Energy executives said hydrogen supply rules must be simplified to attract investment and scale up to replace fossil fuels in heavy industry.

Hydrogen could replace natural gas, coal, or oil in heavy manufacturing and shipping, lowering emissions in non-electrified industries.

Cleaner hydrogen production methods exist. Natural gas produces hydrogen. Blue hydrogen is stored process carbon emissions. Governments worldwide are trying to accelerate the industry’s development to make it an affordable alternative to fossil fuels in industry.

At the CERAWeek energy conference in Houston, energy industry executives said provisions in U.S. President Joe Biden’s signature Inflation Reduction Act (IRA) and EU legislation have incentivized hydrogen development but need further clarification, and government mandates may be needed to encourage industries like steel and shipping to adopt hydrogen.

Colin Parfitt, vice president of Midstream for Chevron Corp., said getting hydrogen from renewable fuels or natural gas economical should come before classifying it.

Spanish energy company Cepsa SA Chief Executive Maarten Wetselaar told Reuters that sectors that use grey hydrogen from fossil fuels will have the most immediate demand for hydrogen. Fertilizer, refining, and steel plants use grey hydrogen.

NextEra CEO John Ketchum said manufacturing rules might speed up green hydrogen’s market entry. He claimed NextEra and the U.S. Treasury are defining green hydrogen. He added wind and solar power fluctuation complicates the procedure.

He said that an electrolyzer producing hydrogen would need to switch to grid power, which may or may not be renewable, if those sources failed. Hydrogen manufacturers would lose money if they had to turn off electrolyzers and stop classifying hydrogen as green. He suggested offsetting non-renewable power with carbon credits.

Margaux Moore, head of Trafigura’s Energy Transition Research Group, added that hydrogen commerce had its own challenges.

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