The global hydrogen generation market was valued at USD 120.60 billion in 2020 and is expected to grow at a CAGR of 5.5% during the forecast period. The introduction of new policies aimed at adopting renewable fuels and increased investments in the refining industry is expected to boost the market conditions.
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The growing need to reduce carbon emissions from refining operations is propelling the adoption of the generation systems. Implementing the regulation of various incentive schemes to limit the amount of sulfur content in gasoline, diesel fuel, and motor oil would further stimulate generation market growth over the forecast timeline.
The focus on low-cost, renewable energy encourages production. From the U.S. to Australia, governments worldwide are promoting the deployment by incorporating rewards and generation goals. Makers of passenger vehicles particularly profit from the most lucrative benefits for the adoption.
Rising crude oil market demand, combined with increased investments in expanding existing refining facilities in emerging economies, would generate substantial business opportunities for numerous manufacturers worldwide.
The global hydrogen generation market is mainly driven by the increasing applications across several industries. It has applications in petroleum recovery, chemical processing (methane and ammonia production), refining, and fuel cells. The strict environmental regulations imposed by many countries to control greenhouse gas emissions are a primary factor behind the generation market demand in all these areas.
Industrialization and the use of fossil fuels have led to the increased emission of greenhouse gases globally, which significantly impacts the environment. Countries such as the U.S., China, and European Union are the major contributors to the emission of greenhouse gases. Hence, these countries are trying to cut down on the emission of greenhouses gases.
The increased sulfur levels in the environment will directly or indirectly lead to higher methane emissions and carbon dioxide emissions. Hence the product is used in oil & gas refineries to reduce the sulfur content in diesel. The product is mainly used in the chemical processing industry to produce ammonia, methanol, and other petrochemical complexes.
Governments across the globe are favoring the use of the product in various sectors. For instance, a few years back, France's government set a target to increase the use of the product in the industrial sector to 10% by 2023 and 40% by the year 2040. Hydrogen is also used in emerging technologies such as fuel cells. Fuel cells are being developed as a fuel source for electric vehicles and power source for many commercial buildings in the developed nations.
Green gas is an emerging technology that is expected to further fuel the growth of the global generation market during the forecast period. Steam methane reforming coal gasification, partial oxidation of oil, and water electrolysis are methods to produce the product. Since fossil fuel reforming is the most cost-effective method, this method is involved in more than 90% of production. Still, during this process, carbon dioxide is emitted into the environment.
But in recent years' methods are being developed to produce green hydrogen from electrolysis of water and renewable energy sources such as solar and wind energy. The plan to build the most significant European green plant was recently proposed by AkzoNobel and gas network operator Gasunie. These techniques are still not widely used, but in the coming decades, green hydrogen generated by these new methods is expected to contribute to the growth of the global generation market.
Many developments are taking place in the global market in recent years. In July 2020, the world's most significant green hydrogen was unveiled in Saudi Arabia by Air Products & Chemicals. The new plant will be powered by 4 gigawatts of solar and wind energy. COVID-19 is expected to impact the growth of the global generation market slightly.
During the pandemic, the activities in oils and refineries are significantly reduced, which will impact the generation. Most commercial buildings are not functioning, limiting the use of hydrogen-based fuel cells for power generation.
The market is primarily segmented on the basis of technology, systems type, application, and region.
By Systems Type
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The steam methane reforming technology segment dominated the market and generated the highest revenue in 2020. Steam methane reforming is a technique to produce hydrogen and other gases such as carbon dioxide and carbon monoxide. It is an established and sophisticated hydrogen generation technology.
The rising global market demand for hydrogen is one of the major factors driving the growth of the generation technology, as it is the most cost-effective method for hydrogen production. Due to operational advantages such as high conversion performance, the steam methane reforming process is leading the generation market.
Coal gasification technology had the second-largest market share, and it is expected to grow at a high growth rate during the projected period. Coal gasification, which produces hydrogen from coal as a natural resource, has been used for two centuries. Furthermore, it is known as a proven technology for hydrogen production, like steam methane reforming.
The ammonia generation segment dominated the market and generated the highest revenue in 2020. Ammonia plants consume a significant amount of the hydrogen produced. Hydrogen is typically manufactured on-site at ammonia plants using fossil fuel as a raw material. Because of its ease of use and low cost, this application historically had a strong user base. Ammonia is used extensively in the fertilizer production process.
The petroleum refinery market segment witnessed a significant increase in market share in 2020, owing to favorable policies to de-sulfate fuels to save the atmosphere. Over the forecast era, the other application category is predicted to have the fastest growth rate.
The Asia Pacific is expected to be the most prominent region for the global hydrogen generation market due to massive investment in research and development to develop environmentally friendly solutions. Japan, China, India, South Korea, and Australia are significant countries in the Asia Pacific region. Rigorous economic performance, combined with large-scale research and development investments in developing countries, is projected to boost generation market growth in this region.
China is implementing significant changes in the petroleum and fuel industries to address various issues, like pollution and economic disparities between cities and the countryside. A few years back, China has invested USD 290 million to develop hydrogen stations that will fuel the production of fuel cells, which will help in the mass generation of fuel cell vehicles.
Major players in the hydrogen generation industry are investing heavily in research & development to develop innovative methods to produce hydrogen. Companies are focusing on building green hydrogen plants across the globe to overcome the environmental regulations and hold an advantage over their rivals by adopting new technologies. Few prominent players in the generation market include Air Liquide S.A., Cummins Inc., Nel ASA, ITM Power, Linde plc, Air Products and Chemicals, Inc., FuelCell Energy, Inc., Iwatani Corporation, Showa Denko, The Messer Group GmbH, Taiyo Nippon Sanso Corporation, McPhy, Engie SA, Uniper SE, Green Hydrogen Systems, Electrochaea GmbH, AquaHydrex, Inc., Exytron GmbH, Enapter, Starfire Energy, Hiringa Energy, Plug Power Inc., Claind S.r.l., Ally Hi-Tech.
Market size value in 2020
USD 120.6 billion
Revenue forecast in 2028
USD 184.23 billion
5.5% from 2021 - 2028
2016 - 2019
2021 - 2028
Revenue in USD million/billion and CAGR from 2021 to 2028
By Technology, By System Type, By Application, By Region
North America Europe Asia Pacific Latin America; Middle East & Africa
Air Liquide S.A., Cummins Inc., Nel ASA, ITM Power, Linde plc, Air Products and Chemicals, Inc., FuelCell Energy, Inc., Iwatani Corporation, Showa Denko, The Messer Group GmbH, Taiyo Nippon Sanso Corporation, McPhy, Engie SA, Uniper SE, Green Hydrogen Systems, Electrochaea GmbH, AquaHydrex, Inc., Exytron GmbH, Enapter, Starfire Energy, Hiringa Energy, Plug Power Inc., Claind S.r.l., Ally Hi-Tech