REPORTOCTOBER2021ENVIRONMENTANDNATURALRESOURCESPROGRAMMissionHydrogenAcceleratingtheTransitiontoaLowCarbonEconomyEditedbyNicolaDeBlasioAuthorsNicolaDeBlasioFridolinPflugmannHenryLeeCharlesHuaAlejandroNunez-JimenezPhoebeFallonEnvironmentandNaturalResourcesProgramBelferCenterforScienceandInternationalAffairsHarvardKennedySchool79JFKStreetCambridge,MA02138www.belfercenter.org/ENRPStatementsandviewsexpressedinthisreportaresolelythoseoftheauthor(s)anddonotimplyendorsementbyHarvardUniversity,HarvardKennedySchool,theBelferCenterforScienceandInternationalAffairs,theInstituteforInternationalPoliticalStudies,theT20,orG20.Copyright2021,PresidentandFellowsofHarvardCollegeREPORTOCTOBER2021ENVIRONMENTANDNATURALRESOURCESPROGRAMMissionHydrogenAcceleratingtheTransitiontoaLowCarbonEconomyEditedbyNicolaDeBlasioAuthorsNicolaDeBlasioFridolinPflugmannHenryLeeCharlesHuaAlejandroNunez-JimenezPhoebeFalloniiMissionHydrogenAbouttheProgramTheEnvironmentandNaturalResourcesProgram’smandateistoconductpolicy-relevantresearchattheregional,national,international,andgloballevel,andthroughitsoutreachinitiativestomakeitsproductsavailabletodecision-makers,scholars,andinterestedcitizens.Overthepast30yearsenvironmentalpolicyhaschangeddramatically.Todayitisanintegralpartofenergypolicy,economicdevelopment,andsecurity.Securitymeansnotonlyprotectionfrommilitaryaggression,butalsomaintenanceofadequatesuppliesoffoodandwater,andtheprotectionofpublichealth.Theseproblemscannotbeaddressedfromonedisciplineorfromtheperspectiveofoneissueoronecountry.Theworldofthefuturewilldemandtheintegrationofmultipleneedsandvaluesacrossbothdisciplinaryandgeographicboundaries.Formore,visitbelfercenter.org/ENRPAcknowledgements“MissionHydrogen”isanongoingcollaborationbetweentheGlobalEnergyTechnologyInnovation(GETI)Initiative–aprojectoftheBelferCenter’sEnvironmentandNaturalResourcesProgramandtheScience,Technology,andPublicPolicyProgram–andtheItalianInstituteforInternationalPoliticalStudies(ISPI)onthefutureofhydrogeninthecontextofthe2021G20inItaly.TheauthorsoweadebtofgratitudetoMinoruAizawa,AlessandroGili,JohnHoldren,SilvioMicali,ErnieMoniz,Shigeru(Sam)Muraki,VenkyNarayanamurti,MasakazuToyoda,andRaffaellaTuratto(inalphabeticalorder)fortheirunwaveringsupportandsteadfastfriendship.ThanksgotoAmandaSardonisforbeingabrightlight.Theeditorwouldalsoliketothankhisco-authorsandentireresearchteamfortheirunrelentingenthusiasm,determination,andimagination-usingEnricoMattei’swords:“thefuturebelongstothosewhocanimagineit!”iiiBelferCenterforScienceandInternationalAffairsHarvardKennedySchoolToPaoloMagriandallofISPIun“grandissimograzie”forhelpingtomakeMissionHydrogenarealityandhavingwarmlywelcomedme.MydeepgratitudegoestotheMinistryofForeignAffairsandInternationalCooperation.ThankstoConsulGeneralFedericaSereniandthesuperbteaminBoston(plusMaria)forbeingmyhomeawayfromhome.Lastbutnotleast,thankstotoSharonWilkeforalwayskeepingusinthenews.AbouttheAuthor/EditorDr.NicolaDeBlasioisaSeniorFellowleadingBelferCenterresearchonenergytechnologyinnovationandthetransitiontoalow-carboneconomy.Withmorethan25yearsofglobalexperienceintheenergysector,Dr.DeBlasioisanexpertinnavigatingthechallengesofstrategicdevelopmentandtechnologyinnovationtowardsustainablecommercialsuccess,atscale.Thiscoupledwithhisinsightontheimpactofaninstitution’sdevelopmentandinnovationactivitiesonotherfacetsofbusinessstrategy,suchasenvironmental,social,operational,geopolitical,andgovernmentalfactors.Dr.DeBlasiospent18yearsatEni,oneoftheworld’sleadingenergycompanies,mostrecentlyasVicePresidentandHeadofR&DInternationalDevelopment.PriortojoiningHarvard,Dr.DeBlasiowasSeniorResearchScholarinthefacultyofSIPAatColumbiaUniversityandProgramDirectorTechnologyandInnovationattheCenteronGlobalEnergyPolicy,wherehewasalsoDirectorofStrategicPartnerships.Dr.DeBlasioholdsadegreeinChemicalEngineeringfromthePolitecnicoofMilanUniversitywithathesisinindustrialcatalysis.HespecializedatSt.AndrewsUniversity,ScotlandandthenatEniCorporateUniversity,wherehefocusedonenergyeconomics.HeisauthorofthebookValueofInnovation,andhasextensivelypublishedandlecturedonenergy,innovation,projectevaluationandcatalysis.vBelferCenterforScienceandInternationalAffairsHarvardKennedySchoolTableofContentsExecutiveSummary...........................................................................................11.Introduction....................................................................................................52.TheHydrogenRainbow.................................................................................82a.TheColorsofHydrogen..............................................................................................103.TheGeopoliticsofRenewableHydrogen..................................................124.China:TheRenewableHydrogenSuperpower?........................................165.TheEuropeanUnionataCrossroads:UnlockingRenewableHydrogen’sPotential...........................................206.HydrogenDeploymentatScale:TheInfrastructureChallenge...............257.TheFutureofSustainableMobility:TheRoleofCleanHydrogen...........288.TheRoleofBlockchaininRenewableHydrogenValueChains................339.ConclusionsandRecommendations..........................................................37References........................................................................................................41viMissionHydrogen1PhotobyShizuoKambayashi/AP1BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolExecutiveSummaryToacceleratetheglobaltransitiontoalow-carboneconomy,allenergysystemsmustbeactivelydecarbonized.Whilehydrogenhasbeenastapleintheenergyandchemicalindustriesfordecades,cleanhydrogen–definedashydrogenproducedfromwaterelectrolysiswithzero-carbonelectricity–hascapturedincreasingpoliticalandbusinessmomentumasaversatileandsustainableenergycarrierinthefuturecarbon-freeenergypuzzle.Buttakingfulladvantageofthispotentialwillrequireacoordinatedeffortbetweenthepublicandprivatesectorsfocusedonscalingtechnologies,reducingcosts,deployingenablinginfrastructure,anddefiningappropriatepoliciesandmarketstructures.Onlyinthiswaycanweavoidreplicatingthesystem-wideinefficienciesofthepastthathavecharacterizedregionalapproachestodeployingnewenergyinfrastructure.Keyfindingsinclude:•Cleanhydrogencouldplayasignificantroleinanacceleratedtransitiontoalowcarboneconomy,particularlyforhard-to-abatesectors,andoffersapathtowardmeetingnationalandinternationalclimateandpollutiongoalswhileavoidingrelianceonimportedfuels.•Thetwokeychallengestocleanhydrogenadoptionanduseatscalearecurrentlyitscostandlimitedinfrastructureavailability.Publicconcernsaroundsafetymightalsopresentadditionalchallengestodeployment.•Fromamarketperspective,cleanhydrogen,likenaturalgas,willinitiallyflourishinregionalmarketswiththecorrespondingpotentialforgeopoliticalconflicts.2MissionHydrogen•Acountry’sroleincleanhydrogenmarketswilldependnotonlyonitsabilitytoproduceanddistributerenewablehydrogencost-competitivelyandatscale,butalsoonitspolicychoices.Nationswilllikelyassumespecificrolesinfuturecleanhydrogenmarkets,whichcanbeclassifiedintofivegroups:exportchampions,waterconstrainedproducers,majorimporters,self-sufficientproducersorregionalexporters,andinfrastructureconstrainedproducers.Forexample,ouranalysisonChina(Section4)suggeststhatBeijingstillhasalongwaytogobeforeahydrogensocietycouldreachfruition,butifthecountryweretoreplicatethesuccessithashadwithothercleantechnologies(likesolarPV)Chinacouldsignificantlylowerproductioncostsandaccelerateadoptionaroundtheworld,whileemergingasarenewablehydrogensuperpower.•Cleanhydrogencanhelpaddressrenewableenergyintermittencyandcurtailmentissuesandopennewavenuesfordevelopingcleantechnologymanufacturedgoodsforbothdomesticandexportmarkets,thusprovidingsubstantialadditionalbenefitstolocaleconomies.•Inthemobilitysector,hydrogencancomplementexistingeffortstoelectrifyroadandrailtransportation,especiallyinlong-distanceandheavy-dutysectors,andprovideascalableoptionfordecarbonizingshippingandaviation.•Blockchaincangreatlyacceleratethetransitiontoalow-carboneconomyastechnologyandpolicypathwaystodecarbonizationwillneedtorelyonprocessesthataccuratelymeasureandrecordemissionsandgreenmoleculesacrossglobalmarketscharacterizedbylimitedtransparency,unevenstandards,differentregulatoryregimes,andtrustissues.Addressingthesechallengeswillrequiremanaginglargevolumesofmulti-partytransactions,whichneedtobesettledquickly,securely,andinexpensively.Theseprocessescanbeaidedgreatlybyblockchain.3BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolBasedonthesefindings,werecommendthefollowingsetofactions:•TheG20shouldinstitutea“Technology20”officialengagementgroupthatbringstogetherleadingglobalstakeholdersfromtheprivateandpublicsectorsacrossentirevaluechainstoserveasatechnologysandboxandprovidetechnologyandpolicyrecommendationstoaccelerateinnovationcycles.Thecaseofhydrogenhighlightshowadoptingnewcleantechnologiescanofferuniqueopportunitiestoacceleratethetransitiontoalow-carboneconomy.Still,deploymentatscalefacessignificantchallengesthatneithertheprivatenorpublicsectorcanaddressalone.•Governmentspursuingcleanhydrogenshouldincreaseinvestmentsininnovation,convenestakeholdersacrossvaluechains,andfostercollaborationinaddressingfirst-moverrisks,strategicbarriers,andopportunities.•Nationsandregionsthatwishtoadoptcleanhydrogenatscaleshouldprioritizedetailedanalysisandplanningnowsincetheeffectsofpolicychoicesmadetodaywillbefeltdecadesinthefuture.Asourresearchhighlights,nationswillneedtocarefullyconsidertheirroleinfuturecleanhydrogenmarketsfromageopoliticalandmarketperspective.Itwillalsobecriticaltoidentifyinfrastructurebottlenecksandaddressfinancialgapsinspecificmarketsandapplications.Forexample,buildingapipelinenetworktodeliverhydrogentohomeownerswhohaveyettoinstallhydrogen-fueledstovesandheatingsystemswouldbefinanciallydisastrous.Hence,synchronizinginfrastructureinvestmentswithgrowthinsupplyanddemandwillbeessentialbutchallenging.•Addressingthepricegapbetweencleanandfossil-basedhydrogenwillrequireactivepolicyinterventions.Suchpoliciescouldincludemeasurestoincentivizethevalueanduseofcleanhydrogen,suchasimplementingcleanhydrogenstandardsandcarbonpricing.4MissionHydrogen•Stakeholdersmustbeappropriatelycreditedforinvestinginthecurrentpremiumrequiredtoproducecarbon-freehydrogen.Thiswillrequireconcertedeffortstoidentifydesignprinciples,bestpractices,andstandardsforrobustblockchainplatformsthatachievesharedagreementamongkeystakeholders(includingmandatingcleanblockchains)andtoeducatestakeholdersaboutblockchaintechnologyanditsvalueproposition.•Nationsandregionsshouldimplementmarket-aligningpolicies,togetherwithproductionandsafetystandards,toacceleratecleanhydrogenadoptionandenabletransnationaltrade.Cleanhydrogenoffersauniqueopportunitytoacceleratetheglobaltransitiontoalow-carboneconomy,butdeploymentatscalefacesimportantchallenges.Webelievethatonlyadeeperunderstandingoftheunderlyingdynamicswillallowpolicymakers,investors,andotherstakeholderstobetternavigatethechallengesandopportunitiesofalow-carboneconomywithoutfallingintothetrapsandinefficienciesofthepast.Stakeholdersneedtothoroughlyassesscleanhydrogen’seconomic,environmental,andgeopoliticalimplications,developstrategiestoaddressthem,anddefinelong-termimplementationplans–anditisessentialtodosonow.5BelferCenterforScienceandInternationalAffairsHarvardKennedySchool1.IntroductionHydrogenandenergyhavealong-sharedhistory.Despitepastfalsestarts,hydrogeniscapturingunprecedentedpoliticalandcommercialmomentumasaversatile,sustainableenergycarrierthatcouldserveasthe“missinglink”inglobaldecarbonizationefforts.Cleanhydrogenproducedfromzero-carbonenergysourcessuchasrenewableandnuclearpowerthroughaprocessknownaswaterelectrolysisappearsevermorelikelytoplayaprominentroleintheglobaltransitiontoalow-carboneconomy.Whilepathwaystotheenergytransitionarevisibleinthepowersector,allothercarbon-emittingsectorsmustalsofindwaystosubstantiallyreduceemissions.Asgovernmentsandcorporationsbecomeincreasinglycommittedtoaddressingclimatechange,theyareplacinggreateremphasisonthedeepdecarbonizationofallenergy-intensivesectors;particularlyinsectorswhereelectricityisnotthepreferredenergycarrierandemissionsare“hard-to-abate.”Examplesincludeironandsteelproduction,high-temperatureindustrialheat,aviation,shipping,long-distanceroadtransportation,andheatingforbuildings;areaswheretherequireddualtransition–shiftingtoelectricityasthepreferredenergydeliverysystemwhiledecarbonizingelectricityproduction–maynotwork.Duetoitsversatility,hydrogencouldplaythisroleandserveasa“link”betweenemittingsectors.Itisimportanttonotethattoreapcleanhydrogen’sfullenvironmentalbenefits,hydrogenmustbeproducedfromzero-carbonsources.Whilehydrogenburnscleanlyasfuelatitspointofuse,hydrogenproducedfromfossilfuelssimplyrelocatesemissionsfromonesitetoanother.Atthesametime,theadoptionofcleanhydrogenatscalewilldependonmorethanitsenvironmentalbenefits;economic,policy,technological,andsafetyfactorsmustalsobeaddressed.Twokeyelementswilldeterminehydrogen’srateofglobalgrowth:thecompetitivenessofproductioncostsandthedeploymentofenablinginfrastructureatscale.6MissionHydrogenToday,greenhydrogen(producedfromrenewableelectricitybywaterelectrolysis)coststwotothreetimesasmuchashydrogenproducedfromfossilfuels;however,innovation,economiesofscale,andcarbonpricingpoliciescanimproveitseconomicviability.Oneofhydrogenkeybenefitsisthatitcanprovidecarbon-freeenergyinmultiplesectors–transport,heating,industry,andelectricitygeneration.Butthisadvantagealsocreatesuncertainties.Theinfrastructureneededinaneconomyinwhichhydrogenisprimarilyusedasatransportfuelisverydifferentfromoneinwhichitsprimaryvalueisasaheatingfuel.Nomajorhydrogenpipelinenetworksexisttoday,andnoliquifiedhydrogenshipsareincommercialoperation.Hereisatruechickenandeggproblem.Ifthereisnoinfrastructuretomovehydrogen,willinvestmentsinsupplyanddemandhappenatthepaceneededtomeetnationaldecarbonizationtargets?Thischallengeraisesanevenmorepressingquestion:whatshouldtherespectiverolesofthepublicandprivatesectorsbeindeployingenablinginfrastructureatscale?Cleanhydrogencanbeusedinbothstationaryandmobilityapplications.Asareadilydispatchablemeansofstoringenergy,hydrogencanhelpaddressgrowingintermittencyandcurtailmentchallengesassociatedwithexpandedrenewableenergycapacity.Itcanserveasafuelinstationarysystemsforbuildings,backuppower,distributedgeneration,orforhigh-temperatureindustrialheat.Inmobilityapplications,hydrogencouldbecomeanessentialenergycarrierforsustainabletransportation.Whetherbypoweringfuel-cellelectricvehiclessuchashydrogencars,trucks,andtrainsorasafeedstockforsyntheticfuelsforshipsandplanes,hydrogencancomplementongoingeffortstoelectrifyroadandrailtransportationandprovideascalableoptiontodecarbonizeshippingandaviationsectors.7BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolSincecleanhydrogenhasthepotentialtobecomeanessentialpieceinthecarbon-freeenergypuzzle,itisalsorelevanttoexploreitsgeopoliticalimplicationsasitenablespolicymakerstonavigateanewenergyworld.Keyvariablestoconsideraretechnology,infrastructure,environment,finance,globalmarkets,andgeopolitics.Focusingonrenewablehydrogen,ourworkdescribedinSection3developedamethodologytoframethesevariables,addressthechallengestheycauseaswellasthepotentialopportunitiestheypresent.Ifhydrogenisadoptedatscale,futuremarketdynamicswilllikelyresembletoday’sregionalnaturalgasmarkets–creatingthepotentialforsimilargeopoliticaldynamics.Indeed,countriesarelikelytoassumespecificrolesinfuturerenewablehydrogensystemsbasedontheirresourceendowmentandinfrastructurepotential.Asaresult,futuregeopoliticalrealitiesofresource-poorcountriesinEuropeandSoutheastAsiamightlookverysimilartothepresentrealities,asenergyimportdependencymightcontinue.Wemayalsowitnessanemergenceofnewexportchampions,suchasAustraliaandNorthAfrica.Whatarethegeneralprinciplesofhowrenewablehydrogenmayreshapethestructureofglobalenergymarkets?Whatarethelikelygeopoliticalconsequencessuchchangeswouldcause?Adeeperunderstandingofthesenascentdynamicswillallowpolicymakersandinvestorstobetternavigatethechallengesandmaximizetheopportunitiesthatdecarbonizationwillbring,withoutfallingintotheinefficientbehaviorsofthepast.Theremainderofthisreportisstructuredasfollows:Section2givesanoverviewofthecolorsofhydrogen.Section3drawsthegeopoliticalandmarketmapforrenewablehydrogen.Section4providesadeepdiveonChinaanditspotentialtobecomearenewablehydrogensuperpower.Section5outlinesthemarketandgeopoliticalimplicationofrenewablehydrogenadoptionfortheEuropeanUnion.Section6addressestheinfrastructurechallenge.Section7analyzesthepotentialroleofrenewablehydrogeninthetransportsector.Section8addressestheroleofblockchaintechnologyandSection9providesanoverallconclusionandrecommendations.8MissionHydrogen2.TheHydrogenRainbowArainbowofcolorsdominatesalmosteveryconversationonthetransitiontoalow-carboneconomy:green,grey,blue,turquoise,pink,yellow,orange–anever-increasingpalettetodescribethesamecolorless,odorless,andhighlycombustiblemolecule,hydrogen.Theonlydifferenceisthechemicalprocessusedtoproduceit.Hydrogenisthemostabundantelementinthesolarsystem,butonEarthitnaturallyoccursonlyinitscompoundform.Therefore,itmustbeproducedfrommoleculesthatcontainit,suchaswaterorhydrocarbons,throughspecificprocesses,includingthermo-chemicalconversion,biochemicalconversion,orwaterelectrolysis.Annualglobalhydrogenproductiontodaystandsatabout75milliontons(Mt)or10exajoules(EJ)1andcomesalmostentirelyfromnaturalgas(steamgasreforming)andcoal(coalgasification)2.Chinaisbyfartheworld’slargesthydrogenproducer:its24Mtperyearrepresentsalmostathirdoftheworld’sproduction;however,mostofChina’shydrogenisproducedfromcoal,accountingfor5%ofthenation’stotalcoalconsumption.34Althoughhydrogenburnscleanlyasafuelatitspointofuse,producingitfromfossilfuelswithoutcarboncapturesimplyrelocatesemissions.Hence,toreaphydrogen’sfullenvironmentalbenefits,itmustbeproducedfromzero-carbonelectricitythroughwaterelectrolysis,anelectrochemicalprocessthatsplitswaterintohydrogenandoxygen.Currently,however,waterelectrolysisaccountsforlessthan0.1%ofglobalhydrogenproduction.5Hydrogenismainlyusedinoilrefiningandtheproductionofammonia,fertilizers,methanol,andsteel.Yet,withagrowingemphasisonitsdecarbonizationpotentialacrosssectors,hydrogendemandisprojectedtoincreaseconsiderablyinthecomingdecades.Estimatesonannualglobal1IEA(2020),“EnergyTechnologyPerspectives2020.”2IEA(2019),“TheFutureofHydrogen.Seizingtoday’sopportunities.”ReportpreparedfortheG20,Japan.3Brasington,L.(2019),“HydrogeninChina.”CleantechGrouphttps://www.cleantech.com/hydrogen-in-china/,accessedJune2021.4WorldCoalAssociation(2019),“Coal”https://www.worldcoal.org/coal,accessedJune2021.5IEA(2019),“TheFutureofHydrogen.Seizingtoday’sopportunities.”ReportpreparedfortheG20,Japan.9BelferCenterforScienceandInternationalAffairsHarvardKennedySchooldemandby2050varysignificantlyamongscenarios.The2017HydrogenCouncilstudyestimatesdemandatapproximately78EJoraround14%ofprojectedtotalglobalenergydemand.StudiesbyBloomberg-NEF(2019),DNV(2018),andIEA(2020)aremoreconservative,withestimatesbetween5and40EJ.6Overalltwofactorswilldeterminehydrogen’srateofglobalgrowth:competitivenessofproductioncostsanddeploymentofenablinginfrastructureatscale.7Thecolorsofhydrogenarecrucialfortheenergytransitionbecauseeachproductionpathwaygeneratesdifferentamountsofgreenhousegasemissionsandresultsindifferentproductioncosts.Today,renewable(orgreen)hydrogenistwotothreetimesmoreexpensivethanhydrogenproducedfromfossilfuels.8However,thankstoinnovation,economiesofscale,andcarbonpricingpolicies,thesecostsareexpectedtodecreaseovertime.Furthermore,theworld’sdependenceongreyhydrogenhasahighcarboncost.Ashifttobluehydrogenwouldreducecarbonemissionsbyhalf.9AlthoughfossilfuelplantsutilizingCarbonCaptureandStorage(CCS)arewell-suitedtomitigateemissions,onlytheadoptionofgreenhydrogenatscale,withitszero-carbonimpact,wouldfullyaddressemissionsconcernsassociatedwiththeproductionandconsumptionofhydrogen.Thefollowingsectiononthecolorsofhydrogenoffersadetaileddescriptionofeachproductionpathway,includingcostvaluationsprovidedbyGoldmanSachs10andemissionsestimatesprovidedbyIEA.116DeBlasio,N.(2021)“TheRoleofCleanHydrogenforaSustainableMobility.”HarvardKennedySchool’sBelferCenter,August2021.https://www.belfercenter.org/publication/role-clean-hydrogen-sustain-able-mobility.7Ibid.8IRENA(2020),“MakingGreenHydrogenaCost–CompetitiveClimateSolution.”https://www.irena.org/newsroom/pressreleases/2020/Dec/Making-Green-Hydrogen-a-Cost-Competitive-Climate-Solution,accessedApril2021.9IEA(2019),“TheFutureofHydrogen.Seizingtoday’sopportunities.”ReportpreparedfortheG20,Japan.10GoldmanSachs(2020),“GreenHydrogen:ThenexttransformationaldriveroftheUtilitiesindustry,ac-cessedJune2021.https://www.goldmansachs.com/insights/pages/gs-research/green-hydrogen/report.pdf11IEA(2019),“TheFutureofHydrogen.Seizingtoday’sopportunities.”ReportpreparedfortheG20,Japan.10MissionHydrogen2a.TheColorsofHydrogenBlackorbrownhydrogenreferstohydrogenproducedbycoalgasification.Theblackandbrowncolorssometimesindicatethecoaltype:bituminous(black)andlignite(brown).ThisprocessgeneratessignificantCO2emissions(19tCO2/tH2).Bluehydrogenreferstohydrogenproducedmainlyfromnaturalgasbysteamgasreforming,pairedwithcarboncaptureandstorage(CCS).Bluehydrogenhasamuchlowercarbonintensitythangreyhydrogen,withestimatesrangingfrom1to4tCO2/tH2.AlthoughtheuseofCCSincreasescosts,bluehydrogencurrentlyremainsthecheapest“clean”alternativetogreyhydrogen;bluehydrogencostestimatesrangefrom€1.1to1.6perkg.Greenorrenewablehydrogenreferstohydrogenproducedfromrenewableenergysourceslikewindandsolarthroughaprocessknownaswaterelectrolysis,whereanelectrolyzersplitswatermoleculesintooxygenandhydrogen.TherearenoCO2emissionsgeneratedduringtheproductionprocess.Today,greenhydrogencostsaresignificantlymorethanthoseofgreyhydrogen,withestimatesrangingfrom€2.3to4.1perkg.Itaccountsforlessthan0.1%oftheworld’shydrogenproduction.Greyhydrogenreferstohydrogenproducedfromfossilfuelsmainlybysteamgasreformingorcoalgasification.ItgeneratessignificantCO2emissions,between10-19tonsofCO2pertonofH2(tCO2/tH2)12andcostsbetween€0.7to1.1perkg.Currently,over95%oftheworld’shydrogenconsumptionisgreyhydrogen.131210tonsofCO2pertonofH2(tCO2/tH2)fromnaturalgas,12tCO2/tH2fromoilproducts,and19tCO2/tH2fromcoal.13Rapier,R.(2020),“EstimatingtheCarbonFootprintofHydrogenProduction.”Forbeshttps://www.forbes.com/sites/rrapier/2020/06/06/estimating-the-carbon-footprint-of-hydrogen-produc-tion/?sh=605c40b924bd,accessedSeptember2021.11BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolOrangehydrogenreferstoemergingprocessestoproducehydrogenusingplasticwasteasafeedstock.Orangehydrogenmayofferasolutiontoboththecleanenergyproblemandissuessurroundingdisposalofplasticwaste.Currently,orangehydrogenremainsintheearlydevelopmentstage,withvarioustechnologiesandproductionprocesses,includingpyrolysis,microwavecatalysis,andphoto-reformingunderevaluation.Pinkhydrogenreferstohydrogenproducedbywaterelectrolysispoweredusingnuclearpower,aclean,butnon-renewablesourceofenergy.ItdoesnotgenerateCO2emissions.Purplehydrogenreferstohydrogenproducedbywaterelectrolysisusingbothnuclearpowerandheat.Redhydrogenreferstohydrogenproducedbyhigh-temperaturecatalyticsplittingofwaterusingtheheatandsteamgeneratedfromnuclearplants.Theprocessrequiresmuchlesselectricitythantraditionalelectrolysis.Turquoisehydrogenreferstohydrogenproducedfromnaturalgasunderaprocessknownasmethanepyrolysis,inwhichnaturalgasisdecomposedintohydrogenandsolidcarbonathightemperatures.Currently,turquoisehydrogenremainsintheearlydevelopmentstage.Yellowhydrogenreferstogreenhydrogenproducedfromsolarenergy.ItdoesnotgenerateCO2emissions.Estimatessuggestthatyellowhydrogenmaybecomethecheapestformofrenewablehydrogeninthemediumterm,withcurrentcostestimatesofaround€2.3perkg12MissionHydrogen3.TheGeopoliticsofRenewableHydrogenNicolaDeBlasio&FridolinPflugmannThetransitiontolow-carbonenergywilllikelyshakeupthegeopoliticalstatusquothathasgovernedglobalenergysystemsforoveracentury.Policymakersneedtorethinktheroletheircountrycouldplayinanewenergyworld.Renewablesarewidelyperceivedasanopportunitytoshatterthehegemonyoffossilfuel-richstatesanddemocratizetheenergylandscape.Virtuallyallcountrieshaveaccesstosomerenewableresources(especiallysolarandwindpower)andcouldthussubstituteforeignsupplywithlocalresources.Ourresearchshows,however,thattherolecountriesarelikelytoassumeindecarbonizedenergysystemswillbebasednotonlyontheirresourceendowmentbutalsoontheirpolicychoices.Renewablehydrogenisenjoyinggrowingpoliticalandbusinessmomentumasaversatileandsustainableenergycarrierwiththepotentialtoplayakeyroleintheglobaltransitiontoalow-carboneconomy;anditisoftendescribedasthe‘missinglink’inglobaldecarbonization.Thisisevenmoretrueforenergyintensivesectorswhereemissionsarehardtoabateandelectrificationisnotthepreferredsolution–suchassteelproduction,high-temperatureindustrialheat,shipping,aviationandheatforbuildings.Butmakingrenewablehydrogenasignificantpartoftheworld’sfutureenergymixwillrequiredefiningnewandinnovativenationalandinternationalpolicieswhiledevelopingappropriatemarketstructuresaimedatspurringinnovationalongvaluechains,scalingtechnologieswhilesignificantlyreducingcosts,anddeployingenablinginfrastructureatscale.Successispossible,butthistransformationaleffortwillrequireclosecoordinationbetweenpolicy,technology,capital,andsocietytoavoidfallingintothetrapsandinefficienciesofthepast.Renewablehydrogencanbeusedforbothmobilityandstationaryapplications.Asasustainablemobilityenergycarrier,itcanpower13BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolfuel-cellelectricvehiclesorbethebaseforsyntheticfuels.Instationaryapplications,itcanbeusedtostorerenewableenergy,bothatutilityscaleoroff-grid,henceprovidingbackuptobufferrenewableenergysources’intermittencyandserveasacarbon-freeheatingsource.Fromageopoliticalperspective,whetherfuturerenewablehydrogenenergysystemswillbeasconcentratedastoday’soilandgassupplyorasdecentralizedasrenewablesisstronglyrelatedtofuturemarketstructures,technology,andenablinginfrastructureavailability.Theroleacountrycouldplayinrenewablehydrogenmarketswilldependonitsabilitytoproduceanddistributerenewablehydrogencostcompetitivelyandatscale.Sincetheproductionofrenewablehydrogenthroughelectrolysisrequiresbothrenewableenergyandfreshwaterresources,toanalyzeacountry’srenewablehydrogenpotential,weconsiderthreeparameters:(1)renewableenergyresourceendowment;(2)renewablefreshwaterresourceendowment;and(3)infrastructurepotential,definedasanation’scapacitytobuildandoperaterenewablehydrogenproduction,transportation,anddistributioninfrastructure.Ourresearchshowsthatcountrieswilllikelyassumespecificrolesinfuturerenewablehydrogensystemsandcanbeaggregatedinfivegroups.Countrieswithlargerenewableandfreshwaterresourceendowments,aswellashighinfrastructurepotential,suchasAustraliaandMorocco,arewellpositionedtoemergeas“exportchampions”thankstotheirsuperiorcostpositionsandaccesstolargeimportmarkets(Group1).Group2countrieshaveabundantrenewableenergyresources,butlimitedfreshwaterresources,whichdecreasestheirlikelihoodofbecomingmajorgreenhydrogenexporters.CountriesinGroup3willneedtoimportrenewablehydrogenduetotheirlimitedrenewablespotentialand/orlandavailability.Mostcountriesinthisgroup–includingJapanandpartsoftheEU–arealreadydependentonenergyimportstoday.Hence,energydependenciesofthesecountriesmightperpetuateintothefutureaswell.CountriesinGroup4havetherenewableandfreshwaterresourcepotentialtosatisfytheirlocalrenewablehydrogendemandthroughdomesticproduction.Whilethesecountriesarepotentiallyself-sufficient,theymaystillcomplementdomesticproductionwithimportsdueto14MissionHydrogencostconsiderations.Hence,nationsinGroup4aretypicallyfacedwithamake-or-buydecision.Finally,countriesinGroup5havevastaccesstorenewableresourcesbutareunlikelytobeabletobuildtherequiredinfrastructureatscale.Thelargerthelandmass,themorecomplexandcostlyitistodeployacohesivenationalinfrastructure,hence,alikelyalternativeforthesecountriesishydrogenproductionatsmalleroff-gridsites.Adetailedcountryclassificationisdepictedbelow.Figure1.Theglobalrenewablehydrogenmap(authors’elaboration)Theresultsillustratehowaglobaltransitiontolow-carbontechnologiesmaynotchangethegeopoliticalpositionofimportingcountries,withtheirrelianceonforeignfossilfuelsbeingsimplyreplacedbydependenceonforeignrenewableenergysupplies.Futuregeopoliticalrealitiesofresource-poorcountriesinEuropeandSoutheastAsiamightthereforebeverysimilartotoday’sandenergyimportdependenciescontinue.Atthesametime,theMiddleEastisalmostcertaintoplayalessprominentroleinfuturerenewablehydrogenmarketsthanintoday’soilmarkets.Asaresult,internationalpoliticalinterestintheregioncoulddwindleandshifttoregionslikeNorthAfrica.15BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolFromapolicyperspective,“exportchampions”shoulddefinepoliciestotriggerinnovationandinfrastructureinvestments,thuspavingthewayforadominantpositioninginfuturemarkets.However,sustaininghighrenewabledeploymentrateswillbekeytoachievetheneededscale.Ontheotherhand,importingcountrieswouldbenefitfromenhancedcooperationwithexportingnationstoestablishinternationalstandardsforrenewablehydrogen.Inordertoincreasetheirenergysecurity,governmentsofimportingcountrieswillalsoneedtodefinelong-termhydrogenstrategies,includingoptionstodiversifysupply.Thepotentialimpactofinterruptionsinhydrogensupplydependsonhowglobalthemarketwilldevelop.Ifliquefactionandshippingoverthousandsofkilometersweretobecomecost-competitive,interruptionsofsupplyinonepartoftheworldcouldhaveimpactonglobalprices.However,webelievethathydrogen,similartonaturalgas,willinitiallyflourishasregionalmarkets.Policymakers,investors,andotherstakeholdersneedtoassesstheeconomic,environmental,andgeopoliticalimplicationsofrenewablehydrogenandexaminepossiblecoursesofaction.Adeeperunderstandingofthesenascentdynamicsisneeded,sothatpolicymakersandinvestorscanbetternavigatethechallengesandopportunitiesofalowcarboneconomytoavoidthetrapsandinefficienciesofthepast.ThisSectionisbasedonthereport:“GeopoliticalandMarketImplicationsofRenewableHydrogen:NewDependenciesinaLow-CarbonEnergyWorld”publishedbytheHarvardKennedySchool’sBelferCenterforScienceandInternationalAffairsinMarch2020.16MissionHydrogen4.China:TheRenewableHydrogenSuperpower?NicolaDeBlasio&FridolinPflugmannPresidentXiJinping’spledgeduringthe2020UnitedNationsGeneralAssembly,thatChinawouldreachpeakcarbondioxideemissionsby2030andachievecarbonneutralitybefore2060,isasignificantstepinthefightagainstclimatechange.SinceChinaistheworld’stopcontributorofgreenhousegases,thereisnodoubtthatBeijingneedstobefrontandcenterofanyefforttocurbglobalemissions.In2019,Chinaaccountedforalmost30%ofglobalemissions,abouttwiceasmuchasthesecondlargestemitter,theUnitedStates.14ButwhileU.S.emissionshavebeenonanoveralldeclinesince2007,15China’shaveincreased,raisingconcernsoverwhetherBeijingcandeliveronitstargets.ThisrealityshouldnotdistractfromthefactthatChinaisalsotheworld’stopdeveloperofrenewablesandothercleanenergytechnologies.Forexample,Chinawastheworld’slargestinstallerofphotovoltaics(PV)by2013and,infewerthantwoyears,alsobecamethegloballeaderinsolarmodulemanufacturing.Atthesametime,Chinaleverageditsindustrialmightandeconomiesofscaletodrivedownmodules’costs–which,bytheendof2018,were90%lowerthanonlytenyearsbefore.Inthiscontext,renewablehydrogencouldsignificantlyaccelerateChina’stransitiontoalow-carboneconomy,increasingthelikelihoodofmeetingitscarbonneutralitygoal.RenewablehydrogenofferssignificantadvantagesforChina.ItcanhelpBeijingmeetitsclimateandpollutiongoals–atatimewhencoalcontinuestodominate–whileavoidingincreasedrelianceonimportedfuels.Asareadilydispatchablemeansof14Statista(2021),“Carbondioxideemissionsin2009and2019bycountry”https://www.statista.com/statis-tics/270499/co2-emissions-in-selected-countries/,accessedApril2021.15EIA(2021),“U.S.Energy-RelatedCarbonDioxideEmissions”https://www.eia.gov/environment/emissions/carbon/,accessedApril2021.17BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolstoringenergy,hydrogencanhelpaddressintermittencyandcurtailmentissuesasrenewableenergyincreasesitsshareofChina’senergymix.Asasustainablemobilityenergycarrier,itcanpowerfuel-cellelectricvehiclesorbethebaseforsyntheticfuels.Finally,renewablehydrogencanopennewavenuesfordevelopingcleantechnologymanufacturedgoodsforbothinternalandexportmarkets.Today,mostofChina’shydrogenisproducedfromcoalvia1,000gasifiers,accountingfor5%ofthecountry’stotalcoalconsumption.Hydrogencostsvarysignificantlyasafunctionofproductiontechnologyandpricesoffossilfuelsandelectricity.Productionfromcoalremainsthelowestcostoption:about30%cheaperthanhydrogenfromnaturalgas.Therefore,reducingthecarbonfootprintofcoal-basedhydrogenwillbecriticalinalow-carboneconomy.Inthemediumterm,coal-basedhydrogenwithcarboncapture,utilizationandstoragewilllikelyremainChina’slowest-costcleanhydrogenproductionpathway.Hence,theunderlyingquestioniswhetherBeijingwillprioritizecostconsiderationsorputitsfullindustrialmightbehindthedevelopmentanddeploymentofrenewablehydrogen.InMarch2019,theChinesegovernmenttookasignificantstepforwardbyannouncingmeasurestopromotetheconstructionofhydrogenfacilitiesfornewenergyvehicles.WanGang,whoisknownasChina’s“fatheroftheelectriccar”,calledforChinato“lookintoestablishingahydrogensociety”and“movefurthertowardfuelcells.”16GiventhatGangmadeasimilarcalltwodecadesagoonvehicleelectrification,whichplayedakeyroleinChina’scurrentbatteryelectricvehiclesmarketdominance,closeattentioniswarranted.Thisbroadvisiononhydrogenhasalsobeenunderpinnedbysignificantinvestmentsattheprovinciallevelaimedatspurringadoptionofrenewablehydrogen.In2020,Guangdongprovincereleaseda“NewEnergyIndustryFosteringPlan”topromote“cleanenergy-based”hydrogenproduction.Hebeiprovinceisnowhometofourhigh-priorityrenewablepower-to-gas16Bloomberg(2019),“WanGang,China’sfatherofelectriccars,thinkshydrogenisthefuture”https://www.bloomberg.com/news/articles/2019-06-12/china-s-father-of-electric-cars-thinks-hydrogen-is-the-future,accessedApril2021.18MissionHydrogenprojectsandBaichengcity(locatedinJilinprovince)intendstoestablishahydrogenhubbasedonwindenergy,supportedbylocalrenewablesmajorssuchaSPICandGoldwind.17Thesearejustafewexamples.Lookingforward,inorderforrenewablehydrogentobecomeasignificantpartofChina’slow-carbonenergymix,Beijingwillneedtodefinenewandinnovativepolicieswhiledevelopingappropriatemarketstructuresaimedatspurringinnovationalongthevaluechains,scaletechnologieswhilesignificantlyreducingcosts,anddeployenablinginfrastructureatscale.AcomprehensiveChinesehydrogenstrategyneedstotietogetherallaspectsofthehydrogenvaluechain,rangingfromresearch,production,storage,andtransmission,toenduses.Figure2.China’sannualsolarandwindpotential(GlobalAtlas2021)Akeybarriertorenewablehydrogenadoptionatscaleisthegeographicaldistributionofrequiredrenewableenergyandfreshwaterresources.Ononehand,whileChina’slargestrenewablepotentialisinland(seeFigure1),thekeyindustrialandurbandemandcentersarelocatedontheEastcoast.Similarly,whileChinaasawholeisnotwater-constrained,freshwateravailabilityvariesgreatlyamongregions.Waterscarcityisalreadyaseriousissueinsomeareas,especiallyimpactingtheurbancentersandindustrialzonesoftheNorth.Elevenprovincesarealreadywater-constrained:Beijing,Gansu,Hebei,Henan,Jiangsu,Liaoning,Ningxia,Shandong,Shanghai,Shanxi,andTianjin.Andsevenmoreareatriskofbecoming17EnergyIceberg(2020),“China’sGreenHydrogenEffortin2020:GearingUpforCommercialization”https://energyiceberg.com/china-renewable-green-hydrogen/,accessedApril2021.19BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolwater-constrained:Anhui,Chongqing,Guangdong,Hubei,InnerMongolia,Jilin,andShaanxi.18Atanationallevel,renewablehydrogencouldbemostefficientlyandeffectivelyproducedintheSouthwesternregion.Thisregionhasrichrenewableresourcesandlessconstrainedwaterresources,butisfarfromChina’seconomicheartland,thusrequiringsignificantinfrastructureinvestmentstoconnectsupplywithdemand,potentiallymakingregionalimportsfromneighboringcountriesmoreattractive.Furthermore,ifwaterscarcityissuesareaddressed,Chinacouldbecomearenewablehydrogenexportchampion,supplyinginternationalmarketsinSoutheastAsiaandbeyond.Fromageopoliticalperspective,renewablehydrogencouldbecomeakeypartoftheBeltandRoadInitiative,symbolizingChina’stechnologicalprowesswhileincreasingexportopportunitiesandpotentiallyenhancingBeijing’sstatusasaleaderintheglobalfightagainstclimatechange.Chinastillhasalongwaytogobeforeahydrogensocietyreachesfruition,butifBeijingweretoreplicatethesuccessithashadwithothercleantechnologieslikesolarPV,itcouldsignificantlylowercostsandaccelerateadoptionaroundtheworld,whileemergingasarenewablehydrogensuperpower.ThisSectionisbasedonthereport“IsChina’sHydrogenEconomyComing?AGame-ChangingOpportunity”publishedbytheHarvardKennedySchool’sBelferCenterforScienceandInternationalAffairsinJuly2020.18ChinaWaterRiskProject(2020),“Whoisrunningdry?”http://www.chinawaterrisk.org/the-big-picture/whos-running-dry/,accessedApril2021.20MissionHydrogen5.TheEuropeanUnionataCrossroads:UnlockingRenewableHydrogen’sPotentialNicolaDeBlasio&AlejandroNuñez-JimenezEuropeancountriesareatacrossroadsontheirpathtocarbonneutrality.Today,theyareattheforefrontoftheglobalcleanhydrogenracebutgoingforwardtheywouldbebetterservedbycollaboratinginsteadofworkingalone.Overall,theEuropeanUnion(EU)ishighlycompetitiveincleantechnologiesmanufacturingandthuswell-positionedtobenefitfromtheemergenceofglobalhydrogenmarkets.Butanarrowfocusonshort-termcostconsiderationscoulddrivememberstatestoimplementnationalroadmapswithlittleornocoordinationamongthemselvesandhencelittleornochanceofcompetingglobally.Asabloc,theEUhaspledgedtoreachcarbonneutralityby2050.Cleanhydrogenisacornerstoneofthistransformationaleffort;accordingly,inJuly2020,theEUadopteditshydrogenstrategywiththeambitionofdeployingopenandcompetitivecleanhydrogenmarketsforallenergysectorsandsegmentsby2050.19Successhingesaroundimplementingacohesivelong-termstrategytoaddressafundamentalquestionanditsassociatedchallenges:wherecouldtheEUsourcecompetitiveandsecurerenewablehydrogensupplies?AsSection3shows,allcountrieshaveaccesstorenewableresources(suchassolarorwind),todifferentdegrees,andcouldproducesomerenewablehydrogenlocally.However,whileresource-richcountries,suchasSpain,couldevolveintoregionalexporters,noEUmemberstatehasthepotentialtobecomeaglobalexportchampion.Atthesametime,NorthAfrican19EuropeanCommission(2020),‘Ahydrogenstrategyforaclimate-neutralEurope’,COM(2020)301final,8July2020.https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020DC030121BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolcountries,suchasMorocco,arewell-situatedtoactaskeysupplierstotheEU.Furthermore,importsfromresource-richregionslikeNorthAmericacouldhelptoaddresssecurityofsupplyconcerns.20Today,EUhydrogendemandstandsat7.8milliontonsperyear(Mt/yr),equivalenttoabout10%ofglobaldemand.GermanyandtheNetherlandsarethelargestconsumers,accountingforoverathirdofEUdemand,followedbyPoland,Spain,Italy,Belgium,andFrance,whichconsumeabout0.5Mt/yreach.21Accordingtoavailableprojections,ashydrogenusegrowsacrossalleconomicsectors,EUhydrogendemandcouldreach76Mt/yrby2050.ButwhiletheEUstrategysetscleartargetsonelectrolyzerdeploymentby2030,itprovidesveryfewdetailsonhowthebloccouldmeetdemand–andatwhatcost–by2050.ReferenceScenariosWeexplainhowtheEUcouldmeetitsoverallrenewablehydrogendemandthroughthelensesofthreereferencescenarios,eachfocusingonakeystrategicvariable:energyindependence,costoptimization,andenergysecurity.•HydrogenIndependence:theEUprioritizesenergyindependencetodevelopaninternal,self-sufficientrenewablehydrogenmarket.•RegionalImports:theEUprioritizescostoptimizationbycomplementingthelowest-costinternalproductionwithimportsfromneighboringexportchampions(MoroccoandNorway)andrenewable-richcountries(IcelandandEgypt).•Long-distanceImports:theEUprioritizesenergysecurityandcostoptimizationbycombininglong-distanceimportsfromexportchampions(AustraliaandtheUnitedStates)withregionalimportsandinternalproduction.20Pflugmann,F.,andDeBlasio,N.(2020)“GeopoliticalandMarketImplicationsofRenewableHydrogen:NewDependenciesinaLow-CarbonEnergyWorld.”HarvardKennedySchool’sBelferCenterforScienceandInternationalAffairs.March2020.https://www.belfercenter.org/sites/default/files/files/publication/Geopolitical%20and%20Market%20Implications%20of%20Renewable%20Hydrogen.pdf21FuelCellandHydrogenObservatory(FCHO)(2020),‘Hydrogenmoleculemarket’,FCHOReports,https://www.fchobservatory.eu/sites/default/files/reports/Chapter_2_Hydrogen_Molecule_Market_070920.pdf22MissionHydrogenEachscenarioanalysisconsistsofthreesteps.First,overallrenewablehydrogenpotentialsarecalculatedforeachcountry(basedonrenewables,freshwaterandlandavailability,infrastructurepotential,andcompetingdemandforrenewableelectricity).Second,eachcountry’sproductioncostcurvesarecomputed(basedonlocalrenewableelectricityandelectrolyzerscosts).Tradeoptimizationsarethencarriedout(basedonproductioncostcurvesandtransportationcosts).OuranalysishighlightshowallthreescenariosareviablepathwaystomeettheprojectedEUrenewablehydrogendemand.Still,theoverallmarketandgeopoliticalimplicationsaresignificantlydifferentintermsoftheabovekeystrategicvariablesandintermsofenablinginfrastructureinvestmentallocations.UndertheHydrogenIndependencescenario,renewablehydrogentradebetweenmemberstateswouldaccountforalmost70%(52Mt/yr)ofEUdemand.22Fromaninfrastructureperspective,pipelinesfromtheIberianPeninsula(Spain,Portugal),theBalticstates(Estonia,Latvia,Lithuania),andDenmarkwillneedtobebuiltacrossthecontinenttoresource-constrainedmemberstates,incombinationwithimportsterminalsforshipmentsfromIreland(Figure3).Importscouldreducethecostofmeetingdemandbyupto12%,thankstothesignificantlylowerproductioncostsattainableoutsidetheEU.UndertheRegionalImportsscenario,renewablehydrogenimportstotheEUaccountforasmuchas83%(63Mt/yr)ofdemand,mainlyfromneighboringexportchampions(Morocco,Norway)andrenewable-richcountries(Iceland,Egypt).Fromaninfrastructureperspective,regionalpartnerswillhavetodevelopinternalproductionatscale,andoverallinvestmentsintransportationinfrastructurewillincreasebyaround40%.Atthesametime,prioritizationpurelyoncostcouldresultintheEUrelyingonimportsfromMoroccoforasmuchas40%ofdemand.22Takingintoconsiderationonlyrenewablehydrogenpotentials,withoutanycostoptimizationconsider-ations,neededtradesbetweenmemberstatestomeet“productiongaps”wouldaccountforonly30%.23BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolToavoidreplicatingpastpatternsofenergydependenceandsecurityrisk,theEUcoulddiversifysuppliesbyleveragingimportsfromlong-distanceexportchampionswithoutincreasingtotalsupplycosts.UndertheLongDistanceImportsscenario,Australianimportsarenotcostcompetitiveduetothesignificantlyhighertransportationcosts.Atthesametime,shipmentsofrenewablehydrogen,asammonia,fromtheUnitedStatescanpartlydisplaceimportsfromMoroccoandlimitEUdependenceonanysingleproducerto20%ofoveralldemand.Figure3.Renewablehydrogenpotentials(authors’analysis)24MissionHydrogenConclusionsandrecommendationsIntheend,today’spolicychoiceswilldeterminewhichscenariowillunfold,butpolicymakersneedtocarefullyevaluatealternativerequirementsandcompetingneeds.OverallrenewablehydrogenadoptionatscaleintheEUwillrequirepolicymakersto:•Lowermarketriskandremovecommercializationbarrierstoachievetherequiredeconomiesofscale.•Defineclearpoliciestostimulatestrongrenewableenergysourcesgrowth,particularlyinmemberstatesthatcanbecomeregionalexporters.•Fundinnovationandpilotprojectstoaccelerateprogresstowardscost-competitiverenewablehydrogentechnologies.•Coordinateenablinginfrastructuredevelopmentanddeploymentacrossthecontinent.•Harmonizestandardsandregulations,includingcertificatesoforigin,toensurerenewablehydrogenflowsseamlesslyacrossborders.25BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolImplementationoftheRegionalImportsorLongDistanceImportsscenario(s)willalsorequirethedefinitionof:•Long-termcontractsanddirectinvestmentstohelpreducemarketriskforproducers.•Transparentregulationsandlong-terminvestmentsinenablinginfrastructuretosendstrongsignalstoinvestorsinproducingnationsandtriggerproduction-capacityinvestments.•Internationalstandardsforrenewablehydrogenproduction,transportation,anduse.RenewablehydrogenoffersauniqueopportunitytoacceleratetheEU’stransitiontoalow-carboneconomy.Still,deploymentatscalefacesimportantchallengesthatneithertheprivatenorthepublicsectorscanaddressalone.OnlybyworkingtogethercantheEUbecomeagloballeaderinrenewablehydrogeninnovationandsimultaneouslycontributetoitsclimateandenergysecuritygoals,astrongereconomy,andamoreintegratedunion.26MissionHydrogen6.HydrogenDeploymentatScale:TheInfrastructureChallengeNicolaDeBlasio,FridolinPflugmann&HenryLeeCleanhydrogenisexperiencingunprecedentedmomentumasconfidenceinitsabilitytoacceleratedecarbonizationeffortsacrossmultiplesectorsisrising.Newprojectsareannouncedalmosteveryweek.Forexample,internationaldeveloper–IntercontinentalEnergy–planstobuildaplantinOmanthatwillproducealmost2milliontonsofcleanhydrogenand10milliontonsofcleanammonia.23Dozensofotherlarge-scaleprojectsandseveralhundredsmalleronesarealreadyintheplanningstage.Similarly,onthedemandside,hydrogenisgainingsupportfromcustomers.Prominentoff-takerssuchasoilmajorslikeShellandbp,steelmakerslikeThyssenKrupp,andworld-leadingammoniaproducerslikeYaraareworkingonmakingacleanhydrogeneconomyareality.Despitetheoptimismsurroundingcleanhydrogen,keyuncertaintiesremain.Oneofhydrogen’sattractionsisthatitcanprovidecarbon-freeenergyinmultiplesectors–transport,heating,industry,andelectricitygeneration.Butthisadvantagealsocreatesuncertainties.Theinfrastructureneededinaneconomyinwhichhydrogenisprimarilyusedasatransportfuelisverydifferentfromoneinwhichitsprimaryvalueisasaheatingfuel.Todaynomajorhydrogenpipelinenetworksexist,24andnoliquifiedhydrogenshipsareincommercialoperation.Thereisatruechickenandeggproblem.Ifthereisnoinfrastructuretomovehydrogen,willinvestmentsinsupplyanddemandhappenatthepaceneededtomeetnationaldecarbonizationtargets?Thischallengeraisesanevenmorepressingquestion:whatshouldbetherespectiverolesofthepublicandprivatesectorsindeployingenablinginfrastructureatscale?23TheGuardian(2021),“Omanplanstobuildtheworld’slargestgreenhydrogenplant”https://www.theguardian.com/world/2021/may/27/oman-plans-to-build-worlds-largest-green-hydrogen-plant,accessedJune2021.24ExceptforlimitedregionalpipelinesystemsintheUnitedStatesandEuropeownedbymerchantproducersservingcaptivemarkets.27BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolWhilemarketeconomicsmustbethedrivingforcebehindproductionanddemanddecisions,regulatoryincentiveswillplayapivotalroleinbothshapinganddeployingenablinginfrastructureatscale.Realizinghydrogen’sfullpotentialwillrequirecarefulpolicyconsiderationtoaddresscompetingneeds.Itisessentialtoplanforthefuturenow,sincetheeffectsofpolicychoicesmadetodaywillbefeltdecadesinthefuture.Forexample,buildingapipelinenetworktodeliverhydrogentohomeownerswhohaveyettoinstallhydrogen-fueledstovesandheatingsystemswouldbefinanciallydisastrous.Hence,synchronizinginfrastructureinvestmentswithgrowthinsupplyanddemandwillbeessentialbutwillbeverychallenging.Anongoingdebateishowhydrogenwillbedeliveredtodemandcenters,orinotherwords,whatwillbethepreferredenergycarrier.Oneoptionwouldbetogeneratecarbon-freepowerandtransmitittoresidential,commercial,andindustrialusers.Theelectricitywouldthenbeusedtoproducehydrogendirectlyonsite.Thisapproacheliminateshydrogentransmissioncostsattheexpenseofoverburdeningpowergridsalreadyconstrainedbytheneedtotransportincreasingsharesofrenewableenergy.Anotheroptionwouldbetopipehydrogendirectlytocustomers.Whilenotimpactingpowergrids,thisapproachrequiresupgradingexistingnaturalgaspipelinestoallowforincreasingsharesofhydrogenorbuildingnewhydrogendedicatedinfrastructure.25Eachoftheseoptionswouldcostbillions,andeachwouldfacesignificantrisksintheformofuncertainmarkets,operations,andregulatoryregimes.Countrieswithoutexistingnaturalgasnetworkswillneedtoinvestinnewhydrogenpipelinesorupgradetheirpowergrids.Themostviablesolutionwilldependontherequiredvolumesandthegeographicaldistributionofproductionanddemandsites.Inextremesynthesis,pipelinesareusuallythemostcost-efficientsolutionwhenvolumesarelarge,andmanydemandcentersarelocatedalongthepipelineroute.Admittedly,theuseofnaturalgasinfrastructurecouldsignificantlylowertheoverallcostoftransportinghydrogen,bothintermsofreduced25Unlessnewtechnologies,suchasmembranesabletoseparatenaturalgasfromhydrogen,willbecomeavailableinthenearfuture.28MissionHydrogeninvestmentinpipelineinfrastructureandavoidedinvestmentintheexpansionoftheelectricitygrid.Still,acarefulcase-by-caseevaluationofthetechnicalandeconomicfeasibilityofcompetingoptionsandoftheoverallvaluechainsimplicationsofatransitionfromnaturalgastohydrogenwillbeneeded.Intheearlystages,hydrogencouldbeblendedatlowpercentageswithnaturalgasinexistingnetworks,inmostcaseswithouttheneedforanyupgrades.However,eventhisapproachcomeswithchallengesandcostsduetotheregionalnatureofnaturalgassystems.Whilesomenetworksandusescanmanagehigherhydrogenshares,otherscanonlydealwithlimitedpercentages.Furthermore,fromamarketperspective,countrieshavedifferentblendinglimits,significantlyhinderingcross-bordertradeopportunities.Inlaterstages,eithernewinfrastructureorthewidespreadconversionofexistinggasnetworksandenduses(industrial,commercial.andresidential)topurehydrogenwouldberequired.Buthereinliestheultimatechallengeofoperationallymanagingthefinalstepinthisconversionprocess.Itisanever-addressedpointthatreiteratestheimportanceofsolidpolicyguidanceforahydrogeneconomytofullytakeoff:theconversiontopurehydrogenwouldrequireallendusesinthedistributionzone–includingresidentialappliances–tobereadyalmostovernight.Howthisprocessshouldworkfromanoperationalpointofviewisunclear.Whatisclear,though,isthatthepublicandprivatesectorswillneedtocoordinatetheiractivitiesattheplanning,financing,andimplementationstages.29BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolFromaglobalmarketperspective,governmentswillneedtoproactivelysynchronizenationalregulatoryregimessothathydrogencanflowbetweencountries.Withincountries,regulatorsandpolicymakerswillneedtoaddresskeychallenges,suchas:•howtodefinetheregulatoryregime,ownership,andsharingofenablinginfrastructure•howtoincentivizecustomerstoinstallnewuses,compensateforrenderingexistingequipmentworthless,andhandleconflictsofstakeholdersnotcooperatinginthetransition•howtosynchronizedemandramp-up,productionbuild-out,andinfrastructureavailability,especiallygiventhatnaturalgasdemandmightnotdeclinecomplementarytohydrogenrise•howtoensureuninterruptedenergysupplytoend-users,particularlyresidentialconsumers,duringthetransitionprocessTostimulatetheneededinvestmentsfromtheprivatesector,policymakersandregulatorswillneedtocreatealeveledplayingfieldwithclearmarketstructuresandregulations,recognizingtheprosandconsofallalternativesandaconcertedefforttosynchronizeinvestmentsinsupply,demand,andinfrastructure.Onlyinthiswaycanweavoidreplicatingthesystem-wideinefficiencieswhichcharacterizedregionalapproachestothedeploymentofnewenergyinfrastructure.30MissionHydrogen7.TheFutureofSustainableMobility:TheRoleofCleanHydrogenNicolaDeBlasio,CharlesHua&AlejandroNunez-JimenezThetransportationsectoristhesecond-largestsourceofCO2emissions,afterelectricityandheatgeneration,accountingforabout25%ofglobalemissions.26However,itisalsooneofthemostchallengingtodecarbonizeduetoitsdistributednatureandtheadvantagesoffossilfuelsintermsofhighenergydensities,easeoftransportation,andstorage.Moreover,thedegreeofdifficultyindecarbonizingvariessignificantlyacrossthesector,makingthechallengeevenmoredaunting.Sofar,emissionsreductionstrategieshavefocusedonimprovingvehicleandsystem-wideefficiencies,modeswitching,andelectrification.Thelatterisprovingrelativelyeasyforsmallervehiclesthattravelshorterdistancesandcarrylighterloads.However,sector-widedecarbonizationpathwayswillrequireatransitiontolow-carbonfuelsandthedeploymentofenablinginfrastructuretosupportinnovationatscale.Renewablehydrogenholdspromiseinsustainablemobilityapplications,whetherbypoweringfuel-cellelectricvehicles(FCEVs)likecars,trucks,andtrainsorasafeedstockforsyntheticfuelsforshipsandairplanes.Fuelcellsconverthydrogen-richfuelsintoelectricitythroughachemicalreaction.FCEVsuseafuelcell,ratherthanabattery,topowerelectricmotors,andoperatenear-silentlyandproducenotailpipeemissions.Hydrogen-poweredvehiclesofferkeyadvantages,includingshorterrefuelingtimes,longerranges,andalowermaterialfootprintcomparedtolithiumbattery-poweredalternatives.However,highcostsofownershipandalackofenablinginfrastructurearekeychallengesthatmustbeaddressedthroughpolicysupport,technologicalinnovation,andfinancialinvestment.26IEA(2021),“Dataandstatistics”https://www.iea.org/data-and-statistics/data-browser/?coun-try=WORLD&fuel=CO2%20emissions&indicator=CO2BySector,accessedMay2021.31BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolHydrogencancomplementexistingeffortstoelectrifyroadandrailtransportationandprovideascalableoptionfordecarbonizingshippingandaviation.Figure1summarizesthemobilitysegmentsforwhichbatteryelectricvehicles(BEVs),FCEVs,andvehiclesrunningonbio-orhydrogen-basedsyntheticfuelsaremostapplicable.Figure4.Hydrogenapplicationsinthemobilitysector.Source:HydrogenCouncil(2017)32MissionHydrogenRoadTransportationMotorvehiclesaccountforabout20%ofglobalCO2emissionsfromenergyand75%oftransportation-specificemissions.27Renewablehydrogencompetitivenesswilldependonoverallcostsofownershipandtheavailabilityofrefuelinginfrastructure.Shortrefuelingtimes,loweraddedweightforstoredenergy,andzerotailpipeemissionsarekeyadvantages.Fuelcellsalsoshowpromisethankstotheirlowermaterialfootprintcomparedtolithiumbatteries.Long-distanceandheavy-dutyvehiclesofferthegreatestpotential,butinvestmentsarerequiredtolowerthedeliveredpriceofhydrogen.Captivefleets,suchastaxis,buses,andtrucks,canhelpovercomethechallengesoflowutilizationofrefuelingstationsandspearheadtheadoptionofhydrogen.RailRailisoneofthemostenergy-efficientandcleantransportmodes.Trainscarry9%ofglobalmotorizedpassengersand7%offreightbutaccountforonly3%ofenergydemandand1%ofCO2emissionsfortheoveralltransportationsector.28Renewablehydrogen-poweredtrainscouldbemostcompetitiveinrailfreightandrural/regionallineswherelongdistancesandlownetworkutilizationdonotjustifythehighcostsassociatedwithtrackelectrification.Hydrogentrainsalsoholdpromiseduetoflexiblebi-modeoperations,allowingthemtorunonelectrifiedandconventionallinesalike.However,innovationincompressingandstoringhydrogenwillbeneededtoimproveeconomicsandscalability.27IEA(2019),“TransportsectorCO2emissionsbymodeintheSustainableDevelopmentScenar-io,2000-2030”https://www.iea.org/data-and-statistics/charts/transport-sector-co2-emis-sions-by-mode-in-the-sustainable-development-scenario-2000-2030,accessedMay2021.28Ibid.33BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolShippingDespitebeingoneofthemostefficientformsoffreighttransport,shippingremainsachallengefordecarbonizationefforts.Thesectoraccountsforabout3%ofglobaland11%oftransportationrelatedCO2emissionsandhasanindustrygoalofreducingemissionsby50%by2050from2008levels.29Renewablehydrogenandammoniacanovercomethelimitationsofbatteryships.However,highcostscomparedtofossilfuels,thechallengeofcargovolumelossduetofuelstorage(intermsofenergycontentparity,whilebatteriesrequire64timesmorevolumethanmarinedieseloil,hydrogenandammoniaonlyrequire8and3timesmore,respectively)30,andthedeploymentofglobalrefuelingnetworksneedtobeaddressed.AviationIn2019,aviationaccountedforaround3%ofglobalenergy-relatedCO2emissionsand12%oftransportationsectoremissions.31Comparedtoroadtransportation,thisseeminglysmallnumbershouldnotbedismissed,though,sincetheoverallcontributiontoglobalwarmingissignificantlyhigherduetoemissionsotherthanCO2,likenitrogenoxidesandsoot.Althoughthepandemichascausedthemostextensiveretrenchmentinaviationhistory,italsoprovidesauniqueopportunityforthesectortorestructureitselftowardsalow-carbonfuture.Drop-insyntheticliquidfuelsprovideanattractivedecarbonizationoptionattheexpenseofhigherenergyconsumptionandpotentiallyhighercosts.Directhydrogenusealsoshowspromise,butthesectorwillneedtoborrowtechnologiesdevelopedfortheautomotiveandspaceindustriesandapplythemtocommercialaircraftoperationswhileachievingsimilarorbettersafetytargets.Duetotheverylongaircraftdevelopmentandcertificationleadtimes,thesechallengesdemandurgentanswersfrombothindustryleadersandpolicymakers.29InternationalMaritimeOrganization(2018),“UNbodyadoptsclimatechangestrategyforshipping”https://www.imo.org/en/MediaCentre/PressBriefings/Pages/06GHGinitialstrategy.aspx,accessedMay2021.30ETHZurich(2019),“TowardsNet-Zero:InnovatingforaCarbon-FreeFutureofShippingintheNorthandBalticSea”https://fe8dce75-4c2a-415b-bfe4-e52bf945c03f.filesusr.com/ugd/0a94a7_0980799eb-ca344158b897f9040872d36.pdf,accessedMay2021.31AirTransportActionGroup,https://www.atag.org/,accessedJune2021.34MissionHydrogenConclusionsBeforerenewablehydrogencantrulybecomeagame-changerinthetransportationsector,significantbarriers,mainlyrelatedtostorage,infrastructure,andcosts,willneedtobeaddressed.Fromaninnovationperspective,itwillbecrucialtoreducecostsandimproveperformance.Technologicalchallengesaroundweightandhydrogenstorageneedsolutions,particularlyinthemaritimeandaviationsectors.Fromapolicyperspective,renewablehydrogenadoptionatscalewillrequiregovernmentsto:•Establisharoleforhydrogeninlong-termdomesticandinternationalenergystrategies,consideringgeopoliticalandmarketimplications.•Implementpolicysupportintheformoflow-carbontargetsandcarbonpricingmeasurestostimulatecommercialdemandforcleanhydrogen.•Addressinvestmentrisks,especiallyforfirstmovers,suchastargetedandtime-limitedloansandguarantees.•Focusonnewhydrogenapplications,cleanhydrogensupply,andinfrastructureprojects.•Supportresearchanddevelopmenteffortsandpublic-privatepartnershipstoaccelerateinnovationcycles.•Harmonizestandardsandeliminateunnecessaryregulatorybarrierswhiledevelopingcertificationsystemsandregulationsforcarbon-freehydrogensupply.35BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolTodate,technologicalfactors,economicconsiderations,andconsumerchoiceshavehinderedtheadoptionofhydrogenatscaleinthetransportationsector.Newgeopoliticalforcessuchasthechallengesofsustainabledevelopmentandclimatechangearereshapingtheplayingfield.Stakeholdersaroundtheworldmustdecidetheirroleinthetransitiontoadecarbonizedtransportationsector.Thischapterisbasedonthepaper“TheRoleofCleanHydrogenforaSustainableMobility’”publishedbytheItalianInstituteforInternationalPoliticalStudies(ISPI)andMcKinseyinJuly2021aspartofthereport“TheGlobalQuestforSustainability–TheRoleofGreenInfrastructureinaPost-PandemicWorld.”36MissionHydrogen8.TheRoleofBlockchaininRenewableHydrogenValueChainsNicolaDeBlasio&CharlesHuaArainbowofcolorscurrentlydominatesalmosteveryconversationonthetransitiontoalow-carboneconomy:green,grey,blue,turquoise,pink,yellow32–anever-increasingpalettetodescribethesamecolorless,odorless,andhighlycombustiblemolecule,hydrogen.Theonlydifferenceisthechemicalprocessusedtoproduceit.Thecolorsofhydrogenarecrucialfortheenergytransitionbecauseeachproductionpathwaygeneratesdifferentamountsofgreenhousegasemissions.Forexample,whilegreyhydrogen,producedfromfossilfuels,yieldsupto20tonsofcarbondioxidepertonofhydrogen,greenhydrogen,producedfromrenewableenergysourceslikesolarandwind,yieldsnoemissions.Furthermore,althoughthesecolorsallrefertothesamemolecule,productioncostsdiffer:greenhydrogenremainssubstantiallymorecostlytoday.Withaggressivedevelopmentanddeploymentofelectrolyzersandotherhydrogentechnologiesatscale,greenhydrogencouldbecomecost-competitivewithbluehydrogen,producedfromnaturalgaswithcarboncapture,by2030inmanycountries.33Overall,therateatwhichgreenhydrogencostsdecreasewillalsodependongovernmentpoliciesandincentives,suchascarbonpricingandtaxcredits.Thereinliesacriticalchallengeforthesuccessfultransitiontoalow-carboneconomy.Asenergysystemsincreasinglyevolvefromcentralizedtodecentralized,from“grey”to“green,”stakeholderswillneedtoefficientlyaccountforandtrackemissionsandgreenmoleculesinatransparent,32Thecolorsofhydrogencorrespondtodifferentproductionpathways.Greenhydrogenisproducedfromrenewableenergybywaterelectrolysis,greyfromfossilfuels,bluefromnaturalgaswithcarboncaptureandsequestration(CCS),turquoisefromnaturalgaspyrolysis,pinkfromnuclear,andyellowfromsolar.33IRENA(2020),“GreenHydrogenCostReduction:ScalingupElectrolyserstoMeetthe1.5⁰CClimateGoal”InternationalRenewableEnergyAgency,AbuDhabi.37BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolsecure,andstandardizedway,andmustbeabletodosoalongvaluechainsfromproductiontoconsumption.TrackingemissionsandgreenmoleculesalongvaluechainsStakeholdersmustbeappropriatelycreditedforinvestinginthecurrentpremiumrequiredtoproducecarbon-freehydrogen.Therefore,theabilitytoverifyahydrogenmolecule’soriginfromcleanenergysourcesamidstadynamicenergylandscapepresentsbothasizablechallengeandatremendousopportunity.Addressingthisdilemmawillrequiremanaginglargevolumesofmulti-partytransactions,whichneedtobesettledquickly,securely,andinexpensively.Today,theoriginofacommodityiscertifiedthroughcertificatesoforigin.However,thecertificationprocesscanbecomplex,requiringmanyintermediariesthataddtime,labor,andcostburdens.Furthermore,concernsoverwhethercommoditiesareaccuratelycountedandtradedposechallengestoscalability.Innovativetechnologieslikeblockchaincouldsignificantlysimplifycarbonaccountingandgreencertificationprocesses.Ablockchainisashared,decentralized,andimmutabledigitalledgerthatsecurelystorestransactionsandenablestheautomatedexecutionof“smartcontracts”34amongpartieswithoutacentralauthorityorintermediaries.35Atitscore,thetechnologyconsistsofadistributednetworkofindependentcomputers,ornodes,thatmanagestheblockchain;thenodesreceivenewtransactions,reviewtheirlegitimacybasedonconsensusprotocols,andintegratethemintoachain.Blockchaintechnologyisalreadydemonstratingitsinnovationpotentialinthefinancialsector,thankstoitsuniquestructuraladvantagesoftrust,efficiency,control,andsecurity.Thesepropertiesmakeblockchainwell-suitedtooptimizeprocesses,enablenovelbusinesssolutions,34Smartcontractsareprogramsstoredonablockchainthatrunwhenpredeterminedconditionsaremet.Theyaretypicallyusedtoautomatetheexecutionofanagreementsothatallparticipantscanbeimmedi-atelycertainoftheoutcome,withoutanyintermediary’sinvolvementortimeloss.Theycanalsoautomateaworkflow,triggeringthenextactionwhenspecificconditionsaremet.35Swan,M.(2015),“Blockchain:Blueprintforaneweconomy”O’ReillyMediaInc.38MissionHydrogenandpromotegreateraccesstoservicesforabroaderrangeofusersbysignificantlyreducingcosts.However,significantchallengesneedtobeaddressedtofosteradoption,suchasinteroperabilitybetweenblockchainnetworks,trustamongusers,andenergyconsumption.Manytrendsdrivingprofoundchangesintheenergysectorcanalsobenefitfromandfurtherunlockblockchain’sfullpotential.Pilotapplicationsareemerginginmanydevelopedanddevelopingcountries.Forexample,US-basedBrooklynMicrogridrunsacommunityenergymarketwithinamicrogrid36wherememberscanbuyandsellenergyfromeachotherusingsmartcontractsonablockchain.37Overall,theincreasedadoptionofdistributedgeneration,energystorage,andsmartdevices,togetherwiththeneedtotrackemissionsandgreenmoleculesalongvaluechains,createsnewcomplexitiesandchallengesforenergymarketsdesignedforcentralizedcontrol.Indeed,blockchaintechnologycanhelppolicymakersandregulatorsaddressconcernsovermeasurement,certification,andtracking.ConclusionsandPolicyRecommendationsAstechnologyandpolicypathwaystodecarbonizationwillneedtorelyonprocessesthataccuratelymeasureandrecordemissionsandgreenmoleculesacrossglobalmarketscharacterizedbylimitedtransparency,unevenstandards,differentregulatoryregimes,andtrustissues,blockchaincangreatlyacceleratethetransitiontoalow-carboneconomy.Butsignificantbarrierstoadoptionremain,includingpolicy,regulatory,andtechnologicalhurdles.Duetothesubstantialpublicandnationalsecurityinterestsingrainedintheenergysector,policymakersandregulatorswillneedtofullyassessallopportunitiesandchallenges,includingtheintegrityofinformationonablockchain,rulesofaccess,transparencyissues,andprivacyrequirements.36Asmallnetworkofelectricityuserswithlocalsourcesofsupplythatisusuallyattachedtoacentralizednationalgridbutisalsoabletofunctionindependently.37BrooklynMicrogrid,https://www.brooklyn.energy/,accessedOctober2021.39BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolFurthermore,blockchain’sfullpotentialwillnotberealizeduntilacriticalmassofusersembracesthetechnology.Goingforward,adoptionatscalewillrequireaconcertedapproachto:•Convenestakeholdersacrossthevaluechainandfostercollaborationinaddressingfirst-moverrisks,strategicbarriers,andopportunities.•Educatestakeholdersaboutblockchaintechnologyanditsvalueproposition,asmanystillhavelimitedunderstandingormisconceptionsaboutitstruepotential(forexample,conflatingtheconceptsofblockchainandcryptocurrency).Addressstakeholderconcernsassociatedwithtransparencyoftransactionsandcybersecurityrisks.•Developastableregulatoryframeworkforusersandadoptersandstructuredmarketsandincentivestosupportkeyplayers,particularlyutilities,inadoptingblockchainandinvestingindigitalinfrastructure.•Identifydesignprinciples,bestpractices,andstandardsforrobustblockchainplatformsthatachievesharedagreementamongkeystakeholders(includingmandatingreasonableenergyconsumptionlevelsassociatedwithblockchainadoption).•Supportresearchanddevelopmenteffortsandpursuepilotanddemonstrationprojects.Asgovernmentsandcorporationsincreasinglyprioritizegreenhydrogenintheenergytransition,andasnewpolicy,business,andregulatorymodelsforarapidlychangingenergysectoraredeveloped,blockchainispoisedtoplayaprominentroleinsupportingthesestrategies.Ifblockchainsucceedsindisruptingtheenergyindustry,stakeholdersthroughouttheenergyvaluechainwillreapsubstantialbenefitsforyearstocome.40MissionHydrogen9.ConclusionsandRecommendationsCleanhydrogencouldplayasignificantroleintheglobaltransitiontoalowcarboneconomy,particularlyforhard-to-abatesectors.Itoffersapathtowardmeetingnationalandinternationalclimateandpollutiongoalswhileavoidingrelianceonimportedfuels.Itcanhelptoaddressrenewableenergyintermittencyandcurtailmentissues.Anditcanopennewavenuesfordevelopingcleantechnologymanufacturedgoods38forbothinternalandexportmarkets,thusprovidingsubstantialadditionalbenefitstolocaleconomies.Atthesametime,keychallengestoadoptionanduseatscaleneedtobeaddressed,includinghigherproductioncostscomparedtofossilfuel-basedhydrogenandthelimitedinfrastructureavailability.Oneofcleanhydrogen’smainattractionsisthatitcanprovidecarbon-freeenergyinmultiplesectors–transport,heating,industry,andelectricitygeneration.Butthisadvantagealsocreatesuncertainties.Whatfuturehydrogenvaluechainswilldevelopisafunctionofthespecificapplicationbeingpursued.Forexample,asdiscussed,theinfrastructureneededinaneconomyinwhichhydrogenisprimarilyusedasatransportfuelisverydifferentfromoneinwhichitsprimaryuseisasaheatingfuel.Publicconcernsaroundsafetymightalsopresentadditionalchallengestodeployment.Fromageopoliticalperspective,renewablesareoftenperceivedasanopportunitytoreducethehegemonyoffossilfuel-richstatesanddemocratizetheenergylandscape.Virtuallyallcountrieshaveaccesstosomerenewableenergyresourcesandcouldthereforesubstituteforeignsupplieswithlocalresources.Ourresearchshows,however,thattherolecountriesarelikelytoassumeindecarbonizedenergysystemswillbebasednotonlyontheirresourceendowmentbutalsoontheirpolicychoices.Sincetheproductionofrenewablehydrogenthroughelectrolysisrequiresbothrenewableenergyandfreshwaterresources,weconsiderthree38Cleantechnologymanufacturingaimsatminimizingtheenergyandenvironmentalimpactsofthepro-duction,use,anddisposalofgoods,rangingfromcommoditiessuchasmetalsandchemicalstofinal-useproductssuchasairplanesandwindturbineblades,throughtheuseofcleanenergyandthedevelopmentofnewmaterialsandprocesstechnologies.41BelferCenterforScienceandInternationalAffairsHarvardKennedySchoolparametersinanalyzingacountry’srenewablehydrogenpotential:(1)renewableenergyresourceendowment;(2)renewablefreshwaterresourceendowment;and(3)infrastructurepotential,definedasanation’scapacitytobuildandoperaterenewablehydrogenproduction,transportation,anddistributioninfrastructure.39Onthebasisofthesevariables,countriescanbegroupedintofivearchetypes:exportchampions,waterconstrainedproducers,majorimporters,self-sufficientproducersorregionalexporters,andinfrastructureconstrainedproducers.Thesearchetypesallowustodrawtheglobalrenewablehydrogenmap(seeFigure1)andhelpelucidatethegeopoliticalimplicationsofrenewablehydrogenadoptionatscale.Fromaglobalmarketperspective,cleanhydrogen,ifadoptedatscale(likenaturalgas),willinitiallyflourishinregionalmarketswiththecorrespondingpotentialforgeopoliticalconflicts.OuranalysisofChina,forexample,showsthatthecountrystillhasalongwaytogobeforeahydrogensocietycouldreachfruition,butifChinaweretoreplicatethesuccessithashadwithothercleantechnologieslikesolarPV,andatthesametimeaddressitsregionalwaterscarcityissuesitcouldsignificantlylowerproductioncostsandaccelerateadoptionaroundtheworld,whileemergingasarenewablehydrogensuperpower.Lookingatspecificapplications,ourresearchonthefutureofsustainablemobilityshowshowhydrogencancomplementexistingeffortstoelectrifyroadandrailtransportation,especiallyforlong-distanceandheavy-dutysectors,andprovideascalableoptionfordecarbonizingshippingandaviation.Figure4summarizesthesectorsforwhichbatteryelectricvehicles,fuelcellelectricvehicles,andvehiclesrunningonbio-orhydrogen-basedsyntheticfuelsaremostapplicable.Fromaninnovationperspective,technologicalchallengesaroundweightandhydrogenstoragewillneedsolutions,especiallyforthemaritimeandaviationsectors.39Itshouldbenotedthattheevaluationofacountry’sinfrastructurepotentialincludesconsiderationsonfinancialvariables(e.g.,accesstocapitalmarkets,creditrating,costofcapital)andpoliticalstability.Thelackoftheseenablingfactorswouldsignificantlyhamperacountry’sabilitytodevelopinfrastructureeventoday;hence,theyareindirectlyaccountedforinourevaluation.42MissionHydrogenFinally,fromavaluechainperspective,blockchaincangreatlyacceleratethetransitiontoalow-carboneconomyastechnologyandpolicypathwaystodecarbonizationwillneedtorelyonprocessesthataccuratelymeasureandrecordemissionsandgreenmoleculesacrossglobalmarketscharacterizedbylimitedtransparency,unevenstandards,differentregulatoryregimes,andtrustissues.Addressingthesechallengeswillrequiremanaginglargevolumesofmulti-partytransactions,whichneedtobesettledquickly,securely,andinexpensively–processesthatcanaidedsignificantlybyblockchain.Takingfulladvantageofcleanhydrogen’spotentialwillrequireacoordinatedeffortbetweenthepublicandprivatesectorsfocusedonscalingtechnologies,reducingcosts,deployingenablinginfrastructure,anddefiningappropriatepoliciesandmarketstructures.Thisistheonlywaytoavoidreplicatingthesystem-wideinefficienciesofthepastthathavecharacterizedregionalapproachestodeployingnewenergyinfrastructure.Toacceleratetheglobaltransitiontoalow-carboneconomyandcleanhydrogenadoptionatscale,werecommendthefollowingsetofactions:•TheG20shouldinstitutea“Technology20”officialengagementgroupthatbringstogetherleadingglobalstakeholdersfromtheprivateandpublicsectorsacrossentirevaluechainstoserveasatechnologysandboxandprovidetechnologyandpolicyrecommendationstoaccelerateinnovationcycles.Thecaseofhydrogenhighlightshowadoptingnewcleantechnologiescanofferuniqueopportunitiestoacceleratethetransitiontoalow-carboneconomy.Still,deploymentatscalefacessignificantchallengesthatneithertheprivatenorthepublicsectorscanaddressalone.•Governmentspursuingcleanhydrogenshouldincreaseinvestmentsininnovation,convenestakeholdersacrossvaluechains,andfostercollaborationinaddressingfirst-moverrisks,strategicbarriers,andopportunities.43BelferCenterforScienceandInternationalAffairsHarvardKennedySchool•Countriesandregionsthatwishtoadoptcleanhydrogenatscaleshouldprioritizedetailedanalysisandplanningnow,sincetheeffectsofpolicychoicesmadetodaywillbefeltdecadesinthefuture.Asourresearchhighlights,nationswillneedtocarefullyconsidertheirroleinfuturecleanhydrogenmarketsfromageopoliticalandmarketperspective.Itwillalsobecriticaltoidentifyinfrastructurebottlenecksandaddressfinancialgapsinspecificmarketsandapplications.Forexample,buildingapipelinenetworktodeliverhydrogentohomeownerswhohaveyettoinstallhydrogen-fueledstovesandheatingsystemswouldbefinanciallydisastrous.Hence,synchronizinginfrastructureinvestmentswithgrowthinsupplyanddemandwillbeessentialbutchallenging.•Addressingthepricegapbetweencleanandfossilfuels-basedhydrogenwillrequireactivepolicyinterventions.Suchpoliciescouldincludemeasurestoincentivizethevalueanduseofcleanhydrogen,suchasimplementingcleanhydrogenstandardsandcarbonpricing.•Stakeholdersmustbeappropriatelycreditedforinvestinginthecurrentpremiumrequiredtoproducecarbon-freehydrogen.Thiswillrequireconcertedeffortstoidentifydesignprinciples,bestpractices,andstandardsforrobustblockchainplatformsthatachievesharedagreementamongkeystakeholders(includingmandatingcleanblockchains)andtoeducatestakeholdersaboutblockchaintechnologyanditsvalueproposition.•Countriesandregionsshouldimplementmarket-aligningpolicies,alongwithproductionandsafetystandards,toacceleratecleanhydrogenadoptionandenabletransnationaltrade.Stakeholdersneedtothoroughlyassesscleanhydrogen’seconomic,environmental,andgeopoliticalimplications,developstrategiestoaddressthem,anddefinelong-termimplementationplans.Itisessentialtodosonow.44MissionHydrogen10.ReferencesAirTransportActionGroup,https://www.atag.org/,accessedJune2021.Bloomberg(2019),“WanGang,China’sfatherofelectriccars,thinkshydrogenisthefuture”https://www.bloomberg.com/news/articles/2019-06-12/china-s-father-of-electric-cars-thinks-hydrogen-is-the-future,accessedApril2021.Bloomberg-NEF(2019)(citedinMathis,W.,andThornhill,J.2019)‘Hydrogen’sPlungingPriceBoostsRoleasClimateSolution’.Bloomberg.August21.https://www.bloomberg.com/news/articles/2019-08-21/cost-of-hydrogen-from-renewables-to-plummet-next-decade-bnefBrasington,L.(2019),“HydrogeninChina.”CleantechGrouphttps://www.cleantech.com/hydrogen-in-chi-na/,accessedJune2021.BrooklynMicrogrid,https://www.brooklyn.energy/,accessedOctober2021.ChinaWaterRiskProject(2020),“Whoisrunningdry?”http://www.chinawaterrisk.org/the-big-picture/whos-running-dry/,accessedApril2021.DeBlasio,N.(2021),“TheRoleofCleanHydrogenforaSustainableMobility.”HarvardKennedySchool’sBelferCenterforScienceandInternationalAffairs,August2021.https://www.belfercenter.org/publication/role-clean-hydrogen-sustainable-mobility.DeBlasio,N.,andPflugmann,F.(2020)“IsChina’sHydrogenEconomyComing?”HarvardKennedySchool’sBelferCenterforScienceandInternationalAffairs,July2020.https://www.belfercenter.org/sites/default/files/files/publication/Is%20China%27s%20Hydrogen%20Economy%20Coming%207.28.20.pdfDNV(2018),“Hydrogenasanenergycarrier.Anevaluationofemerginghydrogenvaluechains.”GroupTechnology&Research.Positionpaper.EuropeanCommission(2020),‘Ahydrogenstrategyforaclimate-neutralEurope’,COM(2020)301final,8July2020.https://eur-lex.europa.eu/legal-content/EN/TXT/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