Green Hydrogen Booms in Asia as Companies rush into Projects



The race to establish green hydrogen production bases in the Asia-Pacific region is heating up, with Western and regional companies cooperating on massive projects to produce what many see as a next-generation power source.


Danish multinational Orsted, the world's largest offshore wind power company, is considering entering the market, as are major Western oil companies.


Green hydrogen, which does not emit carbon dioxide in its production process, is seeing demand rise globally for use as a power-generating fuel. Europe, where renewable energy is widespread, has taken the lead in the field, but Asia is now starting to move toward production.


 "We have had an initial focus on Europe. But for certainly in the foreseeable future, we want to step into that area in Asia," Per Kristensen, who oversees the Asia-Pacific division at Orsted, told Nikkei.


Orsted agreed to cooperate with South Korean steelmaker POSCO last year on an offshore wind power project. The companies have also started a feasibility study for the production of green hydrogen, and could be preparing a supply for "hydrogen steel," which uses hydrogen instead of coal for production.


Orsted operates a business in Denmark that uses offshore wind power to split water molecules to produce green hydrogen. Having launched multiple projects mainly in the North Sea, it now looks to utilize its know-how in Asia.


Major Western oil companies are also pouring into the region. BP has become the largest shareholder in the Asian Renewable Energy Hub, a huge Australian project, having made a 40.5% investment. With plans to produce up to 1.6 million tonnes of green hydrogen per year, the British multinational aims to acquire a 10% share of the world market.


American multinational Chevron is collaborating with Indonesian oil company Pertamina and Keppel Corporation, a government-affiliated Singapore conglomerate, to investigate green hydrogen production using electricity obtained from geothermal power in Southeast Asia. It plans to produce 80,000 to 160,000 tonnes per year in the future.


Hydrogen is used for petroleum refining and other purposes, but its use for power generation is expected to increase as the global decarbonization push gains momentum. In Asia, where manufacturing industries are concentrated, demand for hydrogen in the steelmaking and automobile industries is already rapidly increasing.


According to a report compiled by the Hydrogen Council, which consists of more than 150 multinational companies, and U.S. consulting firm McKinsey & Company, the combined hydrogen demand of China, India, Japan and South Korea will reach 285 million tonnes in 2050, accounting for 43% of the world's total.


China, the world's largest hydrogen consumer, is aiming to take the lead in green hydrogen production. Large-scale projects are being launched, including the construction of a 20,000-tonne-a-year manufacturing plant by state-owned oil company Sinopec.


In India, big projects are being planned one after another, taking advantage of its vast area, abundant sunlight and low-cost renewable energy sources.


The expansion of green hydrogen production in the Asia-Pacific region will provide a tailwind for Japan.


Hydrogen produced in Japan currently costs about $2.50 per kilogram, whereas that figure is expected to drop to $0.70 per kg by 2050 in Australia in India, according to the International Renewable Energy Agency. As importing to Japan will continue to be cheaper, green hydrogen's popularity there is likely to accelerate.


Japanese trading companies are moving to acquire stakes. Mitsui & Co. plans to invest 28% in a green hydrogen production project being planned in Australia by a subsidiary of French power company Engie, with operations slated to start in 2024. Mitsubishi Corporation, meanwhile, is working with Pertamina and others to start operating a production base in the country.


If the cost of procuring hydrogen is higher than in other countries, it will lead to a decline in the international competitiveness of a country's manufacturing industry. In Germany, the public and private sectors have come together to invest in a national plan to produce hydrogen at low cost, and several companies have collaborated on a purchase agreement.


Until now, Japan's public and private sectors have worked together to acquire large-scale interests in oil and liquefied natural gas. To maintain industrial competitiveness, public-private partnerships are essential for green hydrogen as well.


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