The hydrogen economy is at a pivotal moment, with green hydrogen projects gaining traction despite recent setbacks in the blue hydrogen sector. Shell’s decision to halt a blue hydrogen project in Norway highlights challenges for fossil-fuel-based hydrogen, even with carbon capture. On the other hand, green hydrogen, produced using renewable sources like wind and solar, is becoming essential for global decarbonization.
Countries like Malaysia are at the forefront of this transition, with initiatives like the National Energy Transition Roadmap aiming to achieve 70% renewable energy capacity by 2050. Malaysia’s hydrogen hubs and export-focused strategies are positioning the country as a leader in the Asia-Pacific region. Similarly, the U.S. is becoming a key player thanks to the Inflation Reduction Act (IRA), which provides up to $3/kg in tax credits for green hydrogen production.
Green Hydrogen and Ammonia: Long-Term Value
According to LEC Partners’ analysis, green hydrogen is particularly valuable in industries that are difficult to electrify, such as heavy industry, agriculture, and transport. Green ammonia, a key derivative, plays a significant role in reducing the carbon footprint of fertilizers, making it an essential tool for decarbonizing agriculture. With payback periods averaging seven to eight years, green ammonia offers environmental and financial rewards, making it an attractive investment.
Infrastructure: Overcoming Key Barriers
While hydrogen technology advances, infrastructure challenges, including storage and transport, remain obstacles to growth. Shell’s experience shows that project success heavily depends on demand and logistics. To address this, strategic investments in hydrogen hubs and energy grids are crucial to scaling up production. For instance, developing regional hydrogen hubs in countries like Malaysia and incentives from the IRA in the U.S. are pivotal in unlocking the full potential of green hydrogen.
Market Opportunities and Outlook
Countries with abundant renewable resources, such as Malaysia, are building solid foundations for production and export, while the U.S. is set to become a key market player.
At LEC Partners, we believe now is the ideal time to invest in green hydrogen. From production and infrastructure to downstream applications like green ammonia, the hydrogen economy presents a unique opportunity to generate both environmental impact and financial returns. Businesses that invest early and focus on scalable infrastructure will be well-positioned to lead the global transition to a sustainable energy future.
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