The Global Push for Green Hydrogen: Balancing Demand, Production, and Economic Viability
Key Ideas
  • Green hydrogen is essential for decarbonising heavy industries and achieving net zero targets.
  • Challenges arise from the geographical disconnect between high demand areas and optimal renewable energy locations.
  • Economic viability is a central hurdle, with the need for competitive pricing compared to traditional fossil fuels.
  • Government and industry initiatives, such as IPCEI and HARs, aim to bridge the funding gap and support green hydrogen projects.
The drive towards green hydrogen is fueled by the necessity to decarbonize heavy industries and meet net zero goals. Sectors like steel, refining, and chemicals are under pressure to reduce their carbon footprints due to regulatory and market demands. However, the challenge lies in the mismatch between areas with high demand for green hydrogen and those with optimal conditions for renewable-powered production. While countries in Europe and Asia exhibit significant industrial demand, prime renewable energy locations like Chile or Namibia are often in remote areas with lower market needs. This disconnect emphasizes the importance of scaling up production in these areas and developing import-export infrastructure to meet demands efficiently. The economic viability of green hydrogen remains a key obstacle, as prices must compete with traditional fossil fuels. Government support, though lacking compared to other sectors, is increasing through initiatives like IPCEI, IRA, and HARs to incentivize and support green hydrogen projects. The gap between production costs and consumer willingness to pay persists, leading to the exploration of mechanisms like CFDs to ensure financial feasibility for both producers and consumers.
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