WEMO24-Compiled Report-Interactive compressed (002) 4154-7882-8116 v.1 - Flipbook - Page 100
B. This situation is explained by the increasing costs of lowcarbon hydrogen production, competition between uses,
and regulations, particularly in the European Union.
• Production cost
1
According to a recent Capgemini study , Hydrogen market
players generally agree today that the price for low-carbon
hydrogen production will decrease below €7/kg by 2030.
However, there is no real consensus here, which is leading
to a lot of uncertainty overall. (As of today, the actual price
range of carbon hydrogen production is estimated to be
between €1-3 per kilogram).
This figure is far from the previous prediction, with
production prices expected below €2-3/kg by 2030. In its
2023 Global Hydrogen Review, the IEA maintains that lowcarbon hydrogen could be produced in Europe for €1.60/
kg by 2030. Meanwhile the market has seen hydrogen
production costs increase by 30-65% between 2021 and
2023, according to the World Hydrogen Council.
Currently, there is no common vision and a lot of real
uncertainty, with estimates far away from previous
predictions made just a few years ago—a time when the
consensus was that renewable hydrogen production costs
would dip below €3/kg.
• Competition of hydrogen with other decarbonization
technologies, especially for electrification
In some cases, hydrogen as an energy vector is in competition
with other decarbonization technologies, particularly when
it comes to electrification. This is especially the case for road
mobility. The electrification of land transport, such as heavy
goods vehicles or buses, is carried out via batteries or via a
fuel cell powered by hydrogen.
Given technological advances, electric batteries are
becoming more efficient. Therefore, in increasingly
frequent cases, hydrogen is not competitive compared to
batteries for electrifying uses, particularly in heavy mobility.
“Public authorities have stopped investing in hydrogenpowered buses, which are too expensive and complicated to
operate. Truck manufacturers are focusing their efforts on
battery-powered vehicles. The hydrogen-powered engine
could still restore H2 to its rightful place and put European
OEMs back in the international game thanks to their
expertise in internal combustion engines.“
Similarly, the use of hydrogen as a means of storage does
not appear competitive compared to other means of
flexibility (notably batteries), except in rare cases in island
areas not connected to the grid.
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• Regulation, particularly in the European Union,
encourages the use of hydrogen in heavy industry and
air/aviation mobility sectors
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EU regulation schemes have the merit of being exhaustive
and serve as a model for the rest of the world, particularly
regarding the definition of renewable hydrogen.
Indeed, the revised Renewable Energy Directive (RED III)
introduces renewable fuels of non-biological origin (RFNBO)
into targets for developing the use of low-carbon hydrogen
in the sectors most difficult to decarbonize.
The objectives vary significantly according to sector. RED III
targets 42% low-carbon hydrogen in the industrial sector by
2030 and 60% by 2035.
“Current consumers of grey hydrogen, including ammonia
producers, are concerned that overly restrictive regulatory
targets for the incorporation of green hydrogen into their
processes would undermine their competitiveness in a global
market. That's why a recital has been added to the European
RED III regulation, aimed at excluding some usages from the
hydrogen greening objectives.”
WEMO 2024
Focus hydrogen on hard
to abate industries
100
07
https://www.capgemini.com/wp-content/uploads/2024/02/Capgemini-PoV_Hydrogen-Position.pdf
