Netherlands is behind schedule for green hydrogen: What's holding back development?
Short-term obstacles to investing in green hydrogen projects have to do with the high cost price, uncertainty about policy and availability of infrastructure.
Published on August 11, 2024
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Hydrogen can play an important role in the energy transition: it helps fit larger volumes of electricity from offshore wind into the energy system, makes industry and heavy transport more sustainable, and balances the energy system in time and place. Despite ambitious targets in the Climate Agreement, the Netherlands lags in the development of green hydrogen projects. A new publication by Invest-NL and Common Futures maps the short-term obstacles and sheds light on the long-term developments that will contribute to a transparent hydrogen market.
The report shows that the short-term obstacles to investing in green hydrogen projects are mainly related to the high-cost price compared to gray hydrogen, uncertainty about policy, and availability of infrastructure. It also looks at the level of transparency in the market, which is still a little-exposed obstacle to investment decisions. The current hydrogen market is closed and consists mainly of locally produced gray hydrogen. This lacks transparency about traded prices and volumes.
However, transparency can be a driver for the development of the share of green hydrogen in the market. Transparency ensures efficient pricing, helps investors make informed decisions and will attract new players who can use hydrogen as a sustainability solution.
Common Futures' report provides a good overview of the hydrogen market's short-term and long-term challenges and identifies which developments can contribute to a transparent market.
The Netherlands as a frontrunner?
The Netherlands has a unique opportunity to lead the development of the hydrogen market. By removing barriers in the short term with subsidy instruments or blended finance constructions and building a market structure that encourages transparent trade, the Netherlands can not only meet its climate goals but also stimulate economic growth.
"For a sustainable hydrogen market, we need to overcome the short-term obstacles but also definitely invest in what is needed in the long term: a transparent market. Together with market participants, we want to map out the route towards that,” said Stephan Falcão Ferreira, Business Developer at Invest-NL.