Hydrogen is critical to Net Zero – but needs government support

A single tree in a baron landscape, with a lake in the forefront of the image
Read Time
4 mins
Published Date
Nov 3, 2022
Hydrogen will be key to decarbonizing industries such as steel. But to build the supply chains required to develop economies of scale, state intervention will be needed.

“Efforts to support more private investment in hydrogen have included direct state funding of capex projects and revenue support measures that make infrastructure developments bankable”

The EU and the UK are looking to deploy the sort of feed-in tariffs and contracts for difference that have boosted wind and solar generation, while President Biden’s Inflation Reduction Act – which offers tax breaks to companies that provide clean power – is expected to accelerate progress in the U.S.

Japan is betting on green hydrogen – which requires renewable energy to produce – as part of its Net Zero transition. However, its mountainous terrain, deep waters and position in the path of typhoons (which makes floating wind farms unviable), mean it has limited capacity to produce enough green power to meet its existing needs.

Japanese research reveals future use cases

In response, Japan intends to establish itself as a demand center, and has conducted research into the price at which hydrogen becomes a potential substitute for fossil fuels in different settings.

This work has identified heavy goods vehicles and shipping as the next applications that are within reach, potentially providing a pathway for other countries to follow.

Japan’s plan has found a willing ally in Australia, which has massive potential as a green hydrogen producer. To boost its hydrogen supply chain, the Australian government is aiming to be a leader in regulatory certainty.

Steps it has taken to date include implementing a scheme to certify green hydrogen, amending regulation to allow hydrogen into existing gas networks, and reviewing its entire regulatory framework to identify what rules need to change to facilitate hydrogen production and transport.

For now, hydrogen can abate some of our hardest-to-reach emissions. We are fortunate to be helping efforts to build an international supply chain, and when they succeed, hydrogen will finally be playing its part as a zero-carbon solution to our global energy needs.

Read more about our hydrogen services.

Content Disclaimer
This content was originally published by Allen & Overy before the A&O Shearman merger

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