Europe: Taking the Lead in Green Hydrogen, But at What Cost?

Key Points

Claims that the US hydrogen industry is losing ground to Europe are based on European countries providing much higher subsidies to projects that are still uneconomic and would never pass FID in the US.
The energy security issues in Europe, which compound an aggressive climate agenda, do not exist in the US, where the climate agenda is also politically less clear. Politics may evolve in Europe if the money runs out.
We have talked at length in our work about transition – the need for steppingstones to bridge energy gaps, such as CCS and increased use of natural gas – Europe wants none of this for the most part and the cost is rising.
We see more electrolyzer capacity planned for Europe, but we see the potential for oversupply in Europe in a best case and significant oversupply in the US in a best case – not good for buyers if suppliers don’t survive.
Otherwise, we look at a grey ammonia market that is out of phase with a very weak US farm economy – suggesting downside and less attractive blue economics as a result. We also look at more power growth issues.

Exhibit 1: The European projects all need not only premium pricing, but also huge capital subsidies.