What prevents a greater global use of green hydrogen?

What prevents a greater global use of green hydrogen?

The use of green hydrogen (GH2) to decarbonize industries has become embedded in policy debate. A total of 45 nations are currently developing or publishing hydrogen strategies, and various agreements have been reached between nations to establish future hydrogen trade routes. Given the low demand for GH2 and the restricted availability of GH2 infrastructure outside of industrial locations, we are still a long way from a world where GH2 is a major source of energy.

Investment is hampered by the unclear demand for GH2, yet policymakers may be reluctant to support a technology without a clear grasp of the costs, benefits, and business strategy. Investors may view GH2 projects as being excessively risky since there is no obvious demand for GH2 or established public policy.

Beside this, GH2's expensive production costs are preventing it from being used in industry. In the current market environment, expensive green products must compete against more affordable grey solutions, particularly in capital-intensive industries with slim profit margins. Green product manufacturers will continue to struggle to recoup their manufacturing costs and maintain their competitiveness in the absence of environmentally concerned consumers and proper market policies. Market measures like regulation, knowledge exchange, innovation encouragement, and public procurement, for instance, could promote the uptake of GH2 by lowering the cost of environmentally friendly goods while raising the price of conventional ones.

Innovation and industrial policy to support GH2

In a world that is heavily dependent on fossil fuel-based technologies, the development of GH2 as a game-changing technology requires the implementation of a multifaceted industrial policy. Such a policy would aid in bridging the gap between market/ sustainability/climate demands, and the advancement of hydrogen technology.

Industrial policy must encourage the swift adoption of GH2 technology and innovation as well as the outlawing or required phase-out of technologies based on fossil fuels .

Thirdly, industrial policy must guarantee that GH2 is in constant and sufficient demand.

Fourth, coordination of national and international policies is crucial.

An opportunity

GH2 has the potential to trigger a geopolitical change in production, commerce, and energy security in favor of the Global South if correctly organized. Aluminum, ammonia, iron, jet fuel, methanol, and other industrial commodities would be the best candidates for production relocation.

Greener commodities will be less expensive to transport than GH2. Energy costs may have a significant role in the decision of energy-intensive companies to build new facilities in nations with low-cost renewable surpluses and export semi-finished items (such as reduced iron) or finished goods (such as cars).