Challenges Ahead for U.S. and Japan in Meeting Clean Hydrogen Production Targets, Wood Mackenzie Finds

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According to a note by Wood Mackenzie, a leading provider of decision intelligence for the natural resources sector, analysts predict that U.S. hydrogen producers will face challenges in meeting the production targets set forth in the National Clean Hydrogen Strategy and Roadmap released by the Department of Energy. The Strategy outlines a trajectory for low-carbon hydrogen production, aiming for 10 million metric tons per annum (Mtpa) by 2030, 20 Mtpa by 2040, and 50 Mtpa by 2050. However, Wood Mackenzie suggests that the market has not yet progressed at the required pace to fully capitalize on the production potential outlined in the Strategy.


Hector Arreola, Principal Analyst at Wood Mackenzie, highlights several factors that could hinder the achievement of these production targets. These include high renewable power costs, electrolyzer load factor, and a slower decline in capital expenditures for electrolytic hydrogen. The projected cost for electrolytic hydrogen is estimated to be around US$1,600/kW in 2030, which poses a challenge. Additionally, factors such as temporal matching, geo-location, and carbon intensity calculations may affect production subsidies and adoption rates.

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Wood Mackenzie agrees with the Strategy’s identification of sectors such as ammonia, power, and biofuels/e-fuels as critical for long-term clean hydrogen adoption. However, Arreola notes that the level of penetration in each sector will vary due to market forces, alternative decarbonization options, policy support, and cost-effectiveness.


Wood Mackenzie also discusses Japan’s 2nd Basic Hydrogen Strategy, which aims to increase domestic hydrogen production by tenfold by 2030. Japan plans to address challenges related to high costs, lagging demand, infrastructure development, and carbon intensity standardization. The country intends to introduce a hydrogen subsidy scheme, but details regarding the level of subsidy remain undisclosed. Wood Mackenzie suggests that if Japan aims to attract imports, the subsidy offered should be on par with the United States and the European Union.

While 89 Mtpa of low-carbon hydrogen projects have been announced globally, midstream infrastructure announcements, including maritime, pipelines, and storage, have been slower. Wood Mackenzie acknowledges that Japan’s revamping of its hydrogen strategy to develop the entire value chain is a step in the right direction.

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In summary, Wood Mackenzie’s analysis indicates that both the United States and Japan face challenges in meeting their respective hydrogen production targets. Factors such as cost, infrastructure, subsidies, and market dynamics will play crucial roles in determining the success of clean hydrogen adoption in these countries.

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