According to a recent study from Rice University’s Baker Institute for Public Policy, a successful energy transition also necessitates a change in policy and market structure. Texas’ legacy energy economy and geology are ideal for developing a robust hydrogen market, which will play a crucial role in sustainability.
According to the paper, the fastest way to expand hydrogen use is to switch the state’s existing infrastructure and industrial hydrogen uses to low-carbon production methods.
Utilizing current infrastructure in Texas can assist the state manage transitional economic challenges and foster affordability. Texas is home to a sizable natural gas production, transportation, storage, and end-use footprint in addition to a thriving industrial sector that produces plastics, chemicals, and petroleum-based goods. Additionally, it has the largest regional port capacity in the country. Deep knowledge in logistics and supply chain management is a result of all of this.
A hydrogen market already exists in the state, where two-thirds of the nation’s hydrogen transportation infrastructure is located. Additionally, Texas’ coastline geology is perfect for long-term carbon and hydrogen storage.
However, the scope of hydrogen market expansion will be constrained by national, state, and local legislative frameworks. Policies that do not support pricing and volume transparency may restrict investment and thwart the kind of growth that is required to achieve significant size.
Policymakers must embrace a whole value chain strategy, the authors contend, in order to successfully produce the scale required for widespread use of hydrogen. Although the recent federal focus on infrastructure investment is beneficial, market design also needs to be taken into consideration to promote long-term growth.
A number of crucial lessons about the functions of infrastructure investment and market structure in fostering market liquidity can be learned from the history of the U.S. natural gas market. The paper suggests that policies that promote infrastructure investment throughout the whole supply chain, foster competition, and promote transparency could spur the growth of the hydrogen market.
GTI Energy and The Cynthia and George Mitchell Foundation contributed funds to this study.