Roadmap towards a hydrogen economy Market perspective HYDROGEN COUNCIL | SEPTEMBER 2017 There are seven roles for hydrogen in the energy transition Enable the renewable energy system Decarbonize end uses 4 Decarbonize transportation Enable large-scale Distribute energy renewables integration across sectors and and power generation regions 5 Decarbonize industry 1 2 energy use 6 Help decarbonize building heating and power 3 Act as a buffer to 7 increase system Serve as feedstock, using resilience captured carbon SOURCE: Hydrogen Council McKinsey & Company 2 Hydrogen has significant potential across all applications Bubble size indicates hydrogen potential in 2050 in EJ (1 EJ) 1 Power Power ge- Buffer1 generation neration Passenger 4 Small cars Trucks ships Vans & Trans- minibuses Rail3 Mid-sized/ Forklifts portation large cars Synfuel2 Coaches & buses 5 Industry Medium-/low High-grade energy industry heat industry heat 6 Building Countries without Countries with heating gas networks gas networks and power 7 Industry CCU for methanol, Ammonia, Steel (DRI) Refining feedstock olefins, BTX3 methanol 0% 10% 20% 30% 40% 60% 70% 80% 100% 1 Percent of total annual growth in hydrogen and variable revewable power demand Relative importance by 2050 2 For aviation and freight ships 3 Trains and tramways Market share potential in segment 3 Percent of total methanol, olefin, BTX production using olefins and captured carbon SOURCE: Hydrogen Council McKinsey & Company 3 Hydrogen benefits energy systems, environment and business USD 13% 7.5 Gt 4,000 bn of total energy demand annual CO2 abate- annual sales in 2050 in 2050 ment in 2050 (hydrogen and applications) SOURCE: Hydrogen Council, IEA ETP Hydrogen and Fuel Cells CBS, National Energy Outlook 2016” McKinsey & Company 4 Hydrogen: Ready for scale! Start of Mass market commercialization acceptability1 1 Power In renewables-constrained countries generation In other countries 4 Forklifts Trans- Mid-sized and large cars portation City buses Vans Coaches Trucks Synfuel for freight Trams and railways Small cars ships and airplanes Minibuses Passenger ships 5 Industry Medium-/low industry heat energy High-grade industry heat 6 Building heating Blended hydgrogen heating and power Pure hydrogen heating 7 2 Industry Refining Production of methanol, olefins and BTX using H2 and captured carbon feedstock Ammonia, methanol Steel3 Decarbonization of feedstock4 Today 2020 25 30 35 40 2045 1 Mass market acceptability defined as sales >1% within segment in priority markets 2 Market share refers to the amount of production that uses hydrogen and captured carbon to replace feedstock 3 DRI with green H2, iron reduction in blast furnaces and other low-carbon steel making processes using H2 4 Market share refers to the amount of feedstock that is produced from low-carbon sources SOURCE: Hydrogen Council McKinsey & Company 5 Important milestones can be reached already in 2030 4 ▪ 10-15 million fuel-cell vehicles on the road, including private cars, taxis, vans and light commercial vehicles 5 ▪ 3.5 Mt hydrogen used for high-grade heat in first large-scale projects 6 ▪ 50 million households connected to a network safely blending hydrogen and natural gas 7 ▪ 50 Mt CO2 converted to chemicals and intermediates such as methanol using hydrogen SOURCE: Hydrogen Council McKinsey & Company 6 Investment opportunities amount to ~475 billion until 2030 USD billion1 Enable the renewable energy system Decarbonize end uses Hydrogen Storage, transport, End-uses in transportation, industry production and distribution energy, buildings and feedstock 4 Investment 5 potential 140 100 235+ 2018-2030 1 2 Annual 6 revenues 55 40 185+ 2030 3 7 1 Excluding existing feedstock uses SOURCE: Hydrogen Council McKinsey & Company 7 Hydrogen Council members have started investing and deploying Enable the renewable energy system Decarbonize end uses Hydrogen Council Steering members Supporting members Hydrogen Council Details and contacts at hydrogencouncil.com McKinsey & Company 8 .