Research by the World Platinum Investment Council (WPIC) indicates that the development momentum of the EU green hydrogen industry is accelerating as the policy environment becomes clearer and government funding continues to increase. Over the past month, four large European electrolyzer projects (>100 megawatts) have reached final investment decisions (FID). Confidence in green hydrogen continues to grow, and WPIC forecasts that platinum demand related to hydrogen will increase from approximately 40,000 ounces in 2023 to 476,000 ounces in 2028. The hydrogen economy represents an important new end-use market for platinum, further strengthening the demand aspect of the platinum investment rationale.
WPIC forecasts that by 2028, hydrogen fuel cell vehicles (FCEVs) will account for the majority of hydrogen-related platinum demand (Figure 2). However, the adoption of fuel cell vehicles is expected to accelerate the economies of scale for upstream green hydrogen production (link). Specifically, the organization anticipates that expanding green hydrogen production could reduce the levelized cost of hydrogen (LCOH) by 65% from 2022 to 2030 (Figure 3), which will enable heavy-duty fuel cell vehicles to better compete with diesel trucks in terms of total cost of ownership (TCO).
WPIC predicts that lower hydrogen costs will stimulate demand for fuel cell vehicles, which is already supporting more resilient automotive platinum demand. While sales of battery electric vehicles (BEVs) continue to grow, the growth rate has slowed, leading to a forecast that despite the impact of vehicle electrification, the compound annual growth rate (CAGR) of automotive platinum demand will decline by only 1.4% by 2028 (Figure 4). Prior to the recent FID announcements, only about 5% of the 55 gigawatts of electrolyzer projects anticipated in Europe had reached FID (Figure 5). High costs, infrastructure barriers, and an unclear regulatory environment have long hindered investment in green hydrogen projects. In 2023, green hydrogen production accounted for only about 1% of the global hydrogen market size of approximately 100 million mt/year.
Over the past two years, Europe has continuously improved its hydrogen policies, and national funding support has gradually increased. Following the approval of €5 billion and €1.2 billion in hydrogen funding by Germany and Spain, respectively, the industry responded almost immediately. In July 2024 alone, approved electrolyzer projects in Europe (i.e., FID/under construction projects) increased by 33%, with four projects announcing final investment decisions (total capacity of 930 megawatts, Figure 1), and a fifth project is expected to reach FID soon. Encouragingly, private companies involved in these projects include well-known energy and utility groups such as BP, Iberdrola, Shell, and TotalEnergies.
The shift toward final investment decisions (FID) supports WPIC's forecast that European electrolyzer capacity will reach 22 gigawatts by 2030 (Figure 6). WPIC expects European operators to generally prefer proton exchange membrane (PEM) electrolyzers containing platinum group metals (Figure 7). WPIC forecasts that by 2028, European electrolyzers will add 116,000 ounces of platinum demand (Figure 8), although WPIC reiterates that the true value of hydrogen for platinum lies in its role in hydrogen fuel cell vehicles (FCEVs). Therefore, with the positive momentum in electrolyzer investments, WPIC expects the supportive trend for hydrogen fuel cell vehicles to drive demand growth in the platinum investment rationale in the medium term.
Regulatory support is enhancing investor confidence in green hydrogen projects. Platinum demand related to hydrogen is expected to grow from approximately 40,000 ounces in 2023 to 476,000 ounces in 2028.
As an investment asset, platinum's appeal stems from the following:
WPIC research shows that the platinum market has entered a period of consecutive supply deficits starting in 2023; platinum supply remains challenged, primarily from primary mining and secondary recycling; platinum demand in the automotive sector is expected to grow through 2024 due to its substitution for palladium in gasoline vehicles; platinum is a critical mineral in the global energy transition, playing a vital role in the hydrogen economy; platinum prices remain historically low and significantly below gold prices.
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