 billion per year in revenue and support 700,000 total jobs across the hydrogen value chain. By 2050, it could drive growth by generating about $750 billion per year in revenue and a cumulative 3.4 million jobs.
In the “Way Forward” recommendations on pages 78-80, the authors recommend a number of policy actions, including:
– Create public incentives to bridge barriers to initial market launch. [P]ublic support for hydrogen should be on par with other technology support, such as the American Recovery and Reinvestment Act and technology acceleration programs that provided federal cost-share for several hundred fuel cell forklifts, which subsequently led to over 25,000 of them being purchased by industries without federal funding.
– Support infrastructure development. This requires reducing investment risks and operational cost burdens for companies that provide hydrogen infrastructure. Many governments have already been proactive in expanding initial hydrogen infrastructure, often with cost-sharing with the private sector. The US will need to do the same to enable the growth of hydrogen and realize the environmental and economic benefits that a scaled-up domestic hydrogen industry will bring.
– Expand the use of hydrogen across sectors and achieve economies of scale. Large-scale hydrogen production and sufficiently widespread distribution infrastructure would make these technologies more competitive. Deploying hydrogen across multiple sectors in parallel will help drive such scale economies and synergies.