Steve Capanna is policy director and Owen Zinaman is senior advisor for Crux Alliance.
Just a few years ago, green hydrogen looked set to become a central pillar of the global energy transition. Governments across the world rolled out sweeping hydrogen strategies, while companies pitched billion-dollar projects to use clean hydrogen throughout the economy.
But the realities of green hydrogen costs, exacerbated by high interest rates and supply chain constraints, have undermined these plans.
Meanwhile, the US – which had among the most ambitious suites of hydrogen policies under the Biden Administration – has reversed course, scaling back its clean hydrogen production incentive, freezing funds for green hydrogen hubs, and cutting the vast majority of federal hydrogen research and development funding. As a result, a number of planned projects have now been canceled.
Clean hydrogen is experiencing growing pains elsewhere too, with several major production projects in Australia and Europe scrapped or indefinitely postponed. Demand for green hydrogen is increasingly uncertain as well, with manufacturers like steel giant ArcelorMittal backing away from plans to use green hydrogen.
Some ‘no-regrets’ uses remain
Reading the headlines, it can seem like hydrogen has no future as a climate solution.
And yet, while green hydrogen may not be an emissions panacea, climate and energy experts are clear: it remains a crucial tool to cut carbon in some key areas of the economy.
“It’s critical to not throw the baby out with the bathwater,” says Nikita Pavlenko, programs director for fuels and aviation at the International Council on Clean Transportation. “Now is the time for sober consideration of projects that supply the no-regrets uses of hydrogen necessary for long-term decarbonization, whether for the handful of industries with few alternatives or in long-haul shipping and aviation.”
And for those countries that invest in green hydrogen development now, there could be economic as well as environmental rewards.
Not all hydrogen is created equal
Hydrogen currently plays a niche but important role in the global economy. Nearly 100 million metric tons of hydrogen are produced worldwide each year, largely for use in oil refining and to make ammonia and methanol – feedstocks for fertilizers and industrial chemicals. And most of this hydrogen is produced using methane gas, contributing roughly 2% of global greenhouse gas emissions.
But there are other, cleaner ways to produce hydrogen.
“Blue” hydrogen still relies on natural gas but includes equipment to capture some of the carbon emissions released at the production facility. This could significantly lower on-site emissions – although not entirely.
However, it would do nothing to reduce methane and CO2 leaks from natural gas fields or pipelines, which an established body of evidence suggests have been systematically underestimated and are often not accounted for in many existing regulations anyway. Put together, this means blue hydrogen is likely much more polluting than is often claimed.
That’s why clean energy experts view “green” hydrogen as the best option for cutting emissions.
Green hydrogen is produced via a process called electrolysis, in which electricity is used to split hydrogen from water, leaving only oxygen as a byproduct. This process can be emissions free – but only if the electrolysis is powered by new clean electricity resources that are physically deliverable on an hourly basis to the hydrogen production facility.
A narrow but necessary path for green hydrogen
Still, scaling green hydrogen is easier said than done. Green hydrogen remains a nascent technology and costs roughly two to three times more than conventional hydrogen produced from natural gas. Costs are expected to decline as production scales, but only if electricity costs and interest rates are kept in check – which, recently, has not been the case.
But there is good news: experts argue that green hydrogen will only be needed in a few specific parts of the economy.
“Given the heavy energy losses in making hydrogen, it will almost always be cheaper and smarter to use electricity directly,” says Katherine Dixon, executive director of the Regulatory Assistance Project (RAP). “Heat pumps are the best example: they cut energy demand dramatically compared to gas, while hydrogen for heating would multiply it.”
And as other technologies get cheaper, the number of applications where green hydrogen is a necessary decarbonization tool will only shrink.
‘Hard-to-abate’ sectors need hydrogen
Still, in a net-zero economy, absent unforeseen technology innovations, we are going to need a lot more green hydrogen in the future – roughly four to six times more than all of the hydrogen used today, and many orders of magnitude more than current green hydrogen production.
Why? Because there remain many non-electrifiable sectors of the economy where no other viable decarbonization tool exists besides hydrogen, such as steel production, where hydrogen serves as a clean alternative to coal-based coke for processing iron ore.
“Green hydrogen will be critical for decarbonizing applications that have thus far been referred to as ‘hard-to-abate’, such as in the chemicals or steel industries,” says Julia Metz, director of Agora Industry.
Additionally, experts don’t yet foresee a path for battery technology to work for long-distance shipping or long-haul flights, both highly polluting industries, so green hydrogen and fuels made from green hydrogen will likely be necessary for those uses too.
Boosting demand to support long-term investment
Given the cost premium of green hydrogen, strong incentives will be needed to make using it in industry, aviation or shipping an economically viable choice while driving down costs for the future.
To date, countries have largely focused on policies like tax credits that encourage production of clean hydrogen or government investments in green hydrogen production and equipment manufacturing facilities.
EU backs North Africa hydrogen pipeline, but is it a green dream?
But scaling hydrogen requires demand-side policies as well. Indeed, we’re seeing planned projects and investments stall for lack of committed buyers. Stable demand-side policies, which can include contracts for differences (government financing for the higher cost of green hydrogen), requirements for a set percentage of hydrogen consumption to be green for certain sectors, and sectoral emissions limits, can help provide that long-term investment certainty.
Absent such policies, new clean hydrogen production projects have largely proven too risky.
How green is green enough?
Policymakers must also ensure they are only incentivizing truly clean hydrogen. Hydrogen produced with electricity largely generated by coal, for instance, can be considerably dirtier than conventional hydrogen production.
How to measure hydrogen emissions has been the source of robust debate in the European Union (EU), US, and elsewhere. Fossil fuel companies have argued for more lenient standards about what counts as clean. They have also supported using hydrogen in parts of the economy that could be more easily and cheaply electrified, distracting from efforts to electrify quickly.
For a region like the EU, which is poised to be an importer as well as a producer of green hydrogen, stricter standards can help ensure truly low-carbon hydrogen production around the world.
China, for instance, has developed its clean hydrogen production with an eye towards meeting the EU standards. China is also placing major bets on the green hydrogen market, as it represents roughly 60% of global electrolyzer production.
This investment is beginning to drive down equipment costs, which could help make green hydrogen more commercially viable. It could also give China a long-term competitive edge in the global market.
Smart policies create economic opportunity
However, other countries with abundant, low-cost renewable energy resources are also recognizing the potential of green hydrogen as both an export opportunity and a way to reduce reliance on volatile natural gas imports.
For instance, India’s Green Hydrogen Mission targets the production of 5 million tonnes of green hydrogen by 2030, and Brazil has an official goal to be the most competitive low-carbon hydrogen producer by that same year.
To fully capture the economic opportunity, new hydrogen producers will need to ensure their output meets international environmental standards while building up those domestic industries that require green hydrogen to cut emissions, ensuring more economic benefits are realized domestically.
“Governments play a key role in driving innovation that creates economic opportunities across the value chain,” says Metz of Agora Industry. “By supporting green hydrogen investment and adopting targeted industrial policies, they can strengthen resilience while advancing climate and industrial progress.”
It’s time for hydrogen sobriety
The hydrogen bubble has burst. But despite the dire headlines, we cannot achieve global climate goals without some amount of truly clean hydrogen.
If the last few years were dominated by hydrogen hype, we need the future to be dominated neither by hype nor nihilism, but by a sober focus on designing policy to build demand for green hydrogen in the few, important sectors where it’s really needed.
Let’s hope the era of hydrogen sobriety has finally arrived.
The post Hydrogen beyond the hype: The green fuel’s narrow but crucial role in a decarbonized economy appeared first on Climate Home News.
Hydrogen beyond the hype: The green fuel’s narrow but crucial role in a decarbonized economy
Three countries have been named by the Paris Agreement’s compliance committee for failing to submit a nationally determined contribution (NDC) and repeatedly snubbing offers of help with their climate plans.
After months of internal debate over whether to identify serial non-responders, the Paris Agreement’s Implementation and Compliance Committee (PAICC) named the three countries which have failed to engage with it over their NDCs on Friday.
It named Democratic Republic of Congo, Senegal and North Korea in a footnote of its annual report, adding that it decided to name them “with a view to facilitating engagement”, adding that representatives of the three nations had been invited to its meeting in early 2027 “with the purpose of identifying any challenges and constraints”.
“The Committee noted the importance of Parties engaging with the Committee in a timely manner, while noting that some delays may be due to the national capabilities and circumstances of the Parties”, the report said.
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Paris Agreement committee snubbed over missing NDC climate plans
Many governments have still not submitted a nationally determined contribution to the UN, breaching a key requirement of the Paris Agreement
In July, PAICC said 12 countries had ignored its repeated attempts to discuss why they had not published an NDC as required every five years under the 2015 Paris accord.
Members of the committee had been divided over whether to name them, but at a September meeting decided to do so in their annual report to the annual climate COP summit.
By the time the report was published on Friday, only Congo, Senegal and North Korea “had not communicated an NDC or submitted a [Biennial Transparency Report] and had not yet responded to any of the Committee’s notifications, despite several reminders issued by the Committee in this regard”.
Rainforest and renewable energy ambitions
The silence from Congo and Senegal is notable because the former is home to much of the Congo Basin rainforest while the latter has sought billions of dollars in climate finance to support its renewable energy ambitions.
After Brazil, Congo has more rainforest than any country in the world. This forest, and the country’s peatlands, absorb huge amounts of greenhouse gas but are fast being lost to expanding farmland, charcoal production, logging and mining.
Senegal signed a Just Energy Transition Partnership with Canada and wealthy European nations in 2023, to help it meet its renewable energy targets under the-then government of Macky Sall. It was chair of the Least Developed Countries group between January 2022 and December 2023.
Tejas Rao, who is researching the PAICC as part of a doctoral thesis at Cambridge University, said the governments of the three countries should engage with the committee.
“Engagement costs these governments very little and the committee has shown it will listen,” he said.
“Silence leaves the committee with no basis to help, and it leaves the [governments] exposed to the narrative that they are simply disengaged,” he told Climate Home News.
Paris Agreement requirement
The 2015 Paris Agreement requires all parties to publish an NDC every five years outlining their emissions reduction targets, with each plan meant to be more ambitious than the country’s last NDC.
The latest set – the third round of plans, with new targets for 2035 – was due in February 2025. While most countries missed this deadline, all but around 30 – mostly small emitters but including Egypt, Vietnam and Argentina – have now submitted them.
Over the year, the PAICC – which is made up of government climate officials from developed and developing countries – has been communicating with governments that have not submitted NDCs and trying to overcome barriers to them doing so.
Some nations have cited exceptional circumstances as the reason for not submitting an NDC, a process that requires a significant amount of work in tracking emissions and consulting on how to curb them across the economy. For example, a letter from a Sudanese official to the PAICC, seen by Climate Home News, said that the country’s civil war had led to the suspension of its NDC preparation.
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The US and Iran are not signed up to the Paris Agreement and so do not have active NDCs, nor does Taiwan, which is not a UN member state.
Rao said that because the PAICC is “facilitative and non-punitive”, naming the countries “is meant to open a door, not close one – the invited consultation is the point”.
“In recent months, governments that explained their constraints, whether capacity, finance or domestic process, have been met with follow-up and support rather than sanction, and the number of silent governments has fallen sharply,” Rao said.
The post Paris Agreement committee names three countries snubbing it over NDCs appeared first on Climate Home News.
Paris Agreement committee names three countries snubbing it over NDCs