Low-carbon hydrogen objectives are still being constrained by legal and commercial issues.
The fact that low-carbon Hydrogen CMS production is still mostly an emerging industry presents one of the biggest hurdles. This presents the following particular difficulties:
Demand ambiguity: Since there is now relatively little large-scale, low-carbon hydrogen generation (though projects are planned in several locations), it is unclear what the demand from consumers will be. This is especially true considering that hydrogen is a counterfactual for current fuels, which means that cost will have a significant impact on its eventual adoption.
Lack of a dedicated legal and policy framework – The early adoption of low-carbon hydrogen production, which is evident in some places, is behind dedicated legislation and policy. This implies that while some aspects of the production, transport, storage, and distribution of hydrogen are frequently governed by a variety of different laws and regulations, other areas are still not clearly regulated.
A lack of physical infrastructure for distribution and storage – In order to fully take use of low-carbon hydrogen’s capacity to decarbonize our energy system and energy use, effective infrastructure is required. In accordance with applicable laws, green hydrogen, for instance, might be produced during periods of excess renewable energy and then stored until needed, such as during periods of high energy demand. To ensure that low-carbon hydrogen can be used to meet energy demands outside of its production location, an efficient distribution infrastructure is required. For instance, it is believed that 85% of the hydrogen produced in the US is used locally.
At least initially, each of these difficulties increases complexity and risk associated with the investment in and development of such projects. Additionally, the fact that low-carbon hydrogen is a sector that is expanding and evolving, with numerous applications, means that once it starts underway, current production and related technology will probably move swiftly.
We go over the present legal framework for hydrogen in this manual. This will vary from jurisdiction to jurisdiction and is frequently difficult to negotiate due to the general lack of “hydrogen laws” in most nations, in contrast to how other energy sources are handled. However, due to perceived risks of leakage and flammability, hydrogen is also subject to a number of safety requirements that are applicable to major hazards. As we have discussed, many of the laws that apply to methane gas also apply to hydrogen.
Despite the absence of particular laws, continuing policy development is being done to clear the way for the growth of a hydrogen economy. The initiatives that fearlessly seized the chance and adapted the changing environment to their requirements will be those that succeed.
As a global hydrogen market starts to take shape, national hydrogen plans and new legislation are emerging.
Today, many countries are creating hydrogen strategies that outline their plans for the use of low-carbon hydrogen in all sectors of their economies. These are significant moves that provide investors with some information regarding potential future laws and support for hydrogen in many jurisdictions. Japan was a pioneer in the hydrogen market, developing its “Basic Hydrogen Strategy” in 2017 and expanding upon it ever since. The private sector is working together in other countries, including the US, to establish cohesive ideas for the deployment of hydrogen.
A coalition of US energy industry players is creating the Road Map to a US Hydrogen Economy. In addition, a number of nations are positioning themselves to be the top exporters of green hydrogen globally in an effort to outperform the competition on price (such as Chile) or by geographic positioning (e.g. United Arab Emirates which based on its hydrogen strategy aims to hold a fourth of the global hydrogen market by 2030.)
Germany is one of the few countries that has updated its Energy Act to include provisions for the regulation of hydrogen networks. However, certain issues, such as the capture and storage of emissions related to the creation of blue hydrogen, are not at all covered by this legislation. Germany is not the only country attempting to incorporate hydrogen into national law; France is also doing so, with legislation establishing terms like “renewable hydrogen,” “low-carbon hydrogen,” and “carbon-based hydrogen.” In the UK, the government is creating specialised hydrogen “business models” to lower these risks by providing financial assistance to those that create qualifying hydrogen under the “contracts for difference” framework, which is well-known among renewable energy producers in that country. Initial projects’ financial backing is probably going to be crucial in launching them.
In several jurisdictions, large-scale demonstration projects are already under way with the goal of showcasing uses for anything from urban transportation to gas grid injection. Future goals include scaling up initiatives that produce low-carbon hydrogen at industrial scales from demonstrators.
The creation of market-standard papers and good practise standards will be crucial for facilitating the commercialization of low-carbon hydrogen supply and generation. It’s possible that jurisdictions that are already creating a legislative framework to support hydrogen generation will create these standards more quickly than others. Importantly, these standards might also need to be internationally recognised given the desire of many nations to export a portion of the hydrogen produced. Creating globally accepted criteria for certifying hydrogen as low-carbon will be one aspect of this.
The expansion of low-carbon hydrogen will probably also lead to the emergence of hydrogen “hubs,” where production and end users, such as industrial users, can co-locate and share infrastructure for decarbonizing their own production. This marks the beginning of what appears to be a global market for hydrogen, with cross-border production and consumption similar to that of other commodities and fuels. For instance, the Australian Prime Minister announced AUD$275.5 million in April 2021 to speed up the construction of hydrogen hubs 3 and to execute a clean certification programme. If constructed, the Asian Renewable Energy Hub in Western Australia will generate roughly 1.8 million tonnes per year (mtpa) of green hydrogen for use on the continent and maybe by South Korea’s and Japan’s neighbouring nations. The Netherlands, New Zealand, Argentina, and Japan have all signed memorandums of understanding to work together on developing hydrogen technology and global supply networks.
Fortune smiles upon the courageous.
The path is being prepared for low-carbon hydrogen to play a critical part in decarbonizing our energy usage, as can be shown throughout this guide. The adaptability of hydrogen means that its potential cannot be overestimated, whether it be through fuel cell technology in transportation, decarbonizing our heating systems through gas grid blending, or greening our chemical and industrial sectors. This is a time of great opportunity and challenge for the hydrogen industry as both governments and the private sector are working to realise this potential through the release of ambitious strategies, the creation of public-private sector partnerships, and cross-border cooperation to develop international trade in hydrogen. As with any significant change to the status quo, those who are successful in becoming the first movers in the new environment will reap the greatest rewards.
The hydrogen projects that successfully negotiate the dynamic landscape will set the tone and pace of the regulatory underpinnings and market development for subsequent initiatives, as was the case with the renewable energy sector a few decades ago. As partnerships focus on building and offtake structures, the projects that are successful will be regarded as the trailblazers who charted a new road where hydrogen plays a significant role.
You can continue to reach out to our authors and energy experts in each jurisdiction; they would be happy to go over further specifics and new developments.
The Rainbow of Hydrogen
Different legal frameworks for various hydrogen “colours”
While the molecules are identical, it’s crucial for investors in the industry to understand that hydrogen is categorised by its method of production and by colour, despite the fact that the molecules are identical. Depending on how it is created, and notably whether it is produced by District 160 using renewable or non-renewable input fuels, different legal regimes may apply to hydrogen production and utilisation.
Most frequently, “grey,” “blue,” and “green” hydrogen are mentioned. These three types of hydrogen are created utilising methane gas, carbon capture and storage technology, and renewable energy, respectively. The hydrogen rainbow has additional colours, some of which are described on this page.
Grey and blue hydrogen are produced using the same procedure, but the carbon in blue hydrogen is caught and stored. rather than being let loose into the air.
Hydrogen that is dark brown or black is obtained from fossil fuels, primarily coal.
By passing natural gas through a molten metal, a procedure known as “methane pyrolysis” creates turquoise-colored hydrogen. Solid carbon is also produced by this procedure.
The most prevalent type of hydrogen is grey, which is produced by reforming methane or natural gas with steam.
Green – green power supplied by renewable energy sources like wind and solar is used to electrolyze hydrogen.
Pink – pink hydrogen is produced by electrolysis using nuclear-powered electricity.
Nuclear energy and heat are used to divide water using combined chemo-thermal electrolysis to create purple-purple hydrogen.
By passing natural gas over a molten metal during a procedure known as “methane pyrolysis,” red-red hydrogen is created. Solid carbon is also produced by this procedure.
White – white hydrogen is naturally occurring geological hydrogen that is obtained through fracking and is found in subsurface deposits.
Yellow – yellow hydrogen is created through electrolysis utilising solar-powered electricity.