How Governments and Businesses Can Unlock Global Markets for Green Hydrogen
By Andy Marsh, as published by Forbes Technology Council
The future looks promising for green hydrogen in global markets. One after another, market analysts have come around to the molecule’s potential to drive the transition to a low-carbon economy. Their reasoning? As both a clean-burning fuel and an energy carrier, hydrogen could help solve daunting decarbonization challenges while revitalizing local economies. For example, instead of going unused by electricity grids, surplus renewable energy can be directed toward hydrogen production and stored for later use in hard-to-abate sectors like long-haul transport. This versatility is one of the reasons a new report from Bank of America projects that hydrogen could meet nearly one-quarter of our energy needs by 2050 and reduce carbon emissions by one-third.
However, these new adherents also note that hurdles remain, particularly around the availability of clean energy and the cost of renewably-powered electrolysis, the potentially emissions-free process used to produce green hydrogen. As the president and CEO of a company that offers clean hydrogen and zero-emission fuel cell solutions, I believe tackling these challenges will require continuing public support in the form of incentives, tax breaks and enabling regulations. Are governments up to the task?
Increasingly, policymakers are saying yes. In recent months, global markets have rushed to establish strategies for building national green hydrogen value chains. But approaches vary significantly according to domestic ambitions and restraints. South Korea, for example, is hoping green hydrogen can help wean the country off fossil fuels. Elsewhere, commodity-focused economies like Australia’s and Chile’s are aiming to diversify exports. The EU has emerged with perhaps the most far-reaching plan; according to Reuters, Europe could cumulatively invest over $569 billion into green hydrogen by 2050 and create at least 40 gigawatts of electrolyzer capacity between 2025 and 2030. Taken together, these roadmaps suggest to me that we’re at the cusp of a thriving global hydrogen economy.
As these plans move toward implementation, how can policymakers best position their economies to benefit from green hydrogen? Furthermore, how can the hydrogen industry and other business leaders support these ambitious goals?
Putting Hydrogen On Proper Footing
Talk of multibillion-dollar investments and new policy initiatives is generating buzz in the industry, but government support to the energy sector often remains skewed toward oil and gas. A recent study by BloombergNEF estimates $150 billion in subsidies are needed through 2030 in order to scale up hydrogen use and create a supply infrastructure. This is undoubtedly a significant sum, but far less than the $584 billion that G20 governments directed toward fossil fuel industries from 2017 to 2020. It’s time to level the playing field.
Making renewables economically viable in domestic markets is a critical first step. Even among clean energy sources, government support has long favored wind and solar power. In Europe, for instance, feed-in tariffs reportedly helped push the share of renewable sources in electricity grids past the tipping point. I believe green hydrogen certainly merits similar subsidies. On a broader scale, carbon pricing could support the business case for switching to clean energy.
Providing Policy Certainty
Ultimately, building the clean hydrogen ecosystem will require greater industry investment. But policymakers can facilitate this process by streamlining regulatory procedures and aligning safety and quality standards. The Hydrogen Energy Ministerial Meeting identified such harmonization as a pillar of its global action agenda in 2019.
However, it remains to be seen how resilient these plans are to political turnover. Business leaders in the sector should be vocal in their continuing support, as unpredictable policy trajectories could hamper private sector development. Lawmakers can instill long-term market confidence by setting dependable, technology-neutral policy objectives around decarbonization — what the recent Road Map to a U.S. Hydrogen Economy terms “setting the north star.”
Finally, national goals should not hinder international cooperation. In my experience, few countries can develop an entirely self-contained hydrogen supply chain due to varying domestic resources and market dynamics. Partnerships around renewable energy supply and research could be critical to realizing comparative advantages while meeting local needs. Some countries have smartly made provisions for building clean energy and hydrogen capacity in nearby countries, recognizing that production within the region is insufficient to meet potential future demand.
Private Sector Priorities
While governments must create the conditions for a green hydrogen economy to grow, the private sector should not take a wait-and-see approach. Businesses have a role in shaping dialogue and taking steps to align commercial strategies with national frameworks. Here’s how business leaders can play their part:
Today’s hydrogen roadmaps are tomorrow’s regulations. Few companies can singularly influence policymaking, but there’s power in coming together. Those hoping to join the hydrogen revolution should consider participating in working groups and industry initiatives. Such groups include Hydrogen Europe, whose 185 industry members collaborate in technical committees and issue-specific task forces. In the U.S., the Fuel Cell and Hydrogen Energy Association coordinates policy advocacy as well as collaborations with government agencies such as the U.S. Department of Energy’s Fuel Cell Technologies Office.
Leverage Existing Assets And Expertise
Moving into green energy does not have to mean starting from scratch. Companies with experience managing massive time- and capital-intensive projects, for example, could find those skills in high demand in the hydrogen space. Oil and gas majors can partner on electrolyzer projects and explore how to convert natural gas pipelines to hydrogen. For their part, financial institutions can make good on their sustainable lending promises — and pacify investors like HSBC’s, who asked the bank to cut fossil fuel support — by lending to green hydrogen projects.
Planting The Seeds Of A Greener Economy
I believe realizing green hydrogen’s ability to boost economic growth and fight climate change requires a systemic, collaborative and internationally-coordinated approach. While global markets can and should chart their own courses, green hydrogen is not a zero-sum game. A conducive policy environment, alongside a business focus on sustainable value creation, could ensure that green hydrogen’s win-win potential becomes a reality.