Where will hydrogen be used

This long read explains in depth about the use of hydrogen and how it can be produced, transported and stored. As an energy carrier, hydrogen is not a goal in itself, but rather a means, a means for us to achieve massive CO₂ reductions and meet the challenges of making the energy sector more sustainable. In this section, we focus mainly on the question of where the demand for carbon-neutral hydrogen will come from. We elaborate on the various quantitative analyses that have been made regarding the future use of hydrogen, and we compare the different demand scenarios with the potential supply of hydrogen.

You can read about how hydrogen is currently being put to use in the history of hydrogen section. We can roughly state that the Netherlands currently uses a volume off nearly 14 BCM per year (176 PJ/yr), making this country the second largest user of hydrogen in Europe. The industrial sector mainly uses this hydrogen for the production of fertilizer and methanol, and in the refineries.

The demand for hydrogen

The demand for carbon-neutral hydrogen will continue to develop over the coming decades. Exactly how this will develop is of course not known, which is why various researchers work with scenarios; in their scenario-based studies the researchers look ahead to 2030 and 2050 for example. In this section, we showcase the range of projections, forecasts and scenarios regarding the demand for hydrogen in the Netherlands. Based on the findings of the cross-sectoral study group on hydrogen (working under the Climate Agreement), we delve deeper into the demand within the various market sectors, and the potential supply.

Comparing the studies

The many hydrogen supply/demand studies carried out so far show a wide spread of the possible demand for hydrogen, anywhere from virtually null to 1900PJ in 2050. This discrepancy can be explained by the different assumptions used in the studies. For the studies that only analysed the demand for the energy supply of hydrogen, the role of hydrogen was negligible.


Total hydrogen use in the Netherlands (values for other countries or regions are GDP corrected)
Source: ISPT HyChain study. Click to enlarge.

When we look at the underlying trend in the analyses, we see on average an increasing demand for hydrogen. The large variation in the figures shows that there is still much uncertainty about the future role of hydrogen though. If we zoom in on the distribution of demand across market segments, a clearer picture emerges: the greatest potential lies with industry, electricity generation, and transport and mobility.


Hydrogen use per sector in 2050, categorised by type of study
Source: ISPT HyChain. Click to enlarge.

Dutch Supply-Demand Analysis

When the Dutch Klimaatakkoord was drawn up in November 2018, the cross-sectoral hydrogen working group estimated the potential demand and supply of hydrogen in the Netherlands in 2030. Demand scenarios were drawn up for the various sectors with a low, medium and high variant. In addition, various supply scenarios were outlined.

Achtergrondnotitie elektriciteit- en industrie waterstof (publication 2019)

At the end of 2019, these scenarios were fine-tuned to the latest figures and insights. This resulted in the finding that current Dutch production is much higher than assumed. You can find these latest insights in this file. Hydrogen supply and demand / now - 2030 (Update November 2019)

Fuels for international shipping and aviation

The cross-sectoral study group has disregarded the shipping and aviation component since these sectors do not fall within the current Dutch target for CO₂ reduction. These sectors consume enormous amounts of energy though, which is why we touch on them as well in this text box.

In total, around 500PJ of fuel is currently consumed in the Netherlands for international shipping. For aviation fuels in the Netherlands, the figure is approx. 160PJ. According to the previously mentioned HyChain study by ISPT, if these fossil fuels were to be replaced, this could result in a demand in 2050 for up to 700PJ of hydrogen from the international shipping and aviation sectors in the Netherlands, i.e. twice that of the total demand in the high scenario of the cross-sectoral study group. If this demand does indeed materialise, it will have a major impact.

Europe’s first large-scale production facility for sustainable aviation fuel (SAF) is being built in Delfzijl (Netherlands) and is scheduled to go into operation in 2022. Mixing carbon-neutral hydrogen with waste streams such as used frying oil, the plant will produce 100,000 tonnes of SAF and 15,000 tonnes of bio-LPG per year.

What does hydrogen cost?

Hydrogen cannot in general replace another energy carrier one-on-one: we will have to adjust all kinds of steps in the chain before we can introduce hydrogen. The various cost elements from source to end use play a role in the future cost trend for hydrogen. Below we focus on the cost price of hydrogen.

Various factors play a role in determining the cost price of hydrogen. Firstly, there’s the cost of the energy source that will be used, such as natural gas, or electricity from solar and wind energy. Then, of course, there’s the cost of investing in the technical facilities and the operating costs for these facilities.

The Dutch industry currently produces hydrogen from natural gas – predominantly SMR without carbon capture – at a price of about €1.50/kg. It is expected that the price of this grey hydrogen will increase if the associated carbon emissions are taxed more heavily, through the ETS system for example.

Given that we want to avoid releasing carbon emissions when converting natural gas to hydrogen, the CO₂ will have to be captured, transported and stored (and/or reused), which means additional costs for blue hydrogen. On the other hand, this way the producer avoids costs relating to carbon emissions.

Green hydrogen is currently being produced at a price of around €5/kg, with roughly two-thirds of this price coming from the price of electricity and the other one-third from the cost of the electrolyser. The price of electricity is expected to fall (on average), which will reduce the costs for electrolysis. Around 2030, it is expected that the price for renewable hydrogen will be about €2/kg, and this price is expected to drop even further.

If we line up the analyses of various research and consultancy firms, we arrive at a price trend as shown in the graph below.

Hydrogen price trend
Source: Gasunie pitch for the ‘Electricity Table’, based on ECN 2017