Green Hydrogen Subsidies
Green Hydrogen Projects
Hydrogen Production Gap
A new study reveals that global green hydrogen production is far behind initial ambitions, highlighting a competitiveness gap and the need for strategic regulation and subsidies.
Green Hydrogen: Big Gaps Between Ambition and Implementation
Global hydrogen strategies are growing, with over 60 countries aiming to boost green hydrogen production. However, a study published in Nature Energy shows that in 2023, less than 10% of announced green hydrogen production was realized.
The primary challenge remains high costs, with limited willingness to pay. Adrian Odenweller and Falko Ueckerdt from the Potsdam Institute for Climate Impact Research (PIK) analyzed 1,232 global hydrogen projects, identifying significant gaps between ambition and actual implementation.
While global green hydrogen projects tripled in recent years, only 7% of the planned production capacity for 2023 was completed. The gap stems from rising costs, uncertain subsidies, and lack of demand-side readiness. According to PIK, realizing all announced projects by 2030 would require an additional $1 trillion in subsidies.
Permanent subsidies aren’t a sustainable solution. Instead, demand-side instruments, like binding quotas, should direct green hydrogen to sectors hard to electrify, such as aviation and steel production. For instance, EU regulations require a gradual increase in hydrogen-based synthetic fuel blending for aviation by 2050.
The study identifies three key gaps: implementation (completed vs. announced projects), ambition (hydrogen required by 2030 vs. announced projects), and future funding gaps, warning that global subsidies are far from sufficient. The researchers advocate for a technology-neutral approach, including carbon pricing, to meet climate targets without risking fossil fuel lock-ins.
