Global Evaluation of Hydrogen Production Costs: Breakeven Prices and Competitiveness Targets
Key Ideas
- Countries like the U.S., Europe, Japan, UK, Canada, Italy, and China are setting breakeven prices for hydrogen production to compete with traditional fuels in various sectors.
- The cost of hydrogen production varies significantly across regions due to factors such as renewable energy availability, scale of production, and government subsidies.
- Public policies, subsidies, and infrastructure investments are playing a crucial role in driving down hydrogen production costs and encouraging adoption in industries like heavy transport, steelmaking, and petrochemicals.
- Industrial trade-offs and sectoral impacts are being carefully considered to bridge the price gap between conventional and low-carbon hydrogen, aiming for massive CO₂ emission reductions and energy supply diversification.
The G7 countries and China are conducting a comprehensive evaluation of hydrogen production costs, aiming to determine acceptable breakeven prices for industries and end-users worldwide. In the United States, the heavy transport sector in California sets a breakeven threshold of $5 to $7 per kilogram to compete with diesel, while American petrochemicals industries pay as low as $0.80 to $1 per kilogram for standard hydrogen. Europe targets prices between €1.50 and €2 to compete with fossil fuels, with Germany facing heavy transport supply costs reaching €9 per kilogram. In Japan, where hydrogen is a strategic pillar, production costs range between $10 and $12 per kilogram, with stakeholders targeting around $6 to $7 per kilogram to compete with LNG. The UK, Canada, and Italy are investing in various forms of hydrogen production to lower costs and make the energy vector competitive for different sectors. China, the world's largest hydrogen producer, aims to lower the cost of green hydrogen to $2.50 per kilogram by 2030 to compete directly with diesel and LNG. Public policies and subsidies are pivotal in encouraging industries to adopt hydrogen solutions and reduce CO₂ emissions, despite the price gap between traditional fuels and low-carbon hydrogen.