Clean hydrogen is expected to grow from today’s low base by up to 100‑fold globally, according to DNV’s recently published Energy Transition Outlook: Hydrogen to 2060. This growth is significant but its role will be targeted.
Total hydrogen volumes will increase by around 170 per cent, concentrated in sectors where alternatives are limited – so-called hard-to-electrify sectors. Steelmaking, aviation and maritime together are expected to account for more than half of future clean hydrogen demand, reflecting the persistent challenge of decarbonising high‑temperature processes and long‑distance transport. Cumulative global investment to achieve this growth will reach $US3.2 trillion to 2060.
DNV’s outlook is more cautious than earlier projections, revising its forecast downward by around 35 per cent, primarily due to insufficient policy support and the slow conversion of early ambition into commercial-scale projects. The message is clear: hydrogen has a role, but delivery is now contingent on execution and investment discipline rather than vision.
A second insight is equally important. Growth will be uneven and shaped by geopolitics and industrial capability. China is expected to account for around 35 per cent of new hydrogen production and demand, underpinned by its dominance in electrolyser manufacturing and its ability to scale renewables and industrial demand in parallel.
Energy security is emerging as a decisive driver, as countries seek to reduce exposure to volatile fossil fuel markets and secure supply chains for critical industries.
For Australia, this sets a clear context. The opportunity is real, but it is competitive, capital intensive and time sensitive. The recent announcement of shortlisted projects under Round 2 of the Hydrogen Headstart program saw seven large‑scale projects across ammonia, methanol, sustainable fuels and industrial applications invited to submit full applications following a competitive screening process.
The next phase, leading to full submissions later this year, will be significantly more demanding. It will involve detailed due diligence, assessment against strict merit criteria and a requirement to demonstrate credible delivery at scale. This is the point at which many hydrogen projects globally have historically stalled.
While funding programs help bridge the commercial gap, positive investment decisions require achieving three fundamentals that directly affect investor confidence and financing terms, including:
Safety: Scaling hydrogen introduces new risks across production, storage, transport and export interfaces. Investors, insurers and regulators require a clear, evidence‑based safety case that demonstrates risks are understood and managed.
Performance and reliability: Technology choices, plant integration and operating strategies must demonstrate predictable output and availability. In a capital‑intensive project, uncertainty in ramp‑up or degradaton directly reduces debt capacity and increases the cost of equity.
Credible emissions and sustainability performance: Projects must evidence emissions intensity and lifecycle impacts through transparent and auditable methodologies. This is no longer a compliance exercise. It is central to offtake alignment, financing eligibility and long‑term asset value.
These requirements reflect a broader shift in the investor base. Infrastructure and pension investors – who ultimately provide the scale of capital required – are focused on downside protection and alignment with sustainable finance frameworks. This means contracted revenues where possible, but also alignment with climate disclosure standards, defensible emissions claims and robust governance throughout the asset lifecycle.
Projects must demonstrate how risks are allocated, monitored and mitigated, and how performance will be assured over time. Without this, projects struggle to move beyond demonstration into deployment.
The coming months are therefore critical. Between shortlist and full application, developers have a narrow window to convert strong concepts into investment‑ready propositions. This is where independent verification and structured risk assessment become decisive.
This is where DNV is positioned to support. As an independent adviser, DNV works across the full project lifecycle to validate safety, benchmark technical performance, and substantiate emissions and sustainability claims. The objective is straightforward: to replace assumptions with evidence, reduce perceived risk and enable capital to be deployed with confidence.
While each investment decision is made at an individual project level, collectively these projects shape the future energy system. Hydrogen and its derivatives have a relatively small but still important part to play in the energy transition, supporting industrial decarbonisation, strengthening energy security and enabling new trade in low‑carbon commodities.
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