The Hydrogen Economy #50
Whatever It Takes: If Governments Are Serious About the Hydrogen Economy, Incentives Need to Rise
Key Points
- Incentives to promote the hydrogen economy are insufficient today, and without a fix we will fall short of all ambitions for hydrogen. We need sufficient incentives today to start building the infrastructure for tomorrow.
- While blue hydrogen cannot begin to meet the needs of the expected global market, even this important opportunity is being held back because the economics are not certain enough to raise funds: projects need help.
- The green market is power constrained, and we need a workaround to maintain momentum in the equipment markets such that there is sufficient investment to meet future demand. We risk 3-4 years of stagnation.
- Not focusing on carbon intensity, and instead on colors and sources, will cost Europe far more to develop a clean hydrogen economy than we will see in the US – the money required will likely be politically unpopular.
- Otherwise, we do not see many new projects, and almost nothing getting through FID. Concerns are still rising around power demand – for data centers and AI, rather than EVs and energy transition.
Exhibit 1: The clear wild card in this analysis is the amount of green hydrogen that the World can afford by 2040 – this will not happen without a further step up in incentives.
Source: Corporate Reports C-MACC Analysis
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