How governments are prioritizing the hydrogen economy

Governments all around the globe are working feverishly to finalize plans and legislation to kick-start domestic demand, production, and commerce since green hydrogen is seen as a critical instrument in achieving climate targets.

James Douglass of K&L Gates in London, David Wochner of K&L Gates in Washington, DC, Kelly Davies of K&L Gates in Sydney, Melanie Bruneau of K&L Gates in Brussels, and Annette Mutschler-Siebert of K&L Gates in Berlin took part in a town hall on global hydrogen policy and regulatory developments, moderated by Sandra Safro of the Edison Electric Institute and co-host of Hydrogen Rising. The following are the most important regional takeaways from the Townhall.

­The European Union

• The European Green Deal, which was announced on December 11th, intends to achieve carbon neutrality by 2050.
• This commitment is legitimized by the European Climate Law, which sets a target of a 55 percent reduction in greenhouse gas emissions by 2030 compared to 1990 levels.
• The European Commission’s ‘Suitable for 55’ package, which was adopted on July 14, 2021, is a series of measures to make the EU’s climate, energy, land use, transportation, and taxation policies fit for these goals.
• As a response to Russia’s invasion of Ukraine, the Repower EU plan, released on March 8, 2022, proposes plans to make Europe independent from Russian fossil fuels by 2030. Diversifying gas sources, expanding LNG imports from non-Russian providers, including bigger amounts of biomethane, and increasing renewable hydrogen generation and imports are all part of this strategy.

Germany

• By 2045, Germany wants to be carbon neutral. Over €1.2 billion has been invested in ground research and development initiatives, as well as ensuring technological preparedness.
• The hydrogen plan, launched in June 2020, aims to produce 10 gigawatts of green hydrogen by 2030, with a budget of €9 billion divided between €7 billion for domestic initiatives and €2 billion for international partnership projects. One of them was completed last week with Australia.
• International consortia of research institutes, businesses, and academics are now working on three pilot projects totaling €740 million. H2Mare intends to create hydrogen on the seafloor using offshore wind turbines and then convert it into readily transportable forms such as ammonia. H2Giga will advance the manufacture of electrolyzers at scale, while the TransHyDe project will develop, analyze, and improve technology for transporting hydrogen.
• In the transportation sector, the government is now procuring hydrogen buses and trains, and the Government is attempting to develop incentives for the decarbonization of businesses such as steel and chemical manufacturing.
• Is working on a carbon contract for the difference (CCD) instrument. The H2Global plan to encourage hydrogen trading has been authorized for €900 million. It’s a two-auction system in which the government buys green hydrogen from non-EU nations, sells it locally, and pays the current price disparity for green hydrogen.
• The government is focusing on cross-border transportation agreements and plans to considerably expand renewable energy, but getting the necessary financing is a challenge in Germany.

United Kingdom

• In August 2021, the United Kingdom released its low-carbon hydrogen strategy, as well as the Prime Minister’s 10-point plan for a green industrial revolution and an energy white paper.
• Has established a goal of producing 5GW of low-carbon hydrogen by 2030 and 1GW by 2025, as well as a framework to encourage private investment. The 2030 target may be met, but the 2025 target is in doubt.
• The UK government has set aside £240 million to finance low-carbon hydrogen projects.
• A contract for differences (CFD) mechanism is now undergoing public comment. CFD is essential for obtaining bankable projects. Its purpose is to close the cost gap between high and low carbon hydrogen. The government entity will bear the price risk between an agreed-upon set strike price – the producer’s cost plus returns – and a reference price that is meant to represent hydrogen’s market worth. The reference price is difficult to determine since it may change depending on the jurisdiction. It might be a carbon price, a gas price, or the real price of hydrogen received. The government’s role is to choose a reference price that reflects this, as well as the contract period.
• Studies are being conducted to see if the current gas infrastructure can be used for transportation and if a specific proportion of hydrogen can be blended in.
• In the long run, green hydrogen will win because the price difference between hydrogen and higher carbon types of energy will narrow.

France

• The French government has set aside €9 billion to carry out its hydrogen policy. The main goals are to structure industrial initiatives around the manufacturing of electrolyzers, the development of hydrogen mobility equipment, and hydrogen generation for industrial decarbonization.
• The hydrogen ordinance of February 17, 2021, is the first legal framework for renewable hydrogen origin assurances.
• The Code of Energy was amended to designate renewable hydrogen, low carbon hydrogen, and carbonized hydrogen derived from fossil fuels as the three types of hydrogen. With this, France is moving away from colors, and the French legislative wants to speed up the growth of renewable or low-carbon hydrogen by adjusting the value of its production.

United States of America

• Last year’s Bipartisan Infrastructure Act set aside $8 billion for the development of hydrogen centers around the country, and the program’s funding opportunity announcement is coming in May.
• Clean hydrogen is defined by the legislation as hydrogen generated with less than two kilograms of CO2 equivalent at the production site. Within five years, it must be reassessed to see if it is still the appropriate amount or if it needs to be lowered.
• The Department of Energy (DoE) has received funding for the implementation of clean hydrogen production and recycling technology. The Department of the Environment has published Requests for Information (RFIs) to get feedback on how those grant programs should be solicited and implemented.
• The Build Back Better Act, which includes a tax credit for hydrogen generation, is a vital component in advancing upstream hydrogen production and lowering the cost of green hydrogen. The Better America Act has been rebranded, and it appears that the renewable energy tax credits included in the Build Back Better Act will be preserved.
• Before scaling up, there must be clarity on how to get permits, create infrastructure, and resolve some jurisdictional difficulties.
• In the United States, attempts to decarbonize the industrial sector present considerable prospects for both blue and green hydrogen.
• Without standardizing the commodity or producing certificates of origin, an instrument that determines how the hydrogen was created and acts as a barrier to exporters, expanding global hydrogen commerce is difficult.

Australia

• Both the federal and state governments in Australia are focused on export potential.
• The NSW government intends to devote A$70 million of its A$750 million Net Zero Industry and Innovation budget to the development of hydrogen hubs. The NSW Department of Planning, Industry, and Environment allocated A$3 billion in October 2021 to the development of hydrogen supply networks in the state.
• Last year, the Northern Territory issued its master plan, which focuses on the development of larger hydrogen and clean energy economy. It’s strategically located to take advantage of prospective export prospects in the Asia Pacific area.
• Queensland is a proponent of hydrogen technology and has recently offered funding for the purchase of zero-emission cars, including hydrogen vehicles. The state is well-positioned for export potential and has a strong focus on employment creation. The Queensland renewable energy employment fund includes a distinct job component and supports measures to lure investment into the state.
• In Whylla, Southern Australia will build a $593 million center focused on integrated renewable energy solutions, including hydrogen.
• Victoria wants to help the downstream hydrogen supply chain, but it doesn’t have enough money to do so.
• Western Australia has set up adequate funds for hydrogen generation and has concentrated on legislative harmonization with state-based regulations and certification schemes.