New Ariadne Report on Creating Better Incentives for Renewable Hydrogen from Nils Bruch and Michèle Knodt

A new Ariadne report that I co-authored with colleagues from Technische Universität Darmstadt and the Potsdam Institute for Climate Impact Research (PIK) takes a close look at how the EU can better support the scale-up of #renewable #hydrogen.

Due to the failure to include methane #emissions and an insufficient CO2 price, the EU Emissions Trading System (EU #ETS) has only a limited effect on the ramp-up of hydrogen.

In order to improve the #competitiveness of renewable #H2 and thus reduce emissions ambitiously, technology-specific instruments outside the EU ETS are needed.

No time to read the full report? Here are the key takeaways at a glance:

• The competitiveness gap of hydrogen needs to be addressed outside the EU ETS, as the pricing of emissions and the free allocations for hydrogen production do not provide sufficient additional revenue to significantly narrow the cost disparity between renewable or low carbon hydrogen on one side and natural gas on the other.
• To create cost parity and foster a fuel-switch from natural gas to renewable or low carbon hydrogen, CO2 prices in the range of 300-500 €/tCO2 are necessary.
• Switching from emission-intensive gas-based low carbon hydrogen with CCS (blue hydrogen) to renewable hydrogen requires exceptionally high CO2 prices of 2500 €/tCO2 if only downstream emissions are priced.
• Extending the EU ETS to cover upstream emissions would more accurately internalize the climate impacts, leading to a fairer comparison between low carbon and renewable hydrogen.
• Introducing a gradual lowering of the emission intensity threshold (28.2 gCO2eq/MJ) in the standard for low carbon hydrogen could foster innovation and investment in technologies with higher emission reductions and lower residual emissions.