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CCXG Forum, March 2023, Antoine Dechezleprêtre

  1. Innovation and Industrial Policies for Green Hydrogen Antoine Dechezleprêtre, STI/PIE
  2. Source: IEA (2021), Net zero by 2050 Cumulative emissions reduction by mitigation measure in the IEA’s NZE, 2021-2050 Share of total final energy consumtion by fuel in the IEA’s NZE, 2020-2050 Source: IEA (2021), Net zero by 2050 Hydrogen is an important part of net-zero emissions scenarios + storage
  3. A major role for hydrogen to decarbonise heavy industry Contribution of different technologies in emission reductions between 2015 and 2050 in the Netherlands Source: OECD (2021) Policies for a climate-neutral industry: Lessons from the Netherlands. Hydrogen • Make existing hydrogen production in chemical industry carbon-neutral • High-temperature industrial processes in hard-to-abate sectors (steel)
  4. • Producing hydrogen from electrolysis with renewable electricity for ammonia production is still 3 times more expensive than from natural gas (CH4 + H2O → CO + 3 H2) • Even with carbon price savings and adoption subsidies • Cost reductions are needed Even with high carbon price, green hydrogen is not competitive with fossil-based alternatives Green hydrogen electrolyser cumulated cash flows for different scenarios Source: OECD (2021).
  5. • Green hydrogen production costs can be reduced by 70% by 2030 with more efficient electrolysers and cheaper renewable electricity • Cheaper electrolysers will come from R&D, economies of scale and learning-by-doing ➢RD&D needed • IEA’s NZE: 12% of hydrogen emission reductions to 2050 come from mature techs The drivers of cost reductions Expected future cost reductions for green hydrogen Source: McKinsey and Company (2021) & IRENA (2020).
  6. Stagnating global innovation efforts (patents) Source: OECD, STI Micro-data Lab Number of annual patent filings in different hydrogen technologies, 2004-19 • Number of patents smaller since 2009 than in 2008 • Rise in hydrogen production patents, decrease in fuel cells • The pace of innovation activity is not aligned with new hydrogen ambitions
  7. Innovation specialization in hydrogen technologies, 2004-08 and 2015-19 But some countries are specializing into hydrogen innovation
  8. Source: IEA 2021 Public RD&D spending in OECD countries on hydrogen and fuel cells, 2004-2019 • Public RD&D halved between 2008 and 2016 (mostly in fuel cells) • Increase since then, driven by hydrogen production • Yet, hydrogen = 3.3% of energy-related RD&D spending across OECD, but 6% of emissions reduction potential • IEA estimates tripling of public RD&D necessary Public RD&D up, but still lower than in 2000s
  9. Ambitious planned capacity but breakthroughs needed to shift up a gear Source: own calculations based on IEA (2021). Planned hydrogen capacity in main economies • Planned capacity deployment = 175 GW green capacity; 40 Mt H2/year • Net-zero scenario needs: 3 600 GW electrolysis and 500 Mt H2 by 2050 • Costs need to go down so deployment can accelerate Country GW (green) Mt H2/year (green+blue) Spain 35.2 6.1 France 34.4 6.0 United Kingdom 1.8 4.9 Australia 25.7 4.6 Netherlands 10.3 4.1 Germany 12.1 2.4 Canada 0.1 1.8 China 8.0 1.4 United States 1.5 0.7 Italy 1.1 0.2 Japan 0.01 0.003 TOTAL world 175 40.3
  10. Countries’ Hydrogen Strategies Review of strategies in Australia, Canada, France, Germany, Italy, Japan, Korea, Netherlands, United Kingdom, United States, European Union Main messages: 1. Ambitious deployment targets for 2030, but still far from the necessary deployment at 2050 horizon. 2. Main policy instruments and support schemes = demonstration and deployment support. More R&D and prototypes seem necessary. 3. Hydrogen infrastructure commitments at very early stage. 4. Hydrogen-related regulatory standards (on purity, origin, blending with natural gas, safety, etc.) in early discussions. Multiple platforms coexist
  11. Take-home messages for policy 1. Ensure greater support for R&D and demonstration. Covid recovery packages are helping, but significant funding gaps remain 2. Reduce uncertainties through infrastructure investments and standardisation (e.g. on guarantees of origin, hydrogen purity, equipment specifications, blending into the gas grid) 3. Establish clear carbon price trajectories and Carbon Contracts-for-Difference to provide investors with the right incentives. 4. Encourage the creation of an international hydrogen market 5. Further develop renewable energy
  12. Thank you