Frost & Sullivan releases 'Research Report on Growth Opportunities for Carbon Capture Applications in the Global Blue Hydrogen Industry 2023'

Global efforts towards decarbonization and achieving the goal of limiting global average temperature rise to a maximum of 1.5 degrees Celsius above pre-industrial levels will require a supportive regulatory framework that requires businesses, industries, and residential sectors to take energy-saving measures, large-scale economic investment to drive the increase in renewable energy installed capacity, as well as a shift towards nuclear energy and other low-carbon technologies, including blue hydrogen, green hydrogen, and large-scale carbon capture, utilization, and storage (CCUS).

Source: Analysis by Frost & Sullivan

Interest in hydrogen as a carrier of low-carbon or zero-carbon energy has increased significantly. A hydrogen-based economy may be the best alternative to the current fossil fuel-based economy and also a solution to the growing concerns about carbon emissions, energy security, and climate change.

Source: Analysis by Frost & Sullivan

Classified by fossil fuel type, carbon capture blue hydrogen can be divided into natural gas carbon capture, coal carbon capture, petroleum carbon capture, and biomass carbon capture; classified by technology type, carbon capture blue hydrogen can be divided into steam methane reforming (SMR) with carbon capture, automatic thermal conversion (ATR) with carbon capture, methane cracking with carbon capture, coal technology with carbon capture, and other technologies. Note: Other include asphalt gasification + carbon capture, petroleum coking with carbon capture + biomass gasification, heavy oil residue gasification + carbon capture and partial oxidation.

Source: Analysis by Frost & Sullivan

Source: Analysis by Frost & Sullivan

The Report estimates the overall global blue hydrogen application carbon capture market, as well as revenue and annual new production capacity in various technical segments. It also analyzes the revenue share of major global participants.

Hydrogen has limited current uses, but it holds great potential as a cost-effective and low-emission 'blue hydrogen'. In heavy transport vehicles that cannot be powered by batteries, hydrogen is expected to play a key role in replacing petroleum products.

Globally, 98% of hydrogen comes from coal (via gasification), and SMR comes from natural gas. Both methods emit large amounts of carbon dioxide without the use of carbon capture technology, making the deployment of carbon capture technology an ideal choice.

As the pressure to achieve net-zero emissions by 2050 grows, large-scale hydrogen plants using natural gas and coal as raw materials need to be retrofitted with carbon capture technology. One way to address this challenge is to deploy modular solutions to save time and cost.

In 2022, a total of 10 commercial-scale hydrogen production plants globally adopted carbon capture technology, with an annual cumulative capacity to produce low-carbon hydrogen reaching 9.4 billion tons per year. It is estimated that by 2050, the annual demand for blue hydrogen will reach 530 million tons, potentially reducing CO2 emissions by up to 6 billion tons.

The revenue from carbon capture markets generated by hydrogen production is expected to grow from $80.3 million in 2022 to $3.15 billion in 2030, with an annual compound growth rate of 58.2%. The growth potential is mainly concentrated in the United States, Europe, and the Asia-Pacific region.

Steam methane reforming technology (SMR), which includes carbon capture, is one of the most common and mature technologies for producing blue hydrogen. It uses high-temperature steam (700 degrees Celsius to 1,000 degrees Celsius) to produce hydrogen from methane sources such as natural gas.

SMR technology has a high capture efficiency, with a capture rate that can reach 90%, and it has low operating and production costs. Combining SMR with carbon capture can eliminate carbon emissions and help produce clean hydrogen.

It is expected that the SMR and CCUS carbon capture markets will grow rapidly at a compound annual rate of 120.2%, reaching $220 million by 2030. With more blue hydrogen projects coming online, the market will experience significant growth between 2025 and 2026.

Europe is a market leader in implementing blue hydrogen projects. The European Union (EU) adopted a hydrogen strategy in 2021 to accelerate the development of clean hydrogen projects. In addition, the EU has funded hydrogen energy research and innovation projects through research framework programmes. The continuous increase in start-ups in the region has driven the development and investment in blue hydrogen projects, resulting in exponential revenue growth.

Despite various advantages, SMRs using CCUS technology will ultimately be replaced by more advanced technologies such as automatic thermal reforming, gas partial oxidation, and water electrolysis. Compared with SMRs, these technologies offer higher energy efficiency and lower capital expenditure.

Source: Analysis by Frost & Sullivan

ATR technology combines steam reforming and POX technology, offering lower operating costs and higher hydrogen production. Compared to SMR, ATR has advantages such as easier operation, smaller systems, better temperature control, lower operating temperatures, lower energy requirements, easier startup, and less coke generation.

In the ATR process, high concentrations of carbon dioxide can be obtained, with 95% of it being captured and stored. The ATR equipped with CCUS has not yet entered commercial use, but several new projects plan to apply this technology for the dedicated production of hydrogen and ammonia.

The carbon capture market, which includes automatic thermal conversion technology (ATR) for carbon capture, is expected to grow at an average annual compound rate of 30.8% per year, reaching a market size of $1.28 billion by 2030. Despite having more advantages, its capital expenditure (CAPEX) requirements are higher than those of SMR. The market is expected to grow after 2025 as more blue hydrogen projects come online, reducing CAPEX.

Europe will occupy the largest market share during the forecast period. It is expected that the European ATR market will reach $1.07 billion by 2030, mainly driven by initiatives and policies aimed at reducing greenhouse gas emissions. In addition, the EU region supports hydrogen energy research and innovation projects through research framework programmes and government funding, facilitating the rapid implementation of new technologies in the development of blue hydrogen projects.

Recently, Equinor of Norway and the French multinational utility company Engie SA have collaborated on a feasibility study for the H2BE project. The project aims to produce hydrogen from natural gas by combining self-heating reforming technology with CCUS (Combined Cycle Utilization of Steam).

Gasification is the first step in hydrogen production. This process converts carbon-based materials such as coal into syngas. The main components of this gas are carbon monoxide and hydrogen, which react with steam above the catalyst in a water-gas shift reactor to produce carbon dioxide and hydrogen.

Utilizing coal gasification technology, 90%-95% of carbon dioxide can be captured through chemical or physical separation. In addition to some existing coal facilities planning carbon capture upgrades, new plants such as Australia's Hydrogen Energy Supply Chain (HESC) are also under development.

The carbon capture technology market, which includes coal with carbon capture capabilities, is expected to grow moderately at a compound annual growth rate of 22.6%, reaching $290 million by 2030. The market is mainly driven by coal demand in the Asia-Pacific region, as coal is still used as a major raw material for energy production there.

It is projected that by 2040, the coal demand in the Asia-Pacific region will reach 4,400 megatonnes of coal equivalent. China and India are the largest coal producers as well as consumers. Other demand centers include Japan, Indonesia, South Korea, Vietnam, and Australia.

According to the International Energy Agency (IEA)'s projections, under the established policy scenario, hydrogen demand is expected to reach 1150 million tons by 2030, with the majority used in traditional application areas without carbon capture. Hydrogen production should be combined with carbon capture and storage (CCUS) to achieve net-zero targets.

Methane cracking technology produces hydrogen by burning methane, the main component of natural gas, with carbon black as the final by-product. Carbon black can be sold directly or collected and stored.

The carbon capture market for methane cracking technology, which includes carbon capture and storage (CCS), is expected to grow at an exponential compound annual growth rate of 34.0%, reaching $580 million by 2030.

Methane pyrolysis for hydrogen production is comparable to conventional SMR processes, both capable of generating large amounts of hydrogen using methane.

As there is a large amount of natural gas in the Asia-Pacific region and the Middle East, these will be the main areas for applying methane cracking technology.

Other technologies include asphalt gasification + carbon capture, petroleum coking with carbon capture + biomass gasification, heavy oil residue gasification + carbon capture and partial oxidation.

It is expected that from 2024 to 2030, the carbon capture market for other technologies capable of carbon capture will grow moderately at a compound annual growth rate of 21.2%, reaching $780 million by 2030. Oil refining by-products such as asphalt, petroleum coke, and heavy oil residue have driven the market development.

Asia-Pacific regions, Europe, and the Americas will be the main markets for growth opportunities. The United States has the world's largest refining capacity, and as demand for petroleum products surges, its refining capacity will continue to grow.

China has the largest refining capacity in the Asia-Pacific region, with a production capacity of 1,700 million barrels per day. By-products such as asphalt, petroleum coke, and heavy residue oil are usually discarded and cause carbon emissions. Gasification technology can be used to produce hydrogen, and CCS technology can be employed to capture carbon dioxide.

The Report looks ahead to growth opportunities in the blue hydrogen application carbon capture market from four dimensions: industrial decarbonization, blending blue hydrogen into existing natural gas pipelines, treating blue ammonia as a source of energy, and collaboration among major stakeholders.

To achieve the net-zero emission target, governments must aim at emission targets for all energy-intensive industries, including those that are difficult to reduce such as cement, steel, fertilizers, and chemicals. In heavy industries that account for 20% of global emissions, alternatives to fossil fuels (such as renewable energy generated from thermal energy or electrification processing) are still very expensive. In the foreseeable future, carbon capture will become a key decarbonization technology for these industries, and the demand from industries with high emission reduction challenges will become a strong market driver.

For example, cement production accounts for nearly 8% of global total emissions. Since there are few other methods of cement production, the industry has great potential for implementing carbon capture.

Natural gas processing contains up to 90% carbon dioxide, which must be removed before it is sold or compressed into liquefied natural gas (LNG). Currently, most of this carbon dioxide is emitted into the atmosphere, but it can be captured and reinjected into geological formations or used for enhanced oil recovery (EOR).

To successfully transition to the blue hydrogen economy, a viable infrastructure is needed to transport hydrogen from production points to end-users such as hydrogen refueling stations or industrial or stationary generators.

In recent years, the practice of blending blue hydrogen into natural gas in existing pipeline networks has received widespread attention in Europe, Australia, and the United States. This is because global hydrogen transportation and storage infrastructure is still in its early stages, requiring billions of dollars to build new hydrogen pipelines and taking many years to become operational.

Utilizing the existing extensive natural gas pipelines in Europe and America, it is possible to accommodate and transport large volumes of blue hydrogen mixed with natural gas in specific proportions.

Adding blue hydrogen to natural gas mixtures can significantly reduce greenhouse gas emissions, improve system efficiency, and help sectors such as electricity, heating, industry, and transportation decarbonize.

Currently, coal dominates global power generation and is a major source of carbon dioxide emissions. Due to the economic crisis and the COVID-19 pandemic, the development of renewable energy projects as alternatives to coal-fired power plants has slowed down. Every small step in reducing emissions from large coal-fired power plants is crucial for transitioning towards a low-carbon economy.

Blue ammonia (NH3) produced from blue hydrogen can be used to replace fossil fuels for power generation and as a storage form of green hydrogen, thereby eliminating current challenges in transportation and storage.

In the next few years, blue ammonia will be increasingly applied in the maritime and aviation industries.

Globally, the adoption of hydrogen is still in its early stages due to the lack of a unified regulatory framework and awareness among producers and consumers. In recent years, many countries have recognized the role of hydrogen in decarbonization and are formulating frameworks to incorporate hydrogen as part of their carbon neutrality strategies.

As a zero-carbon energy carrier, blue hydrogen is gaining unprecedented commercial and political momentum with the advent of favorable regulatory frameworks and pilot projects in many regions.

In the past five years, blue hydrogen pilot and demonstration projects in Europe, North America, Latin America, Asia-Pacific, the Middle East, and Africa have increased significantly, highlighting their tremendous potential.