8. Future Outlook

In conclusion, we look at how green hydrogen technology will disrupt and transform existing energy systems and business models. We discuss factors affecting timelines for the decarbonization of heavy industries and the effects of large-scale hydrogen integration in the energy industry and other sectors, both upstream and downstream. Regulatory action, we conclude, will largely be informed by national, regional, and global policy goals.

Potential longer-term trends and implications 

The road to complete industrial decarbonization will be a long one, despite the obvious environmental imperative and the many advantages it brings. Considering the significant (and ever-increasing) role green hydrogen is expected to play in this process, it is realistic to assume that growth in the green hydrogen market, in its value chain, and in adjacent, supportive industries is very likely indeed. Based on the technological trajectory outlined in the preceding chapter, however, it is clear that that growth will be uneven, as will be its impact on players in the supply chain, sales and distribution, storage sector, and end-use manufacturers.

It will also be disruptive to various conventional energy firms, with large energy providers changing their core businesses and grid operators intelligently integrating decentralized green hydrogen manufacture, storage, and conversion to electricity into their grid management practices. This will certainly include massive increases in automation and smart management. Energy exchanges will have to adapt their business models, with more players in the market managing decentralized resources and an associated increase in localized demand management.

Conventional fuel extraction and refining will change their focus, facilitating increased use of natural gas and carbon sequestration in hydrogen generation compared to fuels like oil. Industry players will adjust their processes and think more about the production, use, conversion, and sale of green hydrogen within the immediate and surrounding industrial and manufacturing environment as a strategic part of business, not just a static, periodic cost. And the end-use environment will change significantly, whether in transport (with different power-trains being required) or heat and power provision in buildings (which will increasingly use co-generation and microgeneration).

 

Decarbonizing conventional sectors

The building sector will also participate heavily by creating and expanding new infrastructure, including new kinds of storage, generation, and sale facilities, new kinds of plants and pipelines, and new kinds of harborside infrastructure to facilitate shipping and service ships. The impact will be felt even relatively far upstream. Mining will see shifts in the demand for various metals and minerals, some increasing and others decreasing. Materials manufacturers will see increased demand for polymers and membranes in certain areas – as well as increased competition.

Wherever proponents of green hydrogen use it to contribute significantly to the decarbonization of an entire economy, the impact will inevitably be wide-ranging and, in some cases, extremely disruptive across many sectors and industries. The rate of change experienced and disruption incurred will vary widely across sectors. The final impact will, in some cases, only be felt around the middle of the century, but much sooner in others. Important timeline factors will be regional and local availability, price, variable growth in demand, the level of funding support through mechanisms such as private-public projects and direct subsidization, and the rate of implementation of legal frameworks that support or demand the use of green hydrogen in various sectors.

Regulatory prospects in selected regions 

EU

In Europe, the “European Clean Hydrogen Alliance” created by the European Commission aims to stimulate €180-470 billion in investments between 2020 and 2050. After 2030, the focus will shift strongly to green hydrogen from renewable sources. Theoretically, space still exists to use hydrogen generated from conventional sources where the carbon has been sequestered. However, the EU estimates that investment support for growth in renewable energy capacity to facilitate the generation of green hydrogen will reach €220-340 billion. It plans to use various mechanisms to facilitate and contribute to the availability of that amount.

End-use sector stimulation is likely to come through set quotas of renewable hydrogen or its derivatives in specific end-use sectors. Investment support to foster the conversion of conventional end-use appliances to devices using green hydrogen is also planned. These mechanisms, once enacted and implemented throughout the EU, are expected to generate a strong level of support for green hydrogen production and use. Many European countries, including Germany, are committed to green hydrogen use already and are legislating support.

US

At a federal level, the use of hydrogen generally (and green hydrogen specifically) is allowed and supported by elements of several older pieces of legislation. Nevertheless, still no comprehensive hydrogen regulatory regime for the US exists at this time. While hydrogen is regulated by a swath of federal agencies, including the Federal Energy Regulatory Commission (FERC), the Pipeline and Hazardous Materials Safety Administration (PHMSA), and the Environmental Protection Agency (EPA), many regulations are integrated into general fuel source regulation and are not particularly supportive of green hydrogen as such.

Several federal agencies are supportive of the development of hydrogen technology. One is the Department of Energy’s (DOE) US$100 million pledge, to be invested in two new DOE National Laboratory-led consortia to advance research, development, and demonstration of hydrogen and fuel cells technology over the next five years. Any results will take time to reach the market and usefully increase green hydrogen production in the short term.

At the state level, a wide variety of tax exemptions and reductions exist. In California, zero-emission transit buses are exempt from state sales and use taxes when sold to eligible public agencies. Still, there is far more support for non-commercial vehicles, and for obvious reasons, these mainly address battery electric vehicles.

Asia and Oceania 

Japan’s supportive efforts have already been outlined above. China does not have a well-defined legislative framework for hydrogen projects across various sectors, but local and regional projects are springing up, driven by the need to curb urban pollution. There is also no special focus on green energy yet. Still, the rapid growth of renewable energy capacity and the need to decarbonize industry based on increasing legislative demands in other countries that use Chinese products will likely be tackled once the price of fuel-cell technology is considered more reasonable.

Other regional players in northern Asia, such as Singapore, do not typically have supportive legislation for green hydrogen in place yet, either. Further south, there is certainly some interest, but no coherent government policy. Once one reaches Australia, this changes somewhat. Australia’s National Hydrogen Strategy was ratified by the Council of Australian Governments (COAG) Energy Council and Energy Ministers in November 2019. The strategy is designed to establish an Australian hydrogen industry as a major global player by 2030. This will serve as a platform for a number of supportive measures. It should be stated that at this time, it excludes a mandatory national target or any market constraints, nor have any changes to taxation, levies, or other fees been set in place.

However, other supportive measures are planned. Hydrogen hubs will be created as a model for the early stages of industry development. Australia also seeks to contribute to an international guarantee of origin scheme. This scheme would identify and certify production technology, carbon emissions associated with production, and production location.

Other plans include a State of Hydrogen report, an Australian National Hydrogen Infrastructure Assessment by 2022, and the development of significant standards together with industry. The Australian government has the stated goal of being the third-largest exporter of hydrogen to Asian markets.

Russia

The Russian government decided in 2019 to create a State Program on Hydrogen, which has since resulted in a Road Map 2020-2024 for the development of hydrogen technology in Russia, drafted by the Russian Ministry of Energy. It has been submitted to the Russian government for review. Amongst other elements, it suggested that in 2021, incentives for both exporters and domestic purchasers should be initiated. However, it is unclear whether green hydrogen will receive any special treatment.

Middle East

While there appears to be interest in hydrogen production and use throughout the region, and green hydrogen use would be in line with, for example, the Saudi Arabian clean energy targets and vision for 2030, there are no current examples of legislation supporting the growth of a green hydrogen economy. Despite this, Dubai inaugurated the first solar-driven hydrogen electrolysis plant in 2019, planned to go online in 2022.

In Saudi Arabia, a green hydrogen plant driven by 4 GW of wind and solar is planned, with completion expected in 2025. It would produce up to 650 tonnes of green hydrogen a day, enough to power almost 20,000 heavy commercial and transport vehicles.

The massive solar resource in the region makes green hydrogen an excellent option, including for export, and it seems clear that supportive legislation is very likely in the next few years.

Nexus with national, regional, and global policy goals

Whenever a technology or industry aligns with national, regional, and global policy goals, forceful drivers result that can support development, implementation, dissemination, and industry growth in that area of technology or industry. Renewable energy is a good example of this.

National Policy Goals

Most governments accept the need to limit their CO2 emissions as determined by the Paris Agreement and the associated Nationally Determined Contributions (NDCs). As green hydrogen reduces emissions, it is in line with national emissions-reduction policy in most cases, even if specific supportive legislation is still being developed and regulation still being created or harmonized.

Simultaneously, national-level policy goals that align with larger policy and related initiatives typically also create commensurate support. Targets for sustainable development, clean air, and rural electrification would align well in this case and may (or may not) be based on global or regional programs.

Even governments that are slow to respond to environmental imperatives still wish to be seen as keeping up and have a strong motivation to ensure that their manufacturing industries keep pace with such technologies and retain a competitive edge. As the best test-bed and learning space is usually the national level, participation takes place anyway.

Regional Policy Goals

At the regional level, it is important to look beyond cohesive geopolitical areas such as Europe or South America. Often, the policy goals espoused in some parts of a more-or-less arbitrarily defined region (such as “The East” or “The Americas”) can intermesh in interesting, constructive, and supportive ways.

We may cite two examples here that directly impact green hydrogen. The first is the EU-MENA Green Economy region. The Middle East and North Africa (MENA) and the EU have been cooperating for some time to create renewable energy resources in the MENA region, driven by the region’s developmental policy goals and the EU’s requirement for greater green energy supply. This has recently blossomed into the development of the coastal green hydrogen generation facilities mentioned above. These facilitate the transport of green hydrogen to Europe, thereby bolstering energy sales in MENA and a greener economy in Europe.

The second example is Australia and Japan’s effort to lay the groundwork for a larger, cross-regional green energy initiative, driven by Australia’s excellent energy resources and interest in economic development as well as Japan’s demand for clean energy in a low-resource context. Their work could bring forth a Pan-Asian-Oceania green energy region, driven by national and regional policy goals. ‘Regional’ in this case refers to the growth in regional energy transport by ship and new options for smaller countries that lie between Japan and Australia. The initiative has been praised and supported by ASEAN, a body representing many of these countries.

Global Policy Goals

Two international policy frameworks create a climate favorable to green hydrogen by defining a set of goals and requirements that can be driven by the benefits green hydrogen can bring. Many of these are external to the industry’s purely economic context, but make the industry’s support interesting in terms of the external benefits and value generated.

There is no question that the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement form the most important of these frameworks. By defining a massive emissions reduction target to be achieved in a relatively short period of time, it has opened the door for green hydrogen. Another, perhaps lesser-known multilateral initiative is the 2030 Agenda for Sustainable Development, adopted by all UN member states in 2015. It defined the 17 Sustainable Development Goals (SDGs) that are seen as urgently to be achieved by both developed and developing nations.

Many of these would be impacted by the combination of renewable energy and green hydrogen, including the following:

• Goal 3 is “Good Health and Well-being”, which also addresses pollution of all kinds.

• Goal 7 is “Affordable and Clean Energy”, which is fairly self-explanatory in this case.

• Goal 9 is “Industry, Innovation and Infrastructure”, which can certainly benefit from introducing a green hydrogen economy.

• Goal 11 is “Sustainable Cities and Communities”, which could be tremendously boosted by a hydrogen economy.

• Goal 12 is “Responsible Consumption and Production”, which includes ethical considerations that can be assuaged through hydrogen use.

• Goal 13 is “Climate Action”, another area where the benefit of green hydrogen is fairly clear.

Generally speaking, the other SDGs are also positively impacted in various indirect ways by a green hydrogen economy. These goals, supported directly by national governments, NGOs, UN agencies, and increasingly business and industry, create a positive economic, moral, and humanitarian environment for clean energy technologies.

The urgency of global policy targets, some of which require public reporting by countries on their progress, does bring a certain degree of pressure to bear on regional and national actors to create a policy environment in which technologies, industries, and strategies that support these goals can thrive. Green hydrogen is one of them.