The clean hydrogen sector continues to lack tangible progress and final investment decisions (FIDs) on projects remain few and far between, but it is approaching the moment of reckoning needed for market maturity, delegates at the World Hydrogen Summit in Rotterdam said this month .
When asked whether they were more or less positive than a year ago, industry participants gave varied answers, but there was widespread agreement that progress on clean hydrogen had been slower than expected in the so-called "year of decline" Rising material and financial costs, an unstable geopolitical situation and a lack of regulatory clarity are just some of the challenges faced by developers.
It's a "grim situation if you expected a Swiss Army knife approach would work, said Australian Hydrogen Council chief executive Fiona Simon, hinting at the misguided expectation that hydrogen could be used across all sectors to promote decarbonisation. “We're coming to terms” with the real use and proper application of hydrogen, Simon said, pointing to clean steel production. “We are committed to the same concepts and the same policies.”
The industry has reached a point where it is much clearer which projects will actually get done. Willemien Terpstra, chief executive of Dutch gas company Gasunie, said a greater sense of realism underpins the discussions. However, many delegates called for greater policy action, especially on demand. According to Jorge Palomar Herrero, director of hydrogen industry development at Spanish company Iberdrola, stimulating demand will be the key to increasing the number of FIDs. “We can have great intentions and great projects, but without demand they will not come to fruition.” Even in Europe, which has been making efforts to stimulate demand, it has not been enough to stimulate demand, Herrero said.
Some believe that demand-side stimulus alone will likely not be enough, and ultimately As a result, consumption obligations will also have to be introduced, some say. Carrots can help reduce project costs and kick-start production, but sticks will be key, delegates heard. Consumption mandates could accelerate the dynamics of emerging markets, which have greater ambitions to export to future demand centers, said Ignacio de Calonge, IFC director of private sector energy investments at the World Bank.
Governments are now ready to act on them these requests, according to Daria Nochevnik, director of policy and partnerships at the Hydrogen Council, a Brussels-based industry body.
But governments must also cut through bureaucratic red tape to speed up the process, delegates said. European developers in particular are increasingly frustrated with the paperwork associated with funding applications, said Christian Stuckmann, vice president of hydrogen business development at German utility Uniper. Reducing lengthy permitting and funding processes is high on governments' lists, Nochevnik noted.
Some delegates renewed calls for greater use of "blue" hydrogen, produced from natural gas with carbon capture and storage, to allay fears that if it's just about renewable hydrogen, things will start too late or not at all. There seems to be widespread agreement that blue hydrogen will play a key role, especially during the transition period, as it can already provide significant emissions reductions. But there is a "stigma" in Europe, said David Burns, vice president of clean energy at industrial gases company Linde. This could prevent its adoption, which many delegates believe the world cannot afford.
