A study by the World Business Council for Sustainable Development points out that, to boost the global green hydrogen market, incentives and public policies that generate confidence among investors must be created. Currently, the major challenge in this fuel lies in its production cost.
The production of green hydrogen is stagnant worldwide, despite being one of the renewable fuels with the greatest potential to replace fossil fuels in sectors where it is challenging to use electricity, such as industry and certain modes of transportation.
Hydrogen is the most abundant element in the world, although it needs to be extracted from materials like water (whose molecule is H2O) or methane (CH4). While for several years it has been produced on a large scale using fossil fuels (gray hydrogen), global decarbonization and energy transition goals have highlighted the need to produce it from renewable sources (the so-called green hydrogen).
In Colombia, the possibility of producing hydrogen has been explored in regions such as La Guajira, where the implementation of wind and solar energy projects could serve as a driving force to generate this fuel. The issue is that the current production cost of green hydrogen globally ranges between USD$8 and USD$10 per kilogram (kg), while gray hydrogen is produced at $2 per kg.
The Hydrogen Chamber Andi-Naturgas, which brings together various companies in the energy sector in Colombia, estimates that “production costs for green hydrogen in La Guajira will reach USD$1.5/kg by 2050.” However, it is still unclear how this will be achieved.
A study recently published by the World Business Council for Sustainable Development (WBCSD) and the consulting firm Environmental Resources Management (ERM) put forth a series of public policy recommendations to boost the growth of green hydrogen worldwide.
The report notes that only 4% of global green hydrogen projects are at decisive stages to become operational. The rest, as highlighted in a recent investigation by the International Energy Agency, are stagnating due to investment and production cost-related issues.
The WBCSD emphasizes, among its recommendations, the need to promote public policies that stimulate the demand for green hydrogen by industries that could use it. They analyze four sectors: sustainable steel production, heavy-duty land transport, ammonia production, and oil refineries.
By 2025, countries incorporating green hydrogen into their energy transition strategies should undertake two specific actions: first, include green hydrogen and its derivatives in their energy and industrial planning, and second, establish standards to certify the sustainable origin of hydrogen and ensure the safety of its commercialization.
Between 2025 and 2030, incentives and targets should be established to encourage industries to transition from fossil fuels or gray hydrogen to green hydrogen. The report also suggests the need to create markets with clear conditions that promote green hydrogen, such as implementing differential contracts for industries reducing the environmental cost of their operations.
After 2030, the report indicates that countries should set deadlines and impose sanctions on industries not reducing the use of fossil fuels.
Throughout the process, according to the WBCSD, states should initially ensure the funding of some projects through loans, grants, and tax benefits. Once conditions for the market to function are established, public financing would be replaced by special contracts to instill confidence in investors.
Furthermore, the report points out that during the establishment of the green hydrogen market, it will be necessary to continue increasing coal prices to discourage its use and promote carbon bond markets.
SOURCE: El Espectador
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