Supporting the uptake of the green hydrogen industry

Posted on 22 August 2022

​Despite considerable efforts, green hydrogen still has a long way to go to play as a vital energy source, with demand and infrastructure still relatively low. Global electrolyser capacity is currently at a few hundred megawatts, significantly lower than the target of 115GW by 2030 and way below the 5TW by 2050 target described in the World Energy Transitions Outlook by IRENA.

The lack of demand for green hydrogen has slowed investment, while policymakers may be cautious about supporting a technology without understanding the overall cost and business model. The challenge between investors, developers and policymakers must be tackled to enable initial green hydrogen projects to develop while supporting socio-economic plans, such as additional jobs and a clean environment.

Under the current market conditions, higher prices green hydrogen products are competing against established lower-priced grey alternatives. Market policies such as improved regulation that facilitate the uptake of green hydrogen are required.

Supporting green hydrogen with innovation and industrial policy

Innovation and industrial policies can address market failures through measures that could make green hydrogen production more possible. Green hydrogen is a critical part of the Green Industrial Policy, which incorporates societal plans, including a movement toward low-carbon manufacturing and resource efficiency. A multi-dimensional industrial policy is required to enable green hydrogen to develop as a technology in a world reliant on fossil-fuel-based technologies for many years. Such a policy would bridge the gap between market needs, climate targets and hydrogen technology development.

Industrial policy must be capable of accelerating the adoption of hydrogen technology and support a ban or phase-out of fossil-fuel technologies. Eliminating selected technologies can enable space for alternative decarbonised solutions. Industrial policy must promote the speedy adoption of green hydrogen.

Scaling up the adoption of GH2 technologies requires skilling and reskilling programmes. Such measures will foster a new generation of experts in hydrogen-related technologies and accompanying academic educational programmes, e.g. hydrogen engineering.

Industrial policies to support green hydrogen supply and demand are still in their infancy and are typically based on policies used to promote the uptake of renewable energy. Yet differences between the two cases exist, and adjustments are needed as we learn by project experience. Nevertheless, this should not prevent any country from establishing a green hydrogen sector and from sharing its experiences. Implementing structured green hydrogen quotes in the industrial sector could improve the overall demand. Further measures to accelerate and solidify renewable electricity supply will also be needed to prevent competition between green hydrogen production and other green electrification sectors. Scaling up green hydrogen technologies will also require skilling and reskilling programs. This plan will enable a new era of hydrogen-focused professionals and the development of specialist educational courses.

The other factor to consider is the financing for the uptake of green hydrogen technology. Green project financing is rapidly developing and could include loans for each stage of development, from feasibility to commissioning. Industrial policy must also ensure there is a constant demand for green hydrogen. Policies to facilitate this include sustainable public procurement, which would work as a driver for the rising demand for green services, using quotas for green products and establishing a green materials market.

Finally, national and international policy management is critical. Industrial policies that support green hydrogen must include decarbonisation plans to ensure the adoption of new policies meets national and local conditions and the requirements of all stakeholders. Industrial measures supporting the supply and demand of green hydrogen are still developing and derived from plans previously used to improve the uptake of renewable energy. Yet there are differences between renewable energy uptake and green hydrogen, which will only be recognised by establishing a green hydrogen industry and sharing our experiences.

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