If attendance at trade shows is a barometer of an industry’s potential, then the clean hydrogen sector is poised to take off in a very big way.

This year’s World Hydrogen 2024 in Rotterdam drew about 15,000 visitors—twice as many as the previous year. The sprawling exhibition hall was packed with stands paid for by 500 companies and government agencies in a striking show of confidence in hydrogen’s place in the energy transition.

The Dutch government dispatched Deputy Prime Minister Rob Jetten to make the case for the Netherlands as future hydrogen hub, while delegations from countries including the US, Canada, South Korea and the UK also showed up.

The level of interest is not surprising when set against projections that clean hydrogen could command a 10% share of the global energy mix by 2050.

Reality check

However, away from the buzz of the exhibition hall, the mood in the conference sessions was markedly less bullish. A hint of desperation crept into the panel discussions as dozens of executives fretted over the multiple challenges that continue to frustrate an industry that has ridden a wave of hype for several years but has yet to start delivering at scale.

The key unresolved issue for the industry is demand. Put simply, many potential industrial consumers remain reluctant to buy the stuff at anything like the price and length of contract needed to enable producers to make their projects bankable and to proceed to FID.

Consumers are “sitting on the fence”, said Sopna Sury, chief operating officer for hydrogen at German energy firm RWE Generation.

“We need to be honest and say there is not an economic incentive to move from natural gas to renewable hydrogen” Stancell, Air Products

At the project level, costs are still rising, especially for electrolytic hydrogen projects, maintaining upward pressure on hydrogen sales prices and raising questions about the returns on investment developers and their shareholder can realistically expect.

Sury and others called on policymakers to do much more to kickstart demand by imposing consumption mandates on industrial sectors, and then supporting those industries as they make the switch to hydrogen.

“For me, what is really important is that we actually have obligations to adopt hydrogen in replacement of fossil fuels,” said Caroline Stancell, executive director of hydrogen, Europe & Africa at US industrial gases company Air Products. “We need to be honest and say that to move from natural gas to renewable hydrogen, there is not an economic incentive to do it, with the exception of some small niche applications where you can get a premium in the end market.”

Stancell cited the success of demand-focused policy in the maritime sector. She stressed the urgency for progress on demand. Setting targets for 2030 would mean consumers waiting until 2029 to come to the table, further delaying the scale-up of supply.

“If we want to actually see projects coming forward, we need to see legislation that has close in targets so that people have to go down the path of figuring out how they will achieve them,” she said.

Prices and contracts

The demand challenge is significant. Large projects need offtake deals covering 10–15 years to enable them to reach FID. Even if consumers have the ability to pay a premium for green hydrogen, many questions remain over how pricing and the structure of contracts should be developed.

The temptation is to try to replicate contract designs used in the oil and gas sector. But that would not work, and an innovative approach for hydrogen is needed because it is a fundamentally different business, Tom Pasfield, VP for hydrogen business development at UAE oil company Adnoc, told the conference.

Defining the product

In addition to price and contract risk, a lack of clarity over product definitions also continues to deter buyers, delegates said. Efforts to develop certification based on carbon intensity rather than colour labels such as green and blue need to accelerate. Certification remains “a loose end” said Sury. It must focus on the CO₂ footprint of a hydrogen molecule from cradle to grave. “If we do not yet understand what a product is, then we will never really manage to convince customers what it is they are buying into,” she said.

“There are a lot of very good initiatives happening across Europe and internationally. But I think it is really key to connecting markets, be it for imports into Europe but, also, within Europe,” she added.

Policymakers under fire

Policy support for hydrogen, especially the supply side, has evolved rapidly in the last two years but several speakers in Rotterdam took swipes at governments’ approaches. “Hydrogen does receive public support, but it is patchy. It differs between geographies. There are a lot of start-stop mixed signals at a time when consistency and confidence are needed,” said Felipe Arbelaez, senior VP for hydrogen and CCS at oil major BP.

10% – Potential share of global energy mix

Some delegates bemoaned the complexities involved in accessing state support for projects, especially in Europe, as well as difficulties with the permitting process and with securing power grid connections for electrolysers.

“In other industries, what you need to deliver a successful project is a good engineering team, a good commercial team, [and a] good set of customers and suppliers. What you need in hydrogen is a battalion of people that are able to write funding applications, and then you need people that are able to manage funding applications and to answer all the inquiries coming in,” said Christian Stuckmann, VP for business development at Germany energy firm Uniper. He also slammed the cost of grid connections for electrolysers, one reason why Uniper has recently deferred FID on a project in the Netherlands.

The gloss has also come off America’s approach to supporting clean hydrogen, which until recently was lauded as being much simpler than its EU equivalent. Concerns over the implementation of the Inflation Reduction Act’s 45V production tax credit regime are growing. “I am not going to talk about 45V,” Sunita Satyapal, director of the Department of Energy’s hydrogen and fuel cell technologies office, said during her presentation.



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