Hydrogen is seen as a beacon of hope for the energy transition. However, its introduction in the mobility sector is proving particularly difficult. Above all, e-fuels are extremely expensive.
Before hydrogen can be supplied in bulk at gas stations, we need viable large-scale projects that can deliver at affordable prices. But these are lacking.
Frank Urbansky
One reason for the sluggish introduction of hydrogen into the mass mobility market is the lack, or rather the absence, of large-scale projects. This is likely to remain the case in the future, as direct electrification with batteries remains more efficient and cost-effective in most areas of mobility. Although there are regulatory requirements, such as the EU quota for synthetic aviation fuels from 2030, without massive subsidies and a clear market perspective, the use of hydrogen in the mobility sector remains a niche solution – with an uncertain future.
Strategies in 60 Countries
This is hardly due to a lack of political will. In recent years, more than 60 countries around the world have developed strategies to promote the production and use of hydrogen, particularly in the industrial sector. The hope is that the energy source will play a key role in the decarbonization of the economy. However, the reality falls short of the ambitious announcements.
A recent study published in the journal Nature Energy shows that by 2023, less than 10% of the announced production capacities for green hydrogen had actually been realized. This is mainly due to the high costs: hydrogen remains an expensive commodity for which there is little willingness to pay so far.
Researchers Adrian Odenweller and Falko Ueckerdt from the Potsdam Institute for Climate Impact Research (PIK) have analyzed the so-called “competition gap” for all hydrogen projects announced worldwide. Their study covers a database of 1,232 projects that are to be realized by 2030. Their conclusion: a robust political strategy is needed to close the gap between ambitious plans and actual implementation.
“Over the past three years, global project announcements for green hydrogen have almost tripled,” says Odenweller, who led the study. ”However, only seven percent of the production capacity originally announced for 2023 was actually completed on time during this period.”
One Trillion US-Dollar needed
The study identifies three key barriers to market ramp-up: increased production costs, insufficient demand, and uncertainties regarding future subsidy programs and regulatory frameworks.
Particularly alarming: according to the researchers' calculations, an additional 1 trillion US dollars in funding would be needed to implement all planned hydrogen projects by 2030. “Green hydrogen will continue to struggle to meet the high expectations due to a lack of competitiveness,” warns Ueckerdt.
The scientists advocate targeted measures on the demand side. For example, binding quotas could help to channel green hydrogen into sectors where electrification is difficult to implement – such as the steel and chemical industries or aviation. One example of this is the EU requirement that at least 1.2% of all aircraft fuel must consist of synthetic, hydrogen-based fuels from 2030 onwards. This quota is to be gradually increased to 35% by 2050.
Fossil Lock-Ins Jeopardize Climate Targets
The study also points to the risk of so-called “fossil lock-ins.” These arise when companies continue to rely on fossil fuels due to a lack of economically viable alternatives, thereby jeopardizing climate targets.
To break this vicious cycle, the scientists propose a two-stage strategy: in the short term, direct subsidies and targeted regulatory measures are needed to get the market moving. In the long term, however, the focus must be on market-based instruments such as carbon pricing.
“The transition to technology-neutral market mechanisms is crucial to limit public costs and ensure fair competition with other climate protection options,” the researchers say. They add that it is just as important to have realistic expectations about the actual potential of hydrogen as it is to strategically direct funding.
Conclusion: Big Plans Need Clever Implementation
The study shows that merely announcing hydrogen projects is not enough to drive the market ramp-up. While the political will and strategic goals of many countries are clear, the necessary economic basis for actually implementing the planned capacities is lacking.
The scientists are therefore calling for a realistic and sustainable strategy: subsidies should be targeted where hydrogen offers real added value for the energy transition – especially in industries that are difficult to electrify. At the same time, long-term competitiveness must be ensured through market-based mechanisms in order to place the hydrogen market on a stable footing.
The next few years will show whether the ambitious plans can be successfully implemented. However, one thing is clear: without a well thought-out and realistic strategy, green hydrogen threatens to remain a great – but unfulfilled – hope of the energy transition.
This is a partly automated translation of this german article.
