Australia’s ambitious renewable hydrogen production and export plans – albeit mostly driven by state and territory governments and private investors – could see it catch up with Europe within just a few years, an International Energy Agency report has found.

The IEA report, published on Monday, assesses the current state of play for hydrogen around the globe and calls on governments to increase investment and focus policies to tap into the significant potential of the renewable fuel source.

According to the report, Europe is leading hydrogen electrolyser capacity deployment, with 40% of global installed capacity, and is set to remain the largest market in the near term on the back of ambitious strategies from the EU and UK.

But the IEA noted that Australia’s policy plans and targets, including the federal government’s National Hydrogen Strategy, alongside those of its states and territories, suggested it could catch up with Europe in a just a few years’ time.

The report noted the $A300 million federal funding allocation, made available in 2020 via Australia’s Clean Energy Finance Corporation, through the Advancing Hydrogen Fund, “thereby taking the first steps to facilitate investments in hydrogen projects to scale up production and end uses.”

It also noted, however, as detailed in the table below, that the federal government’s National Hydrogen Strategy had no set targets, and was not limited to renewable electrolysis, but rather intended to use coal with CCUS (carbon capture usage and storage) and natural gas with CCUS.

The report gives a special nod to Australia’s state governments, noting that “several regional governments have …defined hydrogen strategies and roadmaps, including in Australia (Queensland, South Australia, Tasmania, Victoria and West Australia).”

The IEA also lists Australia among a small number of countries, including Canada, Chile and Portugal, that have “a clear plan to become exporters” of renewable hydrogen.

But the key message from the IEA’s inaugural Global Hydrogen Review, is that current public investment in hydrogen pales in comparison to what is needed.

According to the report, countries with hydrogen strategies have committed at least $US37 billion to the development and deployment of hydrogen technology, while the private sector has backed this up by announcing investment of $US300 billion.

But to help the hydrogen sector grow on a path consistent with global net zero emissions by 2050, the IEA concludes that investment of $US1,200 billion is needed by the end of this decade.

“It is important to support the development of low-carbon hydrogen if governments are going to meet their climate and energy ambitions,” said Fatih Birol, the IEA Executive Director, who launched the report on Monday at the Hydrogen Energy Ministerial Meeting hosted by Japan.

“We have experienced false starts before with hydrogen, so we can’t take success for granted. But this time, we are seeing exciting progress in making hydrogen cleaner, more affordable and more available for use across different sectors of the economy.

“Governments need to take rapid actions to lower the barriers that are holding low-carbon hydrogen back from faster growth, which will be important if the world is to have a chance of reaching net zero emissions by 2050.”

The report also notes that current hydrogen production remains heavily emissions intensive, with the 90Mt produced in 2020 coming almost exclusively from fossil fuels, resulting in close to 900Mt of CO2 emissions.

On a more positive note, this appears to be shifting, with the global capacity of electrolysers used produce hydrogen using renewable electricity doubling over the last five years to just over 300MW.

Further, the IEA has identified around 350 projects currently under development which could bring global capacity up to 54GW by 2030. Another 40 projects accounting for more than 35GW of capacity are in early stages of development.