"Hydrogen Technology" LLC: Existing Barriers

Existing barriers and enablers to fully unlock the potential of hydrogen

The long-term benefits of hydrogen are compelling, and it provides a promising pathway for the energy transition, with a clear acceleration over the past 3 years, coming from commercialization of products in all sectors. Continuous improvements in cost and performance of hydrogen related technologies are being made along the entire value chain (Figure 7).

Nevertheless, a number of obstacles need to be overcome before the full benefit of hydrogen in the energy transition can materialize. Among these obstacles are an insufficient recognition of its importance for the energy transition, the absence of mechanisms to mitigate and share the long-term of the initial large-scale investments, a lack of coordinate actions across stakeholders, a lack of fair economic treatment of developing technology, a limited technology standards to drive economies of scale.

Many investments in hydrogen require a long horizon of 10 to 20 years. Especially in the early years, infrastructure investments are needed before consumer demand increases. The lack of clear and binding emission reduction targets or stimuli for specifics discourages potential investors from taking on the long term risk. Japan has forged a path to mitigating these risks. The government and industrial companies share a long-term road map for creating the "hydrogen society".

Mobility applications require a coordinate effort across industries to resolve the market mismatch between infrastructure deployment (stations) and demand for hydrogen (FCEVs). H2 mobility Germany is such an effort. Together with government, this industry coalition planned to invest EUR 350 million to build up to 400 refueling stations for FCEVs by 2023. Another example is California Fuel Cell Partnership, which is the collaboration of auto manufacturers, energy companies, fuel cell technology companies, and government agencies, striving to commercialize FCEVs and hydrogen in California. Despite such pockets of progress, full adoption of hydrogen requires similar coordinated initiatives around the world.

Many emerging technologies have benefited from clear regulatory guidelines on preferential financial stimuli, such as feed-in tariffs and Renewable Obligation Certificates (ROCs) for renewables, combined with penetration targets, e.g., by EU member states. However, regulations have not yet recognized the benefits of hydrogen in an integrated way. For example, regulations in Germany impose a double tax on in-and out-flow of electricity when hydrogen is used for energy storage, and power generators have limited incentives to optimize curtailed electricity.

While the cost and performance of the fuel cells and hydrogen production systems have improved in recent years (e.g., fuel cell cost fell more than 50%), performance improvement is not capturing its full potential as industry standards have been set for specific applications but remain limited overall. Advancing the energy transition requires harmonized regional and sector-specific fuel cell and hydrogen standards that will allow for economies of scale in research, development and deployment (R,D&D) and manufacturing. The Hydrogen Council members plan to shift investment from R,D&D to commercialization (Figure 8).