4.5 The Underpinning Policy Framework
43
In a policy framework where the renewable energy producer gets a premium
when the electricity is fed to the grid (i.e. feed-in tariffs), there is little incentive to
utilize the renewable energy for producing hydrogen. In this context, the reduction
or withdrawal of the support provided for renewable electricity generation fed
into the grid would support the economic viability of hydrogen produced from
renewable energy sources (Glenk and Reichelstein 2019).
Straight rebate or investment tax credit for investment in electrolytic hydrogen
production technologies would also support the emergence of renewable hydrogen
production (Glenk and Reichelstein 2019).
If renewable hydrogen is used for storage of renewable energy, power-to-gas
facilities could also be granted rebates in connection with battery storage (Glenk
and Reichelstein 2019).
Policymakers could also consider the positive impact of higher fossil fuel prices on the cost competitiveness of hydrogen produced from renewable energy
sources (Glenk and Reichelstein 2019).
Finally, investment programs for hydrogen related technology development is
another relevant example of policy instrument (Thanapalan et al. 2012).
Summary of Chapter 4
The chapter 4 has answered the secondary question:
• What is the hydrogen demand of industry sectors using fossil fuel-based
hydrogen as feedstock?
Without answering the question from a quantitative point of view, the
chapter 4 has shown that hydrogen is a key feedstock for industrial processes such as the ammonia and methanol production, the oil refining, and the
steel manufacturing. Hydrogen feedstock is produced from CO 2 emitting
processes such as the steam reforming of natural gas, the coal gasification,
and the oil refining by-products.
Currently, the renewable hydrogen production via water electrolysis is
four-fold more expensive than the fossil fuel-based hydrogen production
processes. It is not cost competitive unless it would be supported by specific
policy instruments.
The quantitative answer is provided in the chapter 5.
43
In a policy framework where the renewable energy producer gets a premium
when the electricity is fed to the grid (i.e. feed-in tariffs), there is little incentive to
utilize the renewable energy for producing hydrogen. In this context, the reduction
or withdrawal of the support provided for renewable electricity generation fed
into the grid would support the economic viability of hydrogen produced from
renewable energy sources (Glenk and Reichelstein 2019).
Straight rebate or investment tax credit for investment in electrolytic hydrogen
production technologies would also support the emergence of renewable hydrogen
production (Glenk and Reichelstein 2019).
If renewable hydrogen is used for storage of renewable energy, power-to-gas
facilities could also be granted rebates in connection with battery storage (Glenk
and Reichelstein 2019).
Policymakers could also consider the positive impact of higher fossil fuel prices on the cost competitiveness of hydrogen produced from renewable energy
sources (Glenk and Reichelstein 2019).
Finally, investment programs for hydrogen related technology development is
another relevant example of policy instrument (Thanapalan et al. 2012).
Summary of Chapter 4
The chapter 4 has answered the secondary question:
• What is the hydrogen demand of industry sectors using fossil fuel-based
hydrogen as feedstock?
Without answering the question from a quantitative point of view, the
chapter 4 has shown that hydrogen is a key feedstock for industrial processes such as the ammonia and methanol production, the oil refining, and the
steel manufacturing. Hydrogen feedstock is produced from CO 2 emitting
processes such as the steam reforming of natural gas, the coal gasification,
and the oil refining by-products.
Currently, the renewable hydrogen production via water electrolysis is
four-fold more expensive than the fossil fuel-based hydrogen production
processes. It is not cost competitive unless it would be supported by specific
policy instruments.
The quantitative answer is provided in the chapter 5.