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The Future of Hydrogen 2019

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The Future of Hydrogen 2019 ( the-future-hydrogen-2019 )

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The Future of Hydrogen Chapter 6: Policies to boost momentum in key value chains Near-term policy priorities Targets and/or long-term policy signals. Governments at all levels should look seriously at industrial clusters as opportunities to scale up hydrogen in the 2030 timeframe. Developing cross-sectoral roadmaps and committing to deployment targets can be instrumental to bringing all stakeholders on board and to ensuring that visions for different industries are aligned in scale and timing. Demand creation. Technology-neutral instruments like CO2 pricing would provide an overarching incentive for low-carbon hydrogen use, with a price of USD 50 tCO2 potentially enabling investment in CCUS retrofit at refineries or ammonia plants where CO2 storage is accessible. Other measures could also help, including legal or voluntary commitments to meet CO2 intensity goals at a sectoral level (similar to low-carbon fuel standards) or to provide a given share of output from low-carbon inputs (as with renewable transport fuel obligations), public procurement rules or auctions, tax credits, and schemes that allow consumers to differentiate between products so that they can buy low-carbon products if they wish to. Investment risk mitigation. Supply chain risks and market uncertainty will persist for hydrogen use in most industrial applications over the next decade, especially where final product margins are tight. Specific risks also include cross-border variations in environmental regulations, and the risk of creating monopoly hydrogen suppliers of low-carbon hydrogen at high prices. To help manage these risks, governments might participate in project financing across borders, as in the EU Important Projects of Common European Interest (IPCEI), or organise competitive bidding for hydrogen supply contracts. In individual industrial clusters, or across a broader region, there may be an opportunity to spread risk for potential hydrogen buyers by establishing intermediaries that can sign multi-year contracts for future hydrogen supply, thus pooling their risk according to the scale and timing of their anticipated demand and providing more certainty for investors. Development of CCUS as a service business and special development zones could also help manage risks and therefore minimise costs R&D, strategic demonstration projects and knowledge sharing. Hydrogen is already extensively used in industry today, so much of the research and cost reduction can be undertaken by the private sector as commercial competition increases, especially on the demand side. On the supply side, public support for the first major applications of CCUS technologies in a given region and large-scale integrated electrolyser demonstrations can help ensure that some of the resulting knowledge is widely shared to accelerate subsequent adoption. However, for novel applications (especially those at low technology readiness levels) and complex demonstrations, there might still be a case for public R&D support. Demonstration projects must be linked to overall energy policies and strategies, to avoid one-off projects that do not contribute to sustainable scale-up. In the steel sector, 100% hydrogen DRI needs further refinement and demonstration, and the emergent option of ammonia in DRI can be investigated. To facilitate large-scale demand for hydrogen and hydrogen-based products, proving and improving the (co-)firing of hydrogen in turbines and (co-)firing of ammonia in boilers/turbines/fuel cells are needed for de-risking. Improvements to the storage of hydrogen, including as liquid hydrogen, would also be valuable. Harmonising standards, removing barriers. Areas that would benefit from international harmonisation and common standards include hydrogen purity and pipeline specifications for industry, comparable to ISO standards in the transport sector, safety protocols for the use of hydrogen and hydrogen-based fuels and feedstocks, and “guarantees of origin” (Table 12). PAGE | 181 IEA. All rights reserved.

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