Huge gaps between green hydrogen ambitions and implementation: Study
Meeting green hydrogen expectations will remain challenging despite the surge in announcements of projects and subsidies, a new study has cautioned.
Tracking 190 individual green hydrogen projects announced globally in 2023 over the past three years, researchers Adrian Odenweller and Falko Ueckerdt from the Potsdam Institute for Climate Impact Research, Germany, observed a substantial implementation gap.
Green hydrogen is produced from renewable electricity via electrolysis and is important for reducing emissions.
Only 0.3 gigawatt (GW) of the initially announced 4.3 GW of added capacity was eventually installed and became operational, leading to an overall success rate of seven per cent.
Further, comparing announcements made in 2021 with the final outcomes revealed that virtually no project announced in 2021 was realised on time in 2023, with 86 per cent experiencing delays and 14 per cent disappearing altogether.
Conversely, the 2030 ambition gap towards 1.5°C scenarios has been gradually closing, as the announced project pipeline has nearly tripled to 422 GW over the past three years. However, without carbon pricing, realising all these projects would require global subsidies of US$ 1.3 trillion – far exceeding the announced subsidies, according to the study published in Nature Energy on January 14, 2025.
Green hydrogen project announcements reveal two opposite trends over the past three years. First, there has been a notable short-term setback, with capacities diminishing as projects approach their announced launch year.
This trend of downward-adjusted expectations persisted in both 2022 and 2023, indicating a dramatic green hydrogen implementation gap in recent years.
Additionally, the trend reversed from 2024 onwards, with project announcements steadily increasing over the past three years. The steep mid-term growth in announcements is mostly driven by Europe, which accounts for the largest share of announced capacity by 2030, followed by Australia and Central and South America.
Underlying factors
The study highlighted three key factors contributing to the low success rate of green hydrogen projects.
Firstly, cost estimates for electrolysers have surged due to increasing equipment and financial costs, as only the electrolyser stack is expected to experience rapid cost reductions.
Secondly, analysts have observed a lack of offtake agreements, which could arise from a limited willingness to pay for costly green hydrogen. Additionally, required hydrogen end-use investments, such as transforming steel production from a blast furnace to a direct reduction route, are often difficult to reverse and therefore pose the risk of becoming locked into an expensive and potentially scarce energy carrier.
Thirdly, bridging the substantial cost gap and reducing investment risks requires hydrogen-specific support policies and regulations, even in countries with ambitious carbon pricing.
However, lagging implementation of support policies and regulatory uncertainty regarding green hydrogen production standards in the European Union (EU) and the United States, while important to ensure climate benefits, have hampered growth.
The researchers called for a comprehensive policy strategy for green hydrogen, which would include targeted demand-side measures and a gradual transition from subsidies to market mechanisms. In the short term, this would help de-risk early investments at manageable costs, guiding hydrogen to its most valuable use cases.
In the long term, this would transfer investment risks and competition between hydrogen and other mitigation options to the market. This would help reinforce commitment to climate change mitigation while spurring green hydrogen growth.
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Huge gaps between green hydrogen ambitions and implementation: Study, source
