The hydrogen sector’s potential to revolutionize the energy landscape is theoretically vast, yet practical deployment continues to lag. Martin Tengler, Head of Hydrogen at BloombergNEF, elucidates the critical barriers stalling hydrogen’s progress and outlines the essential criteria, termed “policy stars,” that must align to truly harness the element’s promise. In a recent discourse at the BloombergNEF Forum in Tokyo, Tengler highlighted the precarious status of global hydrogen deployment.
At the heart of the issue lies the misalignment of five strategic pillars, characterized as the “5 stars” of hydrogen strategy. These include a comprehensive strategy with clear targets, financial backing, especially in sectors where hydrogen’s application is deemed crucial, demand-side incentives, carbon pricing, and midstream infrastructural support. The industry’s inadequate alignment with these pillars is illustrated starkly by the recent BloombergNEF scorecard, which marked a decline, giving the sector only 8 out of 25 possible points, emphasizing a regression rather than progress.
Key factors contributing to this stagnation include a reduction in policy support in the United States, a halted auction process in South Korea, and postponed carbon pricing decisions at the International Maritime Organization. These geopolitical and policy developments exacerbate the uncertainty and variability across markets, negatively affecting hydrogen supply forecasts.
However, there are notable exceptions to this trend. India has emerged as a leader in the hydrogen economy with significant record-low auction prices for green ammonia, while China is strategically poised for a green hydrogen renaissance, supported by its 15th Five-Year Plan. Chinese initiatives encompass new state-owned enterprise targets, incorporation of hydrogen in domestic policy frameworks, incentives for co-firing green ammonia, and aligning standards with those of the European Union.
Despite these advances in Asia, the hydrogen sector faces a bifurcation with Western and other markets sending mixed signals, consequently slowing the desired pace of global deployment. This inconsistent trajectory highlights the urgency for international policy coherence and the substantive support necessary for scaling hydrogen energy usage on a global scale.
The discourse around hydrogen’s future underscores the transformative potential of the energy source, yet brings to light the critical need for strategic policy alignment and investment. As markets navigate these complexities, learning from proactive regions may offer a roadmap to overcoming existing barriers and realizing hydrogen’s full potential in the energy transition.
