The 14th Clean Energy Ministerial (CEM 14) recently brought together world energy ministers and industry experts to discuss the future of green hydrogen.
As nations and companies explore investments in this promising clean energy source, a significant concern has emerged: the fear of inadequate demand for green hydrogen. This apprehension was reflected in a survey conducted by UNIDO, IRENA, and the German Institute of Development and Sustainability (IDOS), which highlighted ‘offtaker risk’ as the foremost challenge hindering the bankability of green hydrogen projects.
According to Jonas Moberg, CEO of the Green Hydrogen Organisation, securing offtake poses the most significant risk for green hydrogen companies. While these firms typically invest billions of dollars in green hydrogen production, the lack of demand from potential customers remains a major stumbling block. One reason for this imbalance is that green hydrogen struggles to compete with fossil fuel-based hydrogen in the current market.
Prasant Choubey, President of Avaada, a renewable energy company eyeing green hydrogen production, advocates for a green hydrogen purchase obligation similar to the renewable energy purchase obligation (RPO) that spurred India’s renewable energy capacity growth. However, the Indian government, which initially considered such an obligation, appears to have shifted its stance.
Ajay Yadav, Joint Secretary of the Ministry of New and Renewable Energy, refrained from providing a direct answer regarding a green hydrogen purchase obligation during the CEM14 conference. Instead, he highlighted various government policy measures aimed at making green hydrogen more competitive. Meanwhile, Rahul Walawalkar, President of the Indian Energy Storage Association, suggested blending green hydrogen with grey hydrogen to overcome cost barriers. The addition of green hydrogen in blends can be achieved with minimal additional costs.
Beyond the demand uncertainty, participants in the conference emphasized the necessity for standardized definitions and regulations across the green hydrogen sector. The term ‘green hydrogen’ itself requires a clear and universally accepted definition, while standards are needed for production, handling, and safety practices. Abhay Bakre, Director General of the Bureau of Energy Efficiency (BEE), called for standards and definitions for carbon verifiers and auditors, highlighting the importance of ensuring transparency and reliability in the carbon market.
As nations strive to embrace green hydrogen and its potential to revolutionize the energy landscape, addressing the demand challenge and establishing robust standards will be pivotal for the industry’s success. The evolution of green hydrogen hinges on governments, industries, and stakeholders working together to create a supportive regulatory environment and foster collaborative efforts to achieve common goals. Embracing blended hydrogen solutions and defining clear standards will pave the way towards unlocking the full potential of green hydrogen and ushering in a new era of sustainable energy.
