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An overview of hydrogen prospects: Economic, technical and policy considerations

An overview of hydrogen prospects: Economic, technical and policy considerations Hydrogen is expected to play a role in the future low‐carbon economy as an energy carrier, but its market penetration remains to be seen. Much of the existing literature generally focuses on comparison of marginal production costs and prices to make rather optimistic projections. This study argues that such analysis is myopic as important barriers are ignored. Following Porter’s five‐force approach, we methodologically identify the economic market forces that shape the development of hydrogen markets, and discuss key obstacles in the supply chain. Using evidence of available hydrogen technologies and costs, the distribution network is identified as a major fixed‐investment barrier to market entry, but it is argued that much of it could be overcome if natural gas infrastructure and technology is shared with the hydrogen sector. Natural gas, in turn, is projected to function as a transition fuel under current carbon emissions targets. This study finds that policy costs needed to promote hydrogen to achieve environmental goals can be substantially reduced if government and private investment decisions strategically focus on synergies with natural gas. The possible formulation of such policies is discussed using Australia’s hydrogen industry as a case study. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Australian Journal of Agricultural Resource Economics Wiley

An overview of hydrogen prospects: Economic, technical and policy considerations

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References (52)

Publisher
Wiley
Copyright
Copyright © 2022 Australian Agricultural and Resource Economics Society Inc.
ISSN
1364-985X
eISSN
1467-8489
DOI
10.1111/1467-8489.12458
Publisher site
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Abstract

Hydrogen is expected to play a role in the future low‐carbon economy as an energy carrier, but its market penetration remains to be seen. Much of the existing literature generally focuses on comparison of marginal production costs and prices to make rather optimistic projections. This study argues that such analysis is myopic as important barriers are ignored. Following Porter’s five‐force approach, we methodologically identify the economic market forces that shape the development of hydrogen markets, and discuss key obstacles in the supply chain. Using evidence of available hydrogen technologies and costs, the distribution network is identified as a major fixed‐investment barrier to market entry, but it is argued that much of it could be overcome if natural gas infrastructure and technology is shared with the hydrogen sector. Natural gas, in turn, is projected to function as a transition fuel under current carbon emissions targets. This study finds that policy costs needed to promote hydrogen to achieve environmental goals can be substantially reduced if government and private investment decisions strategically focus on synergies with natural gas. The possible formulation of such policies is discussed using Australia’s hydrogen industry as a case study.

Journal

The Australian Journal of Agricultural Resource Economics – Wiley

Published: Jan 1, 2022

Keywords: hydrogen; natural resource policy; natural gas; energy transition

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