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A wide range of policy instruments are available to facilitate deployment. One of the most critical barriers for hydrogen is the need to create demand for new applications and low-carbon varieties. Policies closing the cost gap between hydrogen and competing alternatives can facilitate greater use - either through incentives, grants and loans, or by addressing operating costs by lowering electricity taxes and levies. Policies that create a demand pull for hydrogen can come in the form of mandates for minimum quotas, rules requiring a share of low-carbon fuels, directed public procurement, or by setting the right technology standards. Putting a system in place that differentiates between commodities or goods based on environmental impact is another means to facilitate use. This enables catering to customers willing to pay more for sustainable products, and facilitates tracking emissions-reduction progress. It may also help to establish a level playing field, where emissions are not simply displaced to locations with less ambitious carbon targets. This can be done by aligning carbon price trajectories, sectoral roadmaps, carbon border adjustment mechanisms, and covering the entire lifecycle of emissions with carbon pricing schemes. Product-oriented fiscal incentives that make some products more attractive than their carbon-intensive counterparts would also help. In terms of facilitating infrastructure development, long-term planning that takes into account lead times for construction, and provides visibility and certainty for users, is necessary. This should include: transmission network planning and coordinating with electricity and natural gas networks; storage capacity and energy security; and bunkering, tanks and other port facilities for the global trade of hydrogen derivatives. Meanwhile related regulations should provide for cost recovery models, and standards for quality and financing. In addition, supply and demand should be coordinated to strike a balance between high utilization and avoiding delays during ramp-up. The certification of hydrogen production, transport, and use is essential and must meet at least four conditions: it covers all emissions from energy source to hydrogen use (including hydrogen derivatives); aspects such as scope, boundaries, and taxonomy are consistent across borders to ensure climate mitigation; it covers not only greenhouse gas emissions but also other sustainability aspects (like land and water use); and, there is a clear distinction between quantitative (lifecycle emissions) and qualitative aspects (labels). Each country should be able to define their own infrastructure standards, but the underlying information should be transparent and readily-understood. This can in turn support greater market diversity, competition, and interoperability.

Measures to Enable More Hydrogen Use

KEY TRENDS

Hydrogen