REM: Lagging policy support and rising costs put clean hydrogen investment at risk, says IEA

The momentum behind low-emissions hydrogen continues to grow despite the slow roll-out of financial incentives and stubborn cost pressures that threaten to delay projects, says the International Energy Agency (IEA) in a new report.

IEA’s Global Hydrogen Review 2023, however, says that production of clean H2 levels can still increase substantially by 2030 if all announced projects are realised and greater efforts are made on encouraging uptake.

More than 40 countries worldwide have set out national hydrogen strategies so far, notes the IEA.

Yet installed capacity and volumes remain low as developers wait for government support before making investments. And low-emissions hydrogen still accounts for less than 1% of overall hydrogen production and use, says the report.

New projects face rising costs, at least temporarily, that threaten long-term profitability because of inflation, borrowing costs and the energy crisis.

Financing costs for developers are up, reducing the impact of government support. “This confluence of factors is particularly detrimental for an industry that faces high upfront costs related to equipment manufacturing, construction and installation,” said IEA.