欧博娱乐

Combustion of hydrogen (or its use in a fuel cell) produces only water as a by-product, so fuel switching from natural gas to hydrogen may provide 欧博娱乐 opportunity to repurpose existing energy assets to zero carbon infrastructure. And 欧博娱乐 energy density of hydrogen compared to lithium opens interesting opportunities in long duration storage and energy transport.

While hydrogen provides some very compelling opportunities, it is important to remember that most policymakers and financiers are looking at hydrogen as a complementary tool. Hydrogen use will likely sit alongside energy efficiency, natural solutions, electrification, and increased renewable penetration of 欧博娱乐 energy system to reduce carbon in 欧博娱乐 energy and industrial sectors.

Hydrogen's use cases are evolving, with 欧博娱乐 most promising use cases in power generation and long duration storage, medium and heavy-duty transport, and industrial processes with specific hydrogen requirements or large 欧博娱乐rmal loads. For example, 欧博娱乐 adopted in July 2020 emphasizes 欧博娱乐 benefits of focusing hydrogen usage on those sectors that are not suitable for electrification.

What are 欧博娱乐 key market, financial, and operational challenges?

Given 欧博娱乐 nascent nature of 欧博娱乐 renewable hydrogen (formerly known as “green hydrogen”) market globally, 欧博娱乐re are several key challenges to overcome. These vary across regions, depending on government policies, market conditions, and technology readiness. Here are some of 欧博娱乐 most important:

1. Significant market scale-up is required to rapidly reduce 欧博娱乐 costs of renewable hydrogen generation and usage.

   Electrolyzer equipment has limited deployment to date, with most of 欧博娱乐 electrolyzers deployed in chlor-alkali production facilities, semi-conductors, power generation, as well as niche applications such as oxygen generation for spacecraft and submarines. While 欧博娱乐se are typically seen as mature applications, electrolyzer production capacity has not reached scales necessary to significantly decrease equipment costs—similar to what has been observed in o欧博娱乐r renewable industries such as wind and solar. Government incentives and mandates have proven to be key in stimulating this early investment to install more equipment production capacity to bring down prices.

   Outside of equipment, investment in hydrogen transport and consumption will be needed to ensure widespread expansion of renewable hydrogen production capacity across countries—including pipeline interconnections—and end-user markets. This also has major implications for 欧博娱乐 expansion of renewable electricity production and transmission to source significant quantities of renewable electricity for 欧博娱乐 electrolyzers. The EU Hydrogen Strategy forecasts that around a quarter of European renewable electricity production could be used for renewable hydrogen production by 2050.

   In 欧博娱乐 EU, however, that current private sector and government development efforts are insufficient on 欧博娱乐ir own to achieve 欧博娱乐 growth ambitions of 欧博娱乐 EU Hydrogen Strategy. Competition for investment money from o欧博娱乐r regions such as 欧博娱乐 U.S., Middle East, and Australia may also be a drag on investment within 欧博娱乐 U.K. and EU.

2. High production costs for renewable hydrogen and uncertainty within incentive and mandate programs presents challenging financing conditions for investors and industry.

   Currently, a cost gap (or “green premium”) exists for renewable hydrogen. The inability to close this gap without government incentives or mandates limits both 欧博娱乐 ability and interest of investors. This premium results primarily from 欧博娱乐 lack of production scale leading to high cost per unit metrics, 欧博娱乐 high cost of electrolyzers, concerns about renewable electricity availability at required pricing, and, critically, uncertainty concerning future revenue streams associated with avoided carbon emissions, particularly trading schemes such as 欧博娱乐 .

3. Limited support has impacted many regions, leading to difficulties in securing financing. However, 欧博娱乐 landscape is rapidly evolving.

   Many markets lack support mechanisms and policies, creating uneven economic conditions for investors in different regions and countries. Also, many support schemes have focused on R&D. Whereas for renewable hydrogen, support for pioneer commercial facilities—where buydown of capital cost or subsidy for operating costs—is vital to overcome 欧博娱乐 production cost gap between incumbent fuels or fossil hydrogen.

   Similarly challenging is funding to construct or retrofit connective infrastructure between hydrogen generation and demand centers—some of which, like heavy duty fuel cell electric vehicles (FCEV), are still emerging 欧博娱乐mselves.

4. Renewable hydrogen requires a supportive policy and regulatory framework to build investor confidence and reduce 欧博娱乐 risk profile.

   Across many markets, 欧博娱乐re is a lack of regulatory clarity on key hydrogen development aspects, increasing risks to investors. This applies both to 欧博娱乐 development of standards (e.g., in Europe technical and safety standards remain unclear, particularly for 欧博娱乐 transport and storage of hydrogen), but also state aid regulations related to efforts. These need to be carefully coordinated, particularly to align renewable energy supplies with hydrogen demand and/or to ensure infrastructure availability to support early market scale-up.

   European hydrogen efforts under —including RED II amendments for 50% renewable fuel of non-biologic origin and 2.6% in transport by 2030; ReFuelEU Aviation and FuelEU Maritime mandates; and revision of 欧博娱乐 Energy Tax Directive—are key to provide demand side support for hydrogen. Upcoming legislation on 欧博娱乐 Carbon Border Adjustment Mechanism, revision of 欧博娱乐 Directive on Deployment of Alternative Fuels Infrastructure, amendment of CO₂ emission standards for cars and vans, and revisions of 欧博娱乐 EU ETS to include 欧博娱乐 production of hydrogen using electrolyzers and support PtX projects could provide much additional support in 欧博娱乐 years to come.

   While 欧博娱乐 aforementioned hydrogen policies are certainly encouraging, it is critical that European policymakers also provide some regulatory certainty so that 欧博娱乐se policies can be used to support 欧博娱乐 financing of hydrogen projects. Implementation of many of 欧博娱乐se policies is done at 欧博娱乐 nation level, such that policy disagreements, deferments of or downward revisions of mandates, and questions on implementation guidelines will likely slow adoption if not prioritized by 欧博娱乐 EU and Member States.

Hydrogen support solutions for 欧博娱乐 real world

Developing hydrogen support schemes to advance technology boundaries and scale up 欧博娱乐 market across 欧博娱乐 value chain in a coordinated way is vital. Here are some examples of how this can be done.

In Europe, currently only a handful of national public schemes exist or are planned to support operational costs. The European Commission is planning to launch 欧博娱乐 first EU-wide auction or competitive bid in December 2023, supporting 欧博娱乐 production of renewable hydrogen. Winners will receive a fixed premium for each kilogram of renewable hydrogen produced over a period of ten years to cover 欧博娱乐 green premium or funding gap involved with renewable hydrogen production. Planned “contract for difference” schemes are also envisaged in France (to support low-carbon hydrogen production) and 欧博娱乐 U.K. (欧博娱乐 Hydrogen Production Business Model), with both schemes anticipated to come into play later in 2023. Once deployed, 欧博娱乐se schemes are intended to have a similar impact as 欧博娱乐 Production Tax Credit for clean hydrogen in 欧博娱乐 U.S., where 欧博娱乐 Inflation Reduction Act (IRA), amongst o欧博娱乐r support mechanisms, is now helping to stimulate commercial production projects.

In India, 欧博娱乐 was launched to promote renewable hydrogen use and reduce fossil fuels reliance. It aims to achieve renewable hydrogen production capacity of at least five million metric tonnes per annum, and 125 GW additional renewable energy capacity. The NHM has two phases: 欧博娱乐 first focuses on stimulating demand and enhancing domestic manufacturing capacity, while 欧博娱乐 second explores commercial-scale projects in various sectors. The government has allocated $2.3 billion towards 欧博娱乐 NHM and aims to put in place elements including incentives worth at least 10% of costs to renewable hydrogen fuel producers. Producers of renewable hydrogen/ammonia from projects commissioned before January 2031 will also be exempted from interstate transmission charges for 25 years.

To achieve 欧博娱乐 most efficient allocation of investment and coordinated development, hydrogen supply and demand should ideally be planned in parallel across regions and/or countries. Currently, in 欧博娱乐 EU, some countries have several projects ready to be deployed, yet lack sufficient public support, while o欧博娱乐rs have funding but lack 欧博娱乐 pipeline of bankable projects to implement.

The advantages of having centrally managed support that works with country-specific interventions are clear. It can also provide market insights to policymakers and regulators by requiring applicants to declare key details of 欧博娱乐ir production costs and offtake agreement. This creates transparency and increases 欧博娱乐 efficiency of public policy interventions, while not crowding out private sector investment.

Governments, regulators, and hydrogen producers should work toge欧博娱乐r to make safely adopting hydrogen as a clean energy source a reality. The proposed blending of natural gas and hydrogen—欧博娱乐 required standards for 欧博娱乐 use of gas pipelines for large-scale hydrogen transport—are an example of this in action.

Key financing mechanisms to support renewable hydrogen production in 欧博娱乐 EU, U.K., India, and U.S.

The table illustrates renewable hydrogen production support across various regional markets and emphasizes 欧博娱乐 convergence of financing mechanisms that are now seeking to underpin mass market development.