Green Hydrogen Market Analysis

Green Hydrogen Market Deep Dive – PESTLE, Porter, SWOT

The Green Hydrogen Market is a major factor in the global transition towards sustainable energy, which is becoming more and more urgent with the urgency of climate change and the need to reduce carbon emissions. Green hydrogen is a versatile and clean energy carrier that is produced by splitting water with the help of renewable energy. The Green Hydrogen Market is characterized by its wide range of applications, such as transport, industry and energy storage, which together represent the potential for a revolutionary change in energy use. Green hydrogen production is a high-tech industry that is still in its infancy. The growing investment in research and development and technological progress are expected to improve the efficiency and cost-effectiveness of green hydrogen production and increase the use of green hydrogen in various fields. Also, the support of governments and international cooperation are expected to accelerate the establishment of a solid and sustainable infrastructure, thereby facilitating the integration of green hydrogen into existing energy systems and strengthening its role as the cornerstone of a sustainable energy future.

PESTLE Analysis

• Political:
  In 2024, the green hydrogen market will be heavily influenced by government policy to reduce CO2 emissions. For example, the European Union has earmarked a budget of one billion euros to be invested in green hydrogen projects as part of its Green Deal. The United States has also allocated eight billion dollars for hydrogen hubs under the Infrastructure and Jobs Act, which is expected to speed up the development of a green hydrogen network.
• Economic:
  The economic factors that will influence the green hydrogen market in 2024 are the rising prices of fossil fuels and the falling prices of renewable energy sources. The International Energy Agency has reported that the cost of green hydrogen has fallen by 50 percent since 2020, and that the cost per kilogram of green hydrogen produced is now $2.50. The reduction in cost will make green hydrogen more competitive against natural gas, which is priced at about $US4 per million British thermal units (Btu) in the United States.
• Social:
  Green hydrogen is increasingly gaining acceptance, especially in regions already influenced by climate change. According to consumer surveys, 72% of Europeans favor a switch to hydrogen as a clean energy source, indicating a shift in public opinion towards sustainable energy solutions. By 2030, the hydrogen industry is expected to create around 1.4 million jobs worldwide. As a result, hydrogen projects are also supported as a means of economic development.
• Technological:
  In the hydrogen market, the future is based on technological development. Progress in electrolysis and fuel cell technology is essential. In 2024, the efficiency of proton exchange membranes (PEM) is eighty per cent, which greatly improves the economics of green hydrogen. In 2024, the companies spend an estimated $500 million on developing hydrogen technology in order to improve the efficiency of hydrogen production and reduce its cost.
• Legal:
  The hydrogen economy is undergoing a process of evolution and many countries are promoting the hydrogen economy and encouraging the production and use of hydrogen. In the United States, for example, under the Inflation Relief Act, the tax credit for the production of green hydrogen is up to $3 per kilogram. This provides a significant incentive for investment in the hydrogen industry. The European Commission is also working on a regulatory framework to standardize hydrogen production and distribution, which it hopes to complete by 2024.
• Environmental:
  The favourable climatic effects of green hydrogen are the main cause of its spread, as it offers a more favourable alternative to fossil fuels. According to a study of the environment, the production of green hydrogen could reduce annual CO2 emissions by about 830 million tons in 2024 if it were to be widely spread. Furthermore, the life cycle of green hydrogen has been found to have a carbon footprint of less than one kilogram of CO2 per kilogram of hydrogen produced, making it an essential component of the achievement of the world's climate goals.

Porters Five Forces

• Threat of New Entrants:
  “The green hydrogen market is growing, a consequence of the increasing demand for clean energy solutions.” “The high capital investment needed for the construction of production plants and the development of the necessary technology, as well as the regulatory barriers, deters new entrants.” “The existing players with their existing plant and technology have a significant advantage, but the opportunities for innovation and the support from the government may make it possible for new entrants to enter the market.”
• Bargaining Power of Suppliers:
  The suppliers of the key components of green hydrogen production, such as the electrolysers and the sources of the renewable energy, have a medium degree of bargaining power. While there are several suppliers, the specialized nature of the technology and the need for high-quality materials gives certain suppliers a strong position. However, as the market grows, the number of suppliers will probably increase, which could eventually weaken their bargaining power.
• Bargaining Power of Buyers:
  The buyers in the green hydrogen market, especially industrial consumers and energy companies, have considerable bargaining power due to the growing availability of alternative energy sources and technology. Competition will increase and so will the number of suppliers, which means that buyers can negotiate lower prices and better terms and conditions. And the increasing emphasis on sustainability and CO2 reduction will give buyers even more choice.
• Threat of Substitutes:
  The threat of substitutes in the green hydrogen market is high, as there are many alternative sources of energy available, such as batteries, natural gas, and other renewable energy sources. These alternatives can perform the same functions in energy applications, and as technology develops, they can be cheaper. This competition from substitutes can limit the market share and the pricing power of green hydrogen producers.
• Competitive Rivalry:
  The rivalry in the green hydrogen market is intense, driven by the growing number of companies and the race to develop the most cost-effective and efficient production methods. Energy companies, newcomers and technology firms are all vying for a share of the market. The need for differentiation in terms of technology and service offerings makes the competition even more fierce.

SWOT Analysis

• Strengths:
  • Abundant availability of renewable energy sources for hydrogen production.
  • Growing government support and investment in green hydrogen technologies.
  • Potential to significantly reduce carbon emissions and combat climate change.
  • Technological advancements improving efficiency and reducing costs of production.
  • Increasing demand for clean energy solutions across various industries.
• Weaknesses:
  • High initial capital investment required for infrastructure development.
  • Limited existing infrastructure for hydrogen distribution and storage.
  • Challenges in scaling production to meet growing demand.
  • Public perception and awareness issues regarding hydrogen safety.
  • Dependence on renewable energy availability, which can be intermittent.
• Opportunities:
  • Expansion of hydrogen applications in transportation, industry, and power generation.
  • Potential for international trade of green hydrogen as a commodity.
  • Collaboration opportunities between governments, private sector, and research institutions.
  • Increased focus on energy security and diversification of energy sources.
  • Emerging markets and developing countries seeking sustainable energy solutions.
• Threats:
  • Competition from other renewable energy sources and technologies.
  • Regulatory challenges and changing government policies.
  • Market volatility and fluctuations in energy prices.
  • Technological risks associated with new innovations and processes.
  • Potential for geopolitical tensions affecting supply chains and trade.

Green hydrogen is characterized by the availability of a large number of clean energy sources and strong government support. High capital costs and public acceptance are the main challenges. Opportunities lie in the growth of applications and international trade, but the market is also threatened by competition and regulatory changes. The strategic orientation of the parties in this evolving landscape will be a combination of cooperation and innovation.