Untangling the knots - Clearing the way to fast green hydrogen deployment
As the EU and some of its Member States are piling up subsidy schemes to try and kickstart a market for ‘clean’ hydrogen, projects are starting to attract public funding for applications with often low levels of technological readiness, economic viability, or even environmental integrity. Some even say that building networks of pipelines is the solution to stimulate the emergence of producers and consumers.
At the same time, little attention is paid to the practical costs of switching to renewable hydrogen from electrolysis in mature sectors already using hydrogen. Producers of hydrogen by steam methane reforming (the currently dominant, polluting way) are expected to receive €18bn in free CO2 emission allowances this decade, even though their conversion to green hydrogen alone would more than fulfil the EU’s goal of installing 40GW electrolysing capacity by 2030.
25 June 2021
In this report, we untangle widespread information to assess the true potential and cost of a switch away from grey to green hydrogen. To this purpose, we developed an online tool to visualise the complementarity between subsidies, regulation and carbon pricing in promoting the deployment of hydrogen from renewable energy.
Our finding is that it would barely cost €1bn to complete a switch to green hydrogen in those three chemical sectors, with only a few policy changes, such as:
- Abolishing free allocation of CO2 emission allowances to steam methane reformers producing hydrogen, to allow fair competition with electrolysers;
- Facilitating the direct access between renewable electricity production and electrolysing facilities, without linking to grids and power markets;
- Not creating unnecessary demand for green hydrogen in sectors that have alternative decarbonisation options.
Exploring hydrogen-based abatement potential
Check out our online tool to explore hydrogen-based abatement potential in the chemical sector!