reducing low-carbon hydrogen investment and operating costs

The low-carbon hydrogen₁ sector has experienced a period of wide-spread enthusiasm since 2021.

However, this enthusiasm has faded with market and regulatory uncertainties and very few projects making it to the investment stage. According to the International Energy Agency (IEA), in 2023, only 4% of projects have entered the Final Investment Decision (FID) phase.

It is this stark disparity between expectations and tangible results that led us to dig deeper and commission this report. Together with EIT InnoEnergy, we aim to uncover the blockages standing in the way of low-carbon hydrogen cost reduction and mass adoption. In our extensive research, we surveyed professionals from nearly 120 companies and organizations in the hydrogen industry between November 2023 and February 2024. These organizations were based in: France (62%), Germany (6%), Rest of Europe (20%), North America (4%), Asia (3%), Africa & Middle East (5%).

We have found that:

1. Low-carbon hydrogen remains too expensive and uncompetitive compared with hydrogen produced from other sources
2. Major players are encountering major difficulties in developing low-carbon hydrogen projects at a competitive price
3. Respondents stressed that regulatory and legislative environments are essential in making hydrogen more competitive in the years ahead
4. In addition to external levers, there are several internal levers that can reduce low-carbon hydrogen costs
5. Digital is not yet seen as a key enabler in reducing hydrogen cost and carrying out projects at scale, but it has great potential
6. Innovation is an underrated lever that needs to be activated to deliver game-changing impacts

This paper outlines the major challenges we need to solve if we are to succeed in producing and marketing competitive, low-carbon hydrogen and making this vector a real tool for decarbonizing our economies.

Download the full paper to learn more about what can be done to bring down the cost of hydrogen and make it a real vector of the energy transition.

¹The European Commission defines low-carbon hydrogen as derived from non-renewable sources with less than 70% of the lifecycle emissions of fossil natural gas. For simplification, we include renewable hydrogen within the low-carbon hydrogen definition