Widely regarded as a critical technology for the decarbonization of global economies, renewable hydrogen is receiving a lot of attention as a clean energy source.
I recently moderated an engaging webinar, hosted by Environmental Analyst, with policy makers and key industry leaders from across the international hydrogen ecosystem. Our focus was on what actions remain to ensure hydrogen’s future as an essential part of our energy mix. (To hear the entire webinar, click on the link at the end of the article.)
Low-carbon infrastructure is crucial for widespread adoption. The supply chain must be robust and responsive to meet the growing demand, and financing models must ensure sustainable investment in hydrogen projects. While these challenges aren’t unique on their own, all are being addressed simultaneously, which adds to the complexity of market maturation.
Breakthroughs in hydrogen production, storage and fuel cell efficiency are accelerating the transition to hydrogen as a clean energy carrier.
Key Drivers for Green Hydrogen
While investment in low-carbon hydrogen technologies has grown and the future looks promising, there are still some challenges that must be addressed and overcome before its use can expand to an impactful level. Here are four key considerations to drive market growth:
- Opportunity/Increased Demand – Clean hydrogen is a scarce commodity today. While emerging demand is high in some markets – like heavy duty or high availability mobility – demand remains fragmented and projects that advance it are often based on close partnerships between the producer and the user.
- Market Maturity – Based on typical models of technology adoption, we are still in the early innovator phase. Early adopters are becoming interested, based on current expected policy support, but moving to a place where hydrogen is broadly adopted could still take years, or even decades. Some parallels for this can be drawn from the adoption timelines for solar and wind markets to mature. The length of time it takes to reach a level of maturity can also depend on how quickly it takes to establish and resolve matters of policy, technology, supply chain, project delivery and clear demand.
- Related Infrastructure Development – A viable infrastructure project, regardless of type, needs to be fully integrated into a market. Hydrogen projects are no different. A viable hydrogen project requires the full value chain to be complete to achieve its decarbonization and economic objectives. Due to the need for all portions of the hydrogen value chain to mature in a coordinated way (i.e. production, transport and use/offtake), if the projects don’t mature at the same rate, the weak link in the chain will slow upstream and downstream projects.
- Clear Policy Support and Incentives – This is necessary to overcome uncertainty and provide sufficient confidence from private investors to commit to projects. Currently, the market remains on a knife-edge, depending on outcomes for policy support, such as a final plan for the 45v tax credit in the U.S. — and recent concerns around U.S. Treasury Department rules to determine what constitutes “clean” fuel.
The future looks promising for investment in low-carbon hydrogen technologies, but there are still challenges to overcome before its use can expand to an impactful level.
Gaining Support for Success
Government incentives are fundamental to advancing the hydrogen economy and will require significant support from government agencies and leaders through financial incentives that support clean hydrogen initiatives.
Fortunately, there have been encouraging signs in this regard, as the Regional Clean Hydrogen Hubs (H2Hubs) program recently set aside as much as $7 billion in funding to support establishment of seven clean hydrogen hubs, which were selected for award consideration this past October. This funding is provided through investment initiatives outlined in the Bipartisan Infrastructure Law to develop production, end-use and connective infrastructure that is critical for the acceleration of clean hydrogen as an energy source.
If the program is successful in meeting the goal of increasing green hydrogen production to match growing regional demand, it will go a long way toward overcoming the biggest hurdles that still stand in the way of achieving large-scale, commercially viable hydrogen ecosystems across the U.S.
Visit the WSP website to learn more about how WSP is accelerating the path to a hydrogen economy.
To register for free to hear the full recording of this webinar, “Exploring International Hydrogen Drivers and Development,” visit the Environmental Analyst website.
