Large discrepancy between planning and reality

16.01.2025

Source: E & M powernews

Despite increasing ambitions in the H2 sector, there are still considerable gaps between announcements and implementation. This is shown in a study by the Potsdam Institute for Climate Impact Research.

Only a fraction of the green hydrogen projects announced worldwide have actually been realized. While more than 60 countries have pushed ahead with strategies to promote hydrogen, particularly in the industrial sector, less than ten percent of the planned production capacities have been implemented by 2023.

The study by the Potsdam Institute for Climate Impact Research - PIK for short - was published in the journal Nature Energy. The authors cite high costs and a lack of willingness to pay as the main reasons for the sluggish development.

Adrian Odenweller and Falko Ueckerdt analyzed all 1,232 hydrogen projects announced worldwide and identified significant competitive disadvantages for green hydrogen. The researchers emphasize the need for a political strategy that focuses on realistic expectations and closes the existing implementation gaps.

"Despite a tripling of project announcements in the last three years, only seven percent of the capacities planned for 2023 have been realized," explains Odenweller. The increased production costs, insufficient demand and uncertainties regarding future funding measures are key challenges for the market ramp-up of green hydrogen.

Ueckerdt adds that around 1 trillion US dollars (equivalent to around 968 billion euros) in additional funding will be required by 2030 in order to implement all the projects planned to date. However, as permanent subsidies are not a sustainable solution, the researchers recommend promoting the use of green hydrogen through binding quotas in sectors that are difficult to electrify, such as aviation, steel and chemicals. From 2030, for example, at least 1.2 percent of aircraft fuels should contain synthetic hydrogen-based fuels, a quota that is set to rise to 35 percent by 2050.

Warning against fossil lock-ins

The study highlights three key gaps: the implementation gap for past projects, the future ambition gap and the future implementation gap. While the ambition gap indicates that the planned projects could meet the requirements of the one-in-five degree scenarios, the implementation gap remains significant. The authors warn against fossil lock-ins, i.e. a situation in which companies retain investments, infrastructure or technologies based on fossil fuels in the long term.

In the long term, the researchers advocate technology-neutral market mechanisms such as carbon pricing in order to reduce public costs and ensure fair competition with other climate protection measures. A robust political strategy that relies on short-term subsidies and demand-side regulation is crucial to close the existing gap between ambition and reality.

The article "The green hydrogen ambition and implementation gap" is available on the Nature Energy website.

Author: Davina Spohn