Policy & Socio-Economics

Arguably one of the most important issues the world is facing currently is climate change. At the current rate of fossil fuel consumption the world is heading towards extreme levels of global temperature rise if immediate actions are not taken. Transforming the current energy system from one largely based on fossil fuels to a carbon-neutral one requires unprecedented speed. Based on the current state of development direct electrification of the future energy system alone is technically challenging and not enough especially in hard-to-abate sectors like heavy industry road trucking international shipping and aviation. This leaves a considerable demand for alternative carbon-neutral fuels such as green ammonia and hydrogen and renewable methanol. From this perspective we discuss the overarching roles of each fuel in reaching net zero emission within the next three decades. The challenges and future directions associated with the fuels conclude the current perspective paper.

Hydrogen will be important in decarbonized energy systems. The primary ways to produce low emission hydrogen are from renewable electricity using electrolyzers called green hydrogen and by reforming natural gas and capturing and storing the CO2 known as blue hydrogen. In this study the degrees to which blue and green hydrogen are complementary or competitive are analyzed through a sensitivity analysis on the electrolyzer costs and natural gas price. This analysis is performed on four bases: what is the cost-effective relative share between blue and green hydrogen deployment how their deployment influences the price of hydrogen how the price of CO2 changes with the deployment of these two technologies and whether infrastructure can economically be shared between these two technologies. The results show that the choice of green and blue hydrogen has a tremendous impact where an early deployment of green leads to higher hydrogen costs and CO2 prices in 2030. Allowing for blue hydrogen thus has notable benefits in 2030 giving cheaper hydrogen with smaller wider socioeconomic impacts. In the long term these competitive aspects disappear and green and blue hydrogen can coexist in the European market without negatively influencing one another.

This report presents an analysis of how hydrogen and battery technologies are likely to be utilised in different sectors within the UK including transportation manufacturing the built environment and power. In particular the report compares the use of hydrogen and battery technology across these sectors. In addition it evaluates where these technologies will be in competition where one technology will dominate and where a combination of the two may be used. This sector analysis draws on DNV’s knowledge and experience within both the battery and hydrogen industries along with a review of studies available in the public domain. The analysis has been incorporated into DNV’s Energy Transition Outlook model an integrated system-dynamics simulation model covering the energy system which provides an independent view of the energy outlook from now until 2050. The modelling which includes data on costs demand supply policy population and economic indicators enables the non-linear interdependencies between different parameters to be considered so that decisions made in one sector influence the decision made in another.

Russia’s invasion of Ukraine has reaffirmed the importance of scaling up renewable energy to decarbonise Europe’s economy while rapidly reducing its exposure to foreign fossil fuel suppliers. Therefore the question of sources of flexibility to support a fully decarbonised European energy system is becoming even more critical in light of a renewable-dominated energy system. We developed and used a Pan-European energy system model to systematically assess and quantify sources of flexibility to meet deep decarbonisation targets. The electricity supply sector and electricity-based end-use technologies are crucial in achieving deep decarbonisation. Other low-carbon energy sources like biomethane hydrogen synthetic e-fuels and bioenergy with carbon capture and storage will also play a role. To support a fully decarbonised European energy system by 2050 both temporal and spatial flexibility will be needed. Spatial flexibility achieved through investments in national electricity networks and cross-border interconnections is crucial to support the aggressive roll-out of variable renewable energy sources. Cross-border trade in electricity is expected to increase and in deep decarbonisation scenarios the electricity transmission capacity will be larger than that of natural gas. Hydrogen storage and green hydrogen production will play a key role in providing traditional inter-seasonal flexibility and intraday flexibility will be provided by a combination of electrical energy storage hydrogen-based storage solutions (e.g. liquid H2 and pressurised storage) and hybrid heat pumps. Hydrogen networks and storage will become more critical as we move towards the highest decarbonisation scenario. Still the need for natural gas networks and storage will decrease substantially.

Climate change and the pressure to decarbonize as well as energy security concerns have drawn the attention of policymakers and the industry to hydrogen energy. To advance the hydrogen economy at a global scale research and innovation progress is of significant importance among others. However previous studies have provided only limited quantitative evidence of the effects of research and innovation on the formation of a global hydrogen market. Instead they postulate rather than empirically support this relationship. Therefore this study analyzes the effects of research and innovation measured by scientific publications patents and standards on bilateral hydrogen trade flows for 32 countries between 1995 and 2019 in a gravity model of trade using regression analyses and Poisson Pseudo Maximum Likelihood (PPML) estimation. The main results of the PPML estimation show that research and innovation progress is indeed associated with increased trade especially with patenting and (international) standardization enhancing hydrogen export volumes. As policy implications we derive that increased public R&D funding can help increase the competitiveness of hydrogen energy and boost market growth along with infrastructure support and harmonized standards and regulations.

To achieve carbon neutrality in Japan by 2050 renewable energy needs to be used as the main energy source. Based on the constraints of various renewable energies the importance of hydrogen cannot be ignored. This study aimed to investigate the diffusion of hydrogen demand technologies in various sectors and used projections and assumptions to investigate the hydrogen supply side. By performing simulations with the E3ME-FTT model and comparing various policy scenarios with the reference scenario the economic and environmental impacts of the policy scenarios for hydrogen diffusion were analyzed. Moreover the impact of realizing carbon neutrality by 2050 on the Japanese economy was evaluated. Our results revealed that large-scale decarbonization via hydrogen diffusion is possible (90% decrease of CO2 emissions in 2050 compared to the reference) without the loss of economic activity. Additionally investments in new hydrogen-based and other low-carbon technologies in the power sector freight road transport and iron and steel industry can improve the gross domestic product (1.6% increase in 2050 compared to the reference) as they invoke economic activity and require additional employment (0.6% increase in 2050 compared to the reference). Most of the employment gains are related to decarbonizing the power sector and scaling up the hydrogen supply sector while a lot of job losses can be expected in the mining and fossil fuel industries.

This report shows how the infrastructure that exists today can evolve from one based on the supply of fossil fuels to one providing the backbone of a clean hydrogen system. The ambitious government hydrogen targets across the UK will only be met with clarity focus and partnership. The gas networks are ready to play their part in the UK’s energy future. They have a plan know what is needed to deliver it and are taking the necessary steps to do just that.

Low-carbon hydrogen plays a key role in European industrial decarbonization strategies. This work investigates the cost-optimal planning of European low-carbon hydrogen supply chains in the near term (2025–2035) comparing several hydrogen production technologies and considering multiple spatial scales. We focus on mature hydrogen production technologies: steam methane reforming of natural gas biomethane reforming biomass gasification and water electrolysis. The analysis includes carbon capture and storage for natural gas and biomass-derived hydrogen. We formulate and solve a linear optimization model that determines the costoptimal type size and location of hydrogen production and transport technologies in compliance with selected carbon emission targets including the EU fit for 55 target and an ambitious net-zero emissions target for 2035. Existing steam methane reforming capacities are considered and optimal carbon and biomass networks are designed. Findings identify biomass-based hydrogen production as the most cost-efficient hydrogen technology. Carbon capture and storage is installed to achieve net-zero carbon emissions while electrolysis remains costdisadvantageous and is deployed on a limited scale across all considered sensitivity scenarios. Our analysis highlights the importance of spatial resolution revealing that national perspectives underestimate costs by neglecting domestic transport needs and regional resource constraints emphasizing the necessity for highly decarbonized infrastructure designs aligned with renewable resource availabilities.

Hydrogen-fuelled technologies for home heating and cooking may provide a low-carbon solution for decarbonising parts of the global housing stock. For the transition to transpire the attitudes and perceptions of consumers must be factored into policy making efforts. However empirical studies are yet to explore potential levels of consumer heterogeneity regarding domestic hydrogen acceptance. In response this study explores a wide spectrum of consumer responses towards the prospect of hydrogen homes. The proposed spectrum is conceptualised in terms of the ‘domestic hydrogen acceptance matrix’ which is examined through a nationally representative online survey conducted in the United Kingdom. The results draw attention to the importance of interest and engagement in environmental issues knowledge and awareness of renewable energy technologies and early adoption potential as key drivers of domestic hydrogen acceptance. Critically strategic measures should be taken to convert hydrogen scepticism and pessimism into hope and optimism by recognising the multidimensional nature of consumer acceptance. To this end resources should be dedicated towards increasing the observability and trialability of hydrogen homes in proximity to industrial clusters and hubs where the stakes for consumer acceptance are highest. Progress towards realising a net-zero society can be supported by early stakeholder engagement with the domestic hydrogen acceptance matrix.

This report aims to summarise the status of the European hydrogen policies and standards landscape. It is based on the information available at the European Hydrogen Observatory (EHO) platform the leading source of data and information on hydrogen in Europe (EU27 EFTA and the UK) providing an overview of the European and national policies legislations strategies and codes and standards which impact the deployment of hydrogen technologies and infrastructures. The EHO database covers a total of 29 EU policies and legislations that directly or indirectly affect the development and deployment of hydrogen technologies. To achieve its net zero ambitions the EU started with cross-cutting strategies such as the EU Green Deal and the EU Hydrogen Strategy setting forward roadmaps and targets that are to be achieved in the near future. As a next step the EU has developed legislations such as those bundled in the Fit for 55 package to meet the targets they have put forward. The implemented legislations including funding vehicles and initiatives have an impact on the whole value chain of hydrogen including production transport storage and distribution and end-uses. At national level as of July 2023 63% of the European countries have successfully published their national strategies in the hydrogen sector while 6% of the countries are currently in the draft stage. Several European countries have strategically incorporated quantitative indicators within their national strategies outlining their targets and estimates across the hydrogen value chain. This deliberate approach reflects a commitment to providing clear and measurable goals within their hydrogen strategies. A target often used in the national strategies is on electrolyser capacity as an effort to enhance the domestic renewable hydrogen production. Germany took the lead with an ambitious goal of achieving 10 GW by 2030 followed by France (6.5 GW) and Denmark (4 - 6 GW). Other targets that some of the countries use in their strategies are on the number of hydrogen refuelling stations fuel cell electric vehicles and total (renewable) hydrogen demand. A few countries also have targets on renewable hydrogen uptake in industry and hydrogen injection limit in the transmission grid. To monitor the policies and legislation that are adopted on a national level across the hydrogen value chain a survey was launched with national experts which was validated by Hydrogen Europe. In total 28 European countries have participated to the survey. On production the survey revealed that 61% of country specialists report that their country provides support for capital expenditure (CAPEX) in the development of renewable or low-carbon hydrogen production plants. Moreover 7 countries also provide support for operational expenditure (OPEX). Furthermore 8 countries have instituted official 6 permitting guidelines for hydrogen production projects while 5 countries have enacted a legal act or established an agency serving as a single point of contact for hydrogen project developers. For transmission only two countries reported to provide support schemes for hydrogen injection. Several countries have policies in place that clearly define the hydrogen limit in their transmission grid for now and in the future ranging from 0.02% up to 15% while a few countries define within their policies the operation of hydrogen storage facilities. On end-use the majority of countries totalling 71% reported to have implemented support schemes aimed at promoting the adoption of hydrogen in the mobility sector. Purchase subsidies stand out as the predominant form of support for fuel cell electric vehicles (FCEVs) with implementation observed in 17 countries. In the context of support schemes for stationary fuel applications for heating or power generation only two countries have adopted such measures. A slightly larger group of four countries do provide support for the deployment of residential and commercial heating systems utilizing hydrogen. For hydrogen end-use in industry a total of 9 countries reported to provide support schemes with a major focus on ammonia production (8) and the chemicals industry (7). On the topic of technology manufacturing 7 countries have reported to have support schemes of which grants emerge as the mainly used method (4). Exploring the latest advancements into European codes and standards relevant to the deployment of hydrogen technologies and infrastructures a total of 11 standards have been revised and developed between January 2022 and September 2023. This includes standards covering the following areas: 6 for fuel cell technologies 2 for gas cylinders 2 for road vehicles and 1 for hydrogen refuelling. Moreover 5 standards were published since September 2023 which will be added to the EHO database in its next update. This includes ISO/TS 19870:2023 which sets a methodology for determining the greenhouse gas emissions associated with the production conditioning and transport of hydrogen to consumption gate. This landmark standard which was unveiled at COP28 aims to act as a foundation for harmonization safety interoperability and sustainability across the hydrogen value chain.