Hydrogen could play a central role in helping the world reach net-zero emissions by 2050. As a complement to other technologies, including renewable power and biofuels, hydrogen has the potential to decarbonize industries including steel, petrochemicals, fertilizers, heavy-duty mobility (on and off-road), maritime shipping, and aviation, as well as to support flexible power generation (among other applications). In 2050, hydrogen could contribute more than 20 percent of annual global emissions reductions.
Hydrogen’s potential role in the broader energy transition is explored in a series of industry reports coauthored by McKinsey and the Hydrogen Council—a global, CEO-led initiative with members from more than 140 companies. The reports explore, for example, how demand for hydrogen could reshape current power, gas, chemicals, and fuel markets; the need for scaling hydrogen production, particularly clean hydrogen (which is made with renewables or with measures to lower emissions); and what must happen in the coming decade to reach net-zero targets.
The momentum behind hydrogen has accelerated in the past year, as described in Hydrogen Insights 2022,1 a recently published perspective on the state of the hydrogen industry. Both investment and project development have ramped up. However, a funding gap remains.
The following five charts show how hydrogen could play a key role in a low-carbon future.
How leaders could help maximize hydrogen’s potential in the net-zero economy
For hydrogen to become a pivotal player in the energy transition, scale-up over the next decade is critical. Policy makers and business leaders can consider actions in three key areas:
- Creating demand. Companies could play a role by pursuing industry-wide transition commitments while policy makers could create incentives—for instance, by introducing direct support mechanisms and mandating quotas or targets.
- Developing infrastructure. Up-front investments are required to develop large-scale infrastructure that enables distribution, such as pipelines and refueling infrastructure.
- Scaling up production. Hydrogen demand will reach mass-market adoption only when low-cost clean-hydrogen supply is available. This will require a scale-up in electrolysis capacity and accompanying renewable-energy capacity, as well as the build-out of carbon capture, utilization, and storage infrastructure. The sooner these investments in gigascale production are made, the earlier hydrogen will reach cost competitiveness.
