The world has witnessed a significant increase in announced and planned national hydrogen policies in the last 2 years. In early 2019, preliminary work on hydrogen was announced by only a handful of countries, such as China, France, Japan and South Korea. Two years later, more than 10 countries — now including Australia, Chile, Finland, Germany, Norway, Portugal and Spain, plus the European Union (EU) — have developed detailed hydrogen strategies, while nine more countries are expected to unveil strategies in the near future.1
A growing number of national hydrogen strategies are being adopted by both public and business entities around the globe, with new developments emerging in Europe, the Asia Pacific (ASPAC) region, the Americas, and the Gulf Cooperation Council (GCC) countries (Figure 1).
Figure 1: Hydrogen strategies according to region2
Americas: Strong progress
Europe: Significant progress
ASPAC: Significant progress
GCC countries: Moderate progress
Countries in both North and South America can play an important role as exporters, and this can be seen in a number of ambitious strategies supported by diverse players. There is significant progress in the US at the state level, in particular California. The impact of the Biden presidency on the US’s role in hydrogen is unclear, but recent months indicate an increasing focus on offshore wind.
Progress is driven by several highly industrialized countries, as well as EU ambitions for leadership in the green agenda. In the aftermath of the COVID-19 outbreak, hydrogen and other green policy initiatives are increasingly perceived as a key driver for future economic growth and recovery on both the national and European level.
The ASPAC region comprises a number of energy importers, technology exporters and countries with strong energy export potential due to ideal settings for hydrogen production. This has led to ambitious goals frequently compared to the ones shown by the EU, as well as highly diversified strategies and focus areas.
The rise of hydrogen presents a challenge and opportunity for the GCC countries as a result of their position and role in the global energy market. The GCC has conditions favoring local green hydrogen production in the future. As a result, isolated policy initiatives are currently being pursued by some GCC countries, although no official hydrogen policies are fully in place.
The different shades of hydrogen
Hydrogen generation technologies are usually divided into categories identified by different colors:3
- Green hydrogen, produced by electrolyzers supplied by renewable electricity. In some cases, production is based on bioenergy, such as biomethane or solid biomass gasification.
- Grey (or brown/black) hydrogen, produced by fossil fuels (mostly natural gas and coal), thereby causing the emission of carbon dioxide in the process).
- Blue hydrogen, produced by the combination of grey hydrogen and carbon capture and storage (CCS). This process avoids most of the greenhouse gas (GHG) emissions from production.
- Turquoise hydrogen, via the pyrolysis of a fossil fuel, where the by-product is solid carbon.
- Yellow (or purple) hydrogen, produced by electrolyzers powered by electricity from nuclear power plants.
In addition to these colors, different names are used when referring to groups of hydrogen production pathways, including “clean hydrogen,” “low-carbon hydrogen,” and “renewable hydrogen”. In general, the term “low-carbon hydrogen” includes green, blue, turquoise and yellow hydrogen. The carbon intensity of hydrogen use can vary greatly, based on factors involving manufacturing, transportation, liquification and storage, all of which contribute to the total carbon footprint. For example, a hydrogen-fueled vehicle produces only water emissions, but it might be running on hydrogen manufactured with electricity generated by a power plant fired by natural gas.
Geopolitical and geo-economic factors shape national hydrogen strategies
As discussed in Geographic hydrogen hotspots, geography is a critical factor in the development of national hydrogen strategies. Local availability and ease of access to hydrogen — coupled with a country’s industrialization, energy needs and dependencies — are key in determining the potential opportunities and challenges a country will face. This includes a country’s unique potential to become a large-scale energy exporter or importer.4
In turn, the initial dilemmas arising from countries’ export/import potential have already impacted the national hydrogen policies developed by countries with strong exporting foundation (for example, Australia), and significant industrialization and energy demands (for example, Germany, Japan, and South Korea). The interplay between export and import strategies can already be seen in the newly formed trade routes and relationships forming between countries and across the continents, altering the status quo and dynamics in today’s worldwide energy landscape.
Without a doubt, hydrogen holds significant geopolitical and geo-economic potential for a large number of countries. We expect that the number of countries with the interest, resources and potential to develop an important position within hydrogen will increase as the global market for hydrogen continues to grow exponentially.
Translating national ambitions and strategies into concrete policy initiatives
While it may be difficult to predict the winners in the global hydrogen energy race, today’s front-runners have already embedded a variety of innovative tools and policy initiatives in their national hydrogen strategies. The chart below includes some of the key focus areas, which are included in all hydrogen strategies, as well as those that reflect some individual priorities for exports, imports and technological leadership.
Figure 2: Current hydrogen strategies for selected front-runners5
|Categories||Key features||Example strategies|
|Across all initiatives||
Public-private partnerships (PPPs) in the making, heavy investment planned, regulatory frameworks in planning
|Australia, Japan, Germany, South Korea|
|Exporters||Memorandums of understanding (MOUs) and trade relations, guarantees of origin, heavy R&D to enable large-scale production, budgeting for infrastructure development||Australia|
|Importers||Investments in supply chain and infrastructure development, target setting for heavy industry segments, focus on transport||
|Technology leaders||Talent and expertise development, prioritization of R&D initiatives, attractive legislation for tech/manufacturing industry and use cases||
Key drivers for the development of national hydrogen policies
According to the World Energy Council (2021), key strategic goals identified in national policies include:
- emission reduction
- diversification and security of energy supply
- fostering of economic growth
- integration of renewables
European hydrogen strategies
In Europe, hydrogen has been a key part of carbon-reduction strategies at both the regional and national level. A hydrogen strategy published in July 20207 sets green hydrogen as the European top priority, while blue hydrogen is seen as a temporary solution for the medium term. By 2030, the EU is committed to have 40 GW of hydrogen electrolyzer capacity. This is almost twice the capacity of China’s Three Gorges Dam, the world’s largest power plant.8 To achieve this goal, the EU is aiming for as much as EUR470 billion of public and private investments by 2050. Moreover, it has announced the construction of an import supply chain with an additional 40 GW from neighboring countries in Central Europe and North Africa.
Some European Member States have also released their own hydrogen strategies. Among them, Spain, Germany and France announced their commitment to install 4, 5, and 6.5 GW of green hydrogen by 2030, respectively. Green hydrogen national targets of Germany, France, Portugal, the Netherlands and Spain already account for more than 50 percent of the EU’s targeted 40 GW of installed electrolyzer capacity in 2030.9
Among recent activities, the Portuguese energy company Galp has joined EDP, Martifer, REN, Vestas and several other European partners to assess the feasibility of the H2 Sines project, which aims to implement an industrial cluster for green hydrogen production based in Sines.10 The project has an important international dimension, both because of its export component, and because of the inclusion of partners with experience in the hydrogen value chain.
Germany’s first publicly accessible hydrogen network is expected to supply increasing quantities of green hydrogen to industrial companies in Lower Saxony and North Rhine-Westphalia from late 2022 onwards.11 BP plc, transmission system operator Nowega, OGE, and the power company RWE Generation have signed an MOU to develop the GET H2 Nukleus project for the production, transport, storage and industrial usage of green hydrogen from Lingen to the Ruhr region and from the Dutch border to Salzgitter.12
For hydrogen development, public-private partnerships can serve as a platform to fund initiatives, develop incentives, exchange information to advance technological progress, create consensus, and coordinate activities. Public-private partnerships can also reduce the risks during early deployment, facilitating the transition from demonstration to commercialization. The objective in many cases is to reach a point where no further public support is needed.
This model has already been successful in the EU through the Fuel Cells and Hydrogen Joint Undertaking,13 helping to demonstrate hydrogen technologies for multiple pathways. In 2020, the European Commission (EC) announced the Clean Hydrogen Alliance, a public-private partnership of the EC, Europe’s fuel cell and hydrogen industry, and research organizations. The partnership is designed to help ensure Europe’s energy independence and the development of zero-emission cars.14
In the US, the California Fuel Cell Partnership (CaFCP)15 serves as an industry/government collaboration aimed at expanding the market for fuel cell electric vehicles powered by hydrogen. In Oregon, a team of public and private organizations has recently signed an MOU to explore the development of what would be one of the largest renewable hydrogen production facilities in North America.16 The partners in the hydrogen production and carbon-reduction initiative include the Eugene Water & Electric Board, NW Natural and the Bonneville Environmental Foundation.
In 2019, Australia launched ‘H2 under 2’, a national hydrogen strategy that sets a production cost of below AU$2/kg of hydrogen.18 The strategy has already led to AU$370 million in state support and consideration in the country’s Technology Investment Roadmap. In addition, Australia and Singapore have established a AU$30 million partnership to accelerate the deployment of low emissions fuels and technologies like clean hydrogen to reduce emissions in maritime and port operations.19 The Australia-Singapore partnership is part of the Government’s AU$565.8 million commitment to build new international technology partnerships that make low emissions technologies cheaper and drive investment in Australia-based projects.
Carbon pricing as a driver of green fuel adoption
In some cases, regulations can share the same goals while differing in their strategy. For example, some mandates incentivize low-carbon energy use from sources such as wind or solar, while others discourage carbon-intensive energy use by putting a price on carbon emissions.
Carbon pricing involves an explicit cost on GHG emissions that is expressed as a value per ton of carbon dioxide equivalent (tCO2e). When considering the nature and effectiveness of carbon-pricing initiatives, governments can create both direct and indirect incentives to eventually reach the same goal of lowering GHG emissions (Figure 3).
Figure 3: Incentivizing low-carbon energy versus discouraging carbon-intensive energy
Initiatives supporting renewable and low-carbon energy use
Initiatives counteracting carbon-intensive energy use
Initiatives directly support the development of infrastructure assets such as electrolyzers, hydrogen-refuelling stations (HRS) and energy-storage facilities.
At the same time, indirect factors are making carbon-intensive solutions less attractive: taxation on tailpipe emissions, inefficient industry processes, cap-and-trade and other mechanisms whereby emitters must acquire licenses or credits to offset GHG emissions.
— Targeted funding and grants (G)
— Science-based targets (G + C)
— Sustainable financing (G)
— Green bonds (G + C)
— ETS/ Cap-and-trade (G)
— Carbon taxation (G)
— Internal carbon pricing (C)
— Voluntary offsetting/ Baseline-and-credit (G + C)
Legend for chart:
G = Government-backed initiatives
C = Corporate initiatives
In the transport sector, specific targets have now been set by some governments for light and heavy fuel-cell electric vehicles (FCEVs), sometimes supported by grants. Nonetheless, for private vehicles, the uptake of FCEVs has been significantly slower than for battery electric vehicles (BEVs). The exceptions are Japan20 and the US, where passenger cars dominate the FCEV market.
In other geographies, the share of FCEV commercial vehicles is growing rapidly, since this segment can be more effectively regulated and controlled by government directives. And the elimination of diesel-powered buses and other vehicles in favor of zero-emission fleets continues on a global basis, including in Belgium, China, France, Germany, Japan, Norway and Taiwan, thus paving the way for hydrogen-fueled fleets.21
Current status of carbon-pricing initiatives
Responding to the urgency and importance of political action to decarbonize entire economies, the EU’s Emissions Trading System (ETS) has fluctuated between emissions-trading systems and carbon-taxation initiatives to control the transition in a regulated manner.22 The first edition of the ETS received criticism for shortcomings such as price volatility and excessive allowances. But there has been a positive reaction to similar efforts by governments across the globe to enforce carbon pricing.23 Nevertheless, numerous jurisdictions have yet to implement such mechanisms (Figure 4).
According to the World Bank, regional, national and subnational carbon pricing initiatives in 2021 covered 11.65 billion metric tons or 21.5 percent of global GHG emissions.25 The reach of these initiatives will definitely increase over time, but to support the objectives of the Paris Agreement in terms of actual carbon prices, there is still a long way to go (Figure 5).
The current average explicit carbon price in the world economy is only US$2/ton of CO2.26 However, the UN Global Compact believes that US$100 is the minimum price needed to spur innovation, unlock investment and shift market signals in line with the 1.5 to 2-degree Celsius pathway.27
Target prices across instruments and jurisdictions can vary from less than US$1/metric ton to more than US$100 because different regions and nations are focusing on different sectors of energy markets. Currently, Lichtenstein, Sweden and Switzerland are the only countries at the high end of the range.28
Governments, industry and its players should take a stand
Fostering the emerging hydrogen-based society requires governments to implement boundaries, frameworks and roadmaps for lower emissions. At the same time, private-sector organizations stand to benefit, from both a commercial and reputational perspective, by pursuing ambitious Environmental, Social, and Governance (ESG) targets.
Where the hydrogen market was previously a niche market, the range of private companies involved is increasing and diversifying. In recent years, there has been the creation of alliances that function much like a virtual marketplace to bring together organizations across the value chain. For example, the Hydrogen Council is a global, industry-led initiative representing the entire hydrogen supply chain, with the purpose of accelerating hydrogen-deployment solutions.
The emergence of formal marketplaces, corporate alliances, regional coalitions and industry associations is a sign of market forces converging to create a new global hydrogen market. However, this is not enough to move the needle on emissions reduction. Rather, these organizations must commit to clearly defined targets.
The reality is that CEOs who are adopting a climate-friendly business model should not be considering it just a compliance cost. Instead, it represents a way to turn the climate-risk challenge into a business opportunity. Along with the need to comply with legal and statutory requirements, corporate ESG agendas are increasingly central to brand perceptions and value among today’s consumers and industry partners. In much the same way, a number of institutional investors are setting their own standards for sustainable-investment portfolios, prompting the organizations they invest in to ‘go green’ in response.
At the same time, to realize the true potential of hydrogen technologies, corporations will need clear messages from governments via national strategies and technology roadmaps, adding to specific policy initiatives and legislation that prioritize shifts toward hydrogen and the improved integration of cross-sector energy-system planning to support green initiatives.
As a catalyst for large-scale deployment of hydrogen assets and infrastructure, governments need to take firm positions and provide clear market signals via strategic frameworks. It is this approach that we believe is most likely to encourage the necessary levels of investment in a sustainable hydrogen economy.
National strategies and commentaries
- Australia: https://www.industry.gov.au/data-and-publications/australias-national-hydrogen-strategy
- Japan: https://www.meti.go.jp/english/press/2017/pdf/1226_003a.pdf. See also https://www.ifri.org/sites/default/files/atoms/files/nagashima_japan_hydrogen_2020.pdf
- GCC: https://www.rvo.nl/sites/default/files/2020/12/Hydrogen%20in%20the%20GCC.pdf
- South Korea: https://www.rvo.nl/sites/default/files/2019/03/Hydrogen-economy-plan-in-Korea.pdf
- Germany: https://www.bmwi.de/Redaktion/EN/Publikationen/Energie/the-national-hydrogen-strategy.html
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1 Sanal Patel, Countries Roll Out Green Hydrogen Strategies, Electrolyzer Targets, Power Magazine, February 1, 2021. See also World Energy Council (WEC), https://www.wec-austria.at/en/international-hydrogen-strategies; and International Renewable Agency (IRENA), https://www.irena.org/publications/2020/Nov/Green-hydrogen.
2 WEC, https://www.wec-austria.at/en/international-hydrogen-strategies/; IRENA, https://www.irena.org/publications/2020/Nov/Green-hydrogen, and Oxford Energy Forum, https://www.oxfordenergy.org/publications/oxford-energy-forum-the-role-of-hydrogen-in-the-energy-transition-issue-127/.
3 Michel Noussan, Pier Paolo Raimondi, Rossana Scita and Manfred Hafner: The Role of Green and Blue Hydrogen in the Energy Transition—A Technological and Geopolitical Perspective, Sustainability, MDPI, https://www.mdpi.com/journal/sustainability.
4 Van de Grauf et al., The new oil? The geopolitics and international governance of hydrogen, NCBI, 2020.
5 WEC, https://www.wec-austria.at/en/international-hydrogen-strategies/; IRENA, https://www.irena.org/publications/2020/Nov/Green-hydrogen, and Oxford Energy Forum, https://www.oxfordenergy.org/publications/oxford-energy-forum-the-role-of-hydrogen-in-the-energy-transition-issue-127/. See also National strategies and commentaries, page XX.
6 World Energy Council, https://www.worldenergy.org/transition-toolkit/innovation-insights/deep-dive-hydrogen#fullpage1.
8 Countries Roll Out Green Hydrogen Strategies, Electrolyzer Target; Power Magazine, 1 February, 2021, https://www.powermag.com/countries-roll-out-green-hydrogen-strategies-electrolyzer-targets/.
9 Michel Noussan, Pier Paolo Raimondi, Rossana Scita and Manfred Hafner: The Role of Green and Blue Hydrogen in the Energy Transition—A Technological and Geopolitical Perspective, Sustainability, MDPI, https://www.mdpi.com/journal/sustainability.
10 Consortium to Evaluate Green-Hydrogen Industrial Cluster in Portugal, Chemical Engineering, 29 July, 2020, Chemical Engineering, https://www.chemengonline.com/consortium-to-evaluate-green-hydrogen-industrial-cluster-in-portugal/.
11 Cross-Industry Collaboration To Focus On Major Hydrogen Network In Germany, 19 March, 2020, Chemical Engineering, https://www.chemengonline.com/cross-industry-collaboration-to-focus-on-major-hydrogen-network-in-germany/.
16 Public-Private Partnership Working Toward Renewable Hydrogen Facility In Oregon, 12 October, 2020, Chemical Engineering, https://www.chemengonline.com/public-private-partnership-working-toward-renewable-hydrogen-facility-in-oregon/.
17 Australia’s National Energy Strategy, https://www.industry.gov.au/data-and-publications/australias-national-hydrogen-strategy.
18 Press release, Office of Prime Minister, Minister for Energy and Emissions Reduction, 10 Jun 2021, https://www.pm.gov.au/media/australia -partners-singapore-hydrogen-maritime-sector.
19 Ministry of Economy, Trade and Industry, Japan, https://www.meti.go.jp/english/press/2017/pdf/1226_003a.pdf; Institut Français Relations Internationales(IFRI), https://www.ifri.org/sites/default/files/atoms/files/nagashima_japan_hydrogen_2020.pdf.
20 Christopher McFadden, These 9 Countries Want to Ban Diesel Cars Very Soon, Interesting Engineering, September 28, 2019.
21 Alex Barnes, The Challenges and Prospects for Carbon Pricing in Europe, The Oxford Institute for Energy Studies, May 2021.
22 Alex Barnes, The Challenges and Prospects for Carbon Pricing in Europe, The Oxford Institute for Energy Studies, May 2021.
23 World Bank Carbon Pricing Dashboard, November 1, 2020, https://carbonpricingdashboard.worldbank.org/.
24 World Bank Carbon Pricing Dashboard, https://carbonpricingdashboard.worldbank.org/.
25 Mari Elka Pangestu, Leadership on Carbon Pricing in 2020-21, World Bank Blogs, May 26, 2021.
26 UN Global Compact, https://unglobalcompact.org.au/paris-climate-agreement-signed-un-global-compact-calls-on-companies-to-set-internal-carbon-price/.
27 Nikos Avlonas, The importance of Carbon Tax to tackle climate change, Center for Sustainability and Excellence, April 9, 2021.