The exponentially rising hydrogen trend attracted not only hydrogen veterans to the World Hydrogen Congress in Rotterdam, but also the fossil fuel industry. Big oil giants, such as Shell and Total Energies, were major sponsors of the event and eagerly presented their new green ambitions on the showroom and the stage. This however begs the question of whether this shift from “black” to “green” will drastically increase the growth of the green hydrogen industry globally, and whether the industry – and its value chain – are ready to meet this rapid growth.

The World Hydrogen Congress was held in Rotterdam under the motto “Where the Hydrogen World Comes to do Business”. The conference attracted more than a thousand participants. Throughout the conference, big players such as Maersk, Shell, TotalEnergies, Bosch, Uniper and Hyundai revealed their plans to integrate low-carbon hydrogen into their business models, and shared their experiences, concerns and recommendations regarding this rapidly growing industry.

Amongst the thought-provoking insights which were shared throughout the congress, eight recurring themes emerged.

The gas of the future?

Whereas a few years ago, the generation of energy by solar and wind was uneconomical, green hydrogen – an energy vector which would be produced by green energy, such as solar and wind - is now perceived as a tool for states and the industry to achieve their decarbonisation goals.

Participants emphasised that the appropriate application for hydrogen would be in hard-to-abate industries, where other energy alternatives cannot meet the energy demand. An example of a hard-to-abate industry would be the production of green steel.

Low-carbon hydrogen should also not be perceived as competing with other clean energy sources but rather as complementary.

With which tech?

Experts voiced their concerns that the supply chain is not ready for the scale of production which is required to meet the energy demands of the EU, specifically when it comes to the production of compressors, electrolysers, and substations, amongst others.

Further, not only is the electrolyser technology not fully mature, but also the technology required to transport hydrogen (such as through repurposed gas grid or by ammonia-carrier shipping vessels) still needs to be developed.

The chicken and the egg dilemma

Which comes first: the supplier or the offtaker?

Although the EU is calling for an urgent supply of low carbon hydrogen to meet its energy demand, offtakers within the EU also need to come to the table and commit in the form of long-term, bankable hydrogen purchase agreement, instead of just memorandums of understanding. If there are no committed offtakers, suppliers and their financiers will be hesitant to invest in hydrogen production projects.

The economy of ammonia

One topic in respect of which there was no consensus amongst the participants of the congress was whether it would be economical to transport hydrogen in the form of ammonia from a producing country in the Global South to an offtaking country in the Global North.

A few parties were of the view that hydrogen should only be utilised in its source country, while others emphasised the importance of establishing an inter-continental global trade on ammonia. Given the commitments made by key industry players such as the Port of Rotterdam to expand its ammonia import terminal, the consensus appears to favour its global trade.

Policy and lawmakers: roll up your sleeves

On numerous occasions, there were calls for policy and lawmakers to address the policy uncertainty by introducing financial support frameworks, stable and reliable regulation and simplified permitting regimes, coupled with one-stop shop permitting and truncated timelines.

The introduction of business-friendly support mechanisms, for example, would transform an investor’s first mover disadvantage to a first mover advantage, thus creating investment security and driving commitment to an industry that is still in its infancy.

The importance of standardisation was also emphasised, in addition to the promotion of global certification system in order to create a common virtual trade basis. Guarantee of origin schemes, which appropriately determine whether a supplier’s hydrogen is green, would also have to be developed and implemented globally.

A wake-up call: The Inflation Reduction Act

The U.S.’s Inflation Reduction Act (“IRA”), passed in August 2022, was repeatedly praised as a gamechanger that will drive investment into the U.S. hydrogen market. The IRA aims to stimulate hydrogen production by the introduction of a tax credit that will award up to USD 3 per kg for low carbon hydrogen, and tax credits for H2 production and fuel cells.

Concerns were raised that Europe will lose its momentum, and that the resources which producers are competing for – such as electrolysers and fuel cells, but also expertise, such as engineering, procurement and construction contractors – will commit to US projects instead

Ensuring value for producing countries

Producing countries should focus on how to extract value other than only the production and export of hydrogen, by also investing into the value chain and the production of the necessary components of hydrogen projects.

Electrolysers were identified as the most attractive localisation component, due to the fact that they amount to about 30% of the project costs.

Key players

Certain jurisdictions have already been identified as the main producers and offtakers of green (or, at the beginning, blue) hydrogen. Australia, Saudi Arabia, Morocco and Chile were identified as the key producing markets. Namibia was identified as a key producer to watch in the African continent. Europe was identified as the main offtaker of hydrogen.

The above has two consequences.

Firstly, a substantial geopolitical shift may occur based on where Europe decides to source its green (or blue) hydrogen, by shifting energy supply to countries that in the past may not have been major geopolitical players.

Secondly, Europe will have to come to grips with the fact that it will lose its energy-intensive industries, as it will in the future be more economical to operate these industries as close as possible to the source of hydrogen production.

Way Forward?

From the main themes which emerged at the congress, it is clear that the path to a decarbonised world, driven in part by a green hydrogen revolution, is still a long way away. The global hydrogen industry currently suffers from legal uncertainty, a value chain that is not ready to meet demand, non-commitment by offtakers and a lack of financial support mechanisms and incentives.

However, one thing is clear – a switch to green energy as a necessity to meet net-zero in 2050 cannot be denied or avoided, not even by the fossil fuel industry. Now it is for the market and states to work together to take the current momentum and translate it into the appropriate actions needed to advance a green economy.