Hydrogen will play no significant role in decarbonising the global economy for at least a decade, and its success beyond that remains uncertain, according to a new report by Moody’s. Hydrogen is an energy-rich combustible gas that releases no carbon dioxide when burnt, and is widely seen as a promising clean energy source in a net zero world. Moody’s said green hydrogen – which is made by splitting water into hydrogen and oxygen using a renewable-powered electrolyser – could be used in the near term to decarbonise oil refining and the chemicals industry. Longer term, it could be used in aviation, trucking, shipping, cement, steel and the power sector. But to fulfil this potential, “substantial” advances will be needed to remove technological, commercial and logistical obstacles, the report found. Well-designed policy support will also be necessary, Moody’s added. Despite the hype around hydrogen, today the majority of its use is in oil refining and chemicals production. Just 5% is used in steelmaking – a sector overwhelmingly dominated by coal – and negligible amounts are used in transport, energy generation, and other industrial applications. In addition, today most hydrogen is manufactured using fossil fuels – in a process that extracts hydrogen from fossil methane gas, producing CO2 as a byproduct and contributing 3% of global carbon emissions. Moody’s said replacing this so-called “grey hydrogen” with currently much more expensive “green hydrogen” made with water and electricity will require cost reductions. It also found that of the 1400 low-carbon hydrogen projects announced globally, only 7% have reached final investment decision. The report warned that those 1400 projects would require vast amounts of renewables to be built – equalling a quarter of all renewable capacity globally. It could also put a worrying strain on water sources, Moody’s added.

The International Energy Agency’s (IEA) latest annual medium-term market report for the oil industry has predicted that growth in the world’s demand for oil will slow in the coming years. Despite rising demand from fast-growing economies in Asia, alongside carbon-intensive sectors like aviation, oil use will increase but be increasingly offset by factors such as rising electric car sales, fuel efficiency improvements in conventional vehicles, and a declining use of oil for electricity generation in the Middle East, the IEA said. As such, global demand – which, when including biofuels, averaged just over 102 million barrels a day in 2023 – is expected to level off around 106 million daily barrels by 2030. In parallel, the IEA predicted a surge in global oil production capacity led by the US and other producers in the Americas. This is expected to outstrip demand growth between now and 2030, with total supply capacity forecast to hit nearly 114 million barrels a day by 2030 – eight million per day above projected global demand. Spare capacity could have “significant consequences” for oil markets, the IEA warned. “As the pandemic rebound loses steam, clean energy transitions advance and the structure of China’s economy shifts – growth in global oil demand is slowing down and set to reach its peak by 2030,” said IEA Executive Director Fatih Birol. “This report’s projections show a major supply surplus emerging this decade, suggesting that oil companies may want to make sure their business strategies and plans are prepared for the changes taking place.”

Progress to ensure basic energy access globally has stalled for the first time, according to a new report assessing contributions to the UN Sustainable Development Goal (SDG) 7. SDG 7 focuses on ensuring access to affordable, reliable, sustainable and modern energy for all. The report was co-authored by the International Energy Agency (IEA), International Renewable Energy Agency, UN Statistics Division, World Bank and World Health Organization. The organisations noted that, although progress has been made on specific elements of the SDG 7 agenda, such as an increased rate of renewables deployment in the power sector, it remains insufficient to achieve the goal. The number of people without access to electricity increased for the first time in over a decade as world populations grew, counting 685 million people without electricity in 2022 – ten million more than the previous year. Around 80% of this population (570 million) was based in sub-Saharan Africa. A further 2.1 billion people still lived without access to clean cooking fuels and technologies. Meanwhile, international public finance flows supporting clean energy development rebounded to US$15.4 billion the same year, representing a 25% increase. “To achieve SDG 7, we will need much more investment in emerging and developing economies to expand access to electricity and to clean cooking technologies and fuels,” said Fatih Birol, Executive Director of the IEA. “In addition to climate and environmental benefits, addressing these challenges will bring a range of societal and economic advantages, linked to gender equality, health, education and employment.” Separately, IRENA convened its 27th council meeting in Abu Dhabi today, gathering representatives from 105 countries to discuss critical issues facing the energy transition – just days after UN Secretary-General Antonio Guterres issued an urgent call for climate action.