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The Future of Hydrogen Chapter 6: Policies to boost momentum in key value chains The next ten years will be critical to keeping hydrogen in the energy policy toolbox The main driver of wide deployment of low-carbon hydrogen is its potential to help reduce carbon emissions while contributing to energy security and resilience. Governments around the world have committed to ambitious goals for emission reductions, and are wrestling with the challenge of how best to achieve those goals without taking any risks with energy security and resilience. The rapid pace of change and the scale of the challenge means that the next ten years are absolutely critical. Precisely how hydrogen will ultimately fare against other low-carbon options cannot be known, but there is a clear long-term rationale for ensuring that the fullest possible range of options is available to help tackle multiple energy system challenges – including energy security, affordability, access and sustainability – for a growing global population and economy. Put another way, it seems foolhardy not to keep the option of large-scale, clean, flexible hydrogen on the table. “Ambitious pragmatism” will be essential to build momentum, to support the development of low-cost and low-carbon hydrogen on a large scale, and to help position hydrogen to be ready to compete and seize longer-term opportunities. Much progress has been made with hydrogen over the last ten years, but it takes time for new energy technologies to penetrate existing markets. A decade is not long to further expand supply and demand to a point of shared confidence between governments, investors, equipment suppliers and others in the sustainability of hydrogen markets. It took almost 25 years from the introduction of the first market-creating feed-in-tariff for renewable electricity to the point where solar PV made up 1% of global electricity output. Building an effective springboard would involve scaling up low-carbon hydrogen supply in a way that encourages innovation, efficiencies and cost reduction. Mass manufacturing of electrolysers, fuel cells and components of refuelling stations will spur cost reductions, especially if international standards are agreed. Scale will also reduce the costs risks associated with major investment in technologies for making hydrogen-based fuels and feedstocks, and in common infrastructure, including pipeline conversions, new pipelines, CCUS infrastructure and shipping terminals. Near-term opportunities Smart policy is needed to put the world on a pathway that enables these long-term goals to be met. Hydrogen value chains are complex and the risks faced by investors are significant. Co-ordination problems between different parts of value chains persist, costs are changing quickly and technologies (including competitors to hydrogen in some applications) are developing rapidly. Regulations and standards vary between regions and are expected to undergo revision, creating uncertainty for companies and investors. Against this background, the case is strong for focusing near-term action on applications where the barriers to deployment can be most easily overcome. Four value chains present a particular opportunity over the next decade to make a step-change in the pace of hydrogen deployment. PAGE | 171 IEA. All rights reserved.PDF Image | The Future of Hydrogen 2019
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