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Given our coverage of cost, permitting, and power challenges facing hydrogen, we are not surprised to see a slowdown in general news and new projects and slower progress on announced projects.

Assumptions for 2030 in the recent IEA study of hydrogen costs assume meaningfully lower power costs and equipment scale efficiencies – neither of which is evident today or looks likely soon.

We will not get the equipment scale efficiencies if we do not build the equipment, and the momentum today has the industry moving in the wrong direction to achieve that – alarm bells should be ringing.

But the IEA work shows one very clear economic reality: capacity factor for electrolyzers is critical, and with so many projects backed by wind and solar, delays are inevitable because the math fails.

None of the objectives suggested in the IEA study will be met unless the current momentum can be reversed, and as most of it is focused on costs, power, or electrolyzers, subsidies will need to rise.

The slowdown in hydrogen activity in the West is apparent in Exhibit 1 and apparent in the lack of new projects that we track weekly. Escalating costs suggest that incentives may be inadequate.

China became the market leader in solar modules and batteries because relative speed to the market drove scale efficiency on top of other cost advantages. This will happen with electrolyzers.

Local demand for electrolyzers is high in China and any foreign investors outside of the US and Europe will have no qualms about buying equipment from China – a couple of projects below could benefit.

As costs escalate in the US and Europe, we are making it very challenging to set up real competition with Chinese manufacturers, and delays to US and European projects just give China more experience.

There is potential for India to become a low-cost equipment provider and given better relationships between the West and India, this could provide challenges for US and European equipment makers.

We look again at prioritizing the use of hydrogen this week and focus on shipping as the industry is effectively split between methanol and ammonia, both of which need abundant clean hydrogen.

Near-term global market dynamics have depressed ammonia and methanol pricing, and this has influenced investment progress as current economics play a large part in investment decisions.

But the recent turn in ammonia pricing may be a trend that would get investors interested again. Current prices are below what would be needed to get green ammonia moving, but maybe not blue.

Methanol is more of a challenge as you need a source of CO2; ideally an existing one to get the clean label when using green or blue hydrogen; the cost of the CO2 may matter more than methanol pricing.

Of course, the other option is to find customers willing to pay more – and we note a recent LinkedIn post from the LSB CEO making the same point last week. Anything can get done if the price is right.

Several price reporting companies are trying to establish themselves as pricing references for hydrogen of various colors but are doing so based on theoretical cost models and are misleading.

There is very little blue and green hydrogen globally trading hands and none of the transactions are public. Even the grey hydrogen that moves is not freely traded and is very contract-specific.

Costs published by “price” reporters are also averages in what are likely to be very wide ranges, based on the projects that we review each week, and risk sending the wrong signals to potential users.

We look at a range of projects this week but with a focus on the US and a couple of green initiatives that could work, but only if they can get the renewable power needed.

Otherwise, we dive into why and where hydrogen makes sense for trains, and we look at some of the projections for ammonia as a fuel.

Assuming that there are constraints on hydrogen availability, yet still a need to decarbonize, we look at alternatives and conclude that we would either need a lot more power or more crops, or both.

Shipping is the one space that would be very hard to decarbonize without hydrogen – although some biofuel routes are possible – some are experimenting with wind power – looks to be a niche.

The problem with crop-based solutions is the increase in farming needed, this may destroy other carbon sinks (deforestation) and need a step change in nitrogen fertilizer availability – more hydrogen.

Our view is that the availability of cheap renewable power is likely one of the largest impediments to making abundant green hydrogen, so when alternatives just call for more power, we have an issue.

We look at a new batch of projects – none of which make economic sense without premium pricing, but it looks like the Europeans are now in the lead with blue hydrogen/ammonia.

China has cheap solar panels and electrolyzers and low–cost hydropower already directed toward green hydrogen production. In all our work to date, China is the low-cost producer.

Regulatory challenges that beset Europe and the US do not challenge China, and the country can move faster – China could have a million tons of green hydrogen before the rest of the world combined does

But is it worth anything, and is it any sort of competitive advantage? How eager will the rest of the world be to buy “greener” goods from China given the challenges of auditing the green claims?

This is very unclear, and as long as the motivation within China is self-sufficiency around energy and doing the right thing optically for its population, then we could see development accelerate.

It may help with downstream export markets for China if local companies can produce goods that remain competitively priced globally but also have a green production label.

We tend to forget that many, if not most, renewable fuels programs, except those starting with syngas, need hydrogen to dehydrate or hydrogenate the fuels. They also all need green power.

Volume requirements are generally much smaller than for large ammonia/methanol projects, and tacking alongside a much larger blue hydrogen project may make sense where possible.

Green hydrogen is more modular in nature and would lend itself well to supporting renewable fuels as long as enough affordable renewable power can be found – challenging in regulated US states.

Most industrial manufacturers and fuel producers do not want to own their own power projects, but this may be something about which they have little choice, depending on their location.

Our project tracker this week looks at different scales and locations but draws a conclusion we have outlined before: China has a lead in green hydrogen – but it is not clear what that is worth.

Some of the technological breakthroughs that many hope for with hydrogen will likely not happen without scaling what we have now and developing an industry that can learn and fund itself.

Government spending – based mainly on national security fears – was a major driver of semiconductor development in the early days – if we are at war with climate change – hydrogen needs the same.

We still see an underappreciation of the cost challenges facing green hydrogen, partly because of power supply – blue hydrogen is a long-term and more affordable option – it needs more support.

The industrial gas companies are well positioned to drive a lot of blue initiatives through ATR-based hydrogen with CCS to oxygen production for the ATRs and oxy-combustion and nitrogen for ammonia.

Our projects this week focus on some very high-cost green ideas – either because of power costs or hydrogen logistics – and one low-cost blue project.

Affordable green hydrogen at scale will currently have to wait for affordable surplus renewable power at scale, suggesting that the industries could evolve in series, which will take many years.

For electrolyzer technology and costs to evolve more quickly, green hydrogen and renewable power need to evolve in parallel, and for that incentives should change to drive electrolyzer development.

Offering 45V (or equivalent) for electrolyzer-based hydrogen on any power source today – phasing in green power over time – see chart – would step change green hydrogen investment immediately.

We look at sub-scale green ammonia plans and note that these are high costs and will require high prices – it is not yet clear how much higher-priced ammonia demand there will be.

We continue to question how low-carbon power can evolve at the pace some consumers are looking for without a much more sensible focus on nuclear, hydro, and natural gas with CCS.