Navigating through hydrogen

Policymakers must address the need to displace carbon-intensive hydrogen with low-carbon hydrogen, and incentivise the uptake of hydrogen.

Publishing date: 01 April 2021
Authors: Georg Zachmann Ben McWilliams

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Hydrogen is seen as a means to decarbonise sectors with greenhouse gas emissions that are hard to reduce, as a medium for energy storage, and as a fallback in case halted fossil-fuel imports lead to energy shortages. Hydrogen is likely to play at least some role in the European Union's achievement by 2050 of a net-zero greenhouse gas emissions target.

However, production of hydrogen in the EU is currently emissions intensive. Hydrogen supply could be decarbonised if produced via electrolysis based on electricity from renewable sources, or produced from natural gas with carbon, capture, and storage. The theoretical production potential of low-carbon hydrogen is virtually unlimited and production volumes will thus depend only on demand and supply cost.

Estimates of final hydrogen demand in 2050 range from levels similar to today's in a low-demand scenario, to ten times today's level in a high-demand scenario. Hydrogen is used as either a chemical feedstock or an energy source. A base level of 2050 demand can be derived from looking at sectors that already consume hydrogen and others that are likely to adopt hydrogen. The use of hydrogen in many sectors has been demonstrated. Whether use will increase depends on the complex interplay between competing energy supplies, public policy, technological and systems innovation, and consumer preferences.

Policymakers must address the need to displace carbon-intensive hydrogen with low-carbon hydrogen, and incentivise the uptake of hydrogen as a means to decarbonise sectors with hard-to-reduce emissions. Certain key principles can be followed without regret: driving down supply costs of low-carbon hydrogen production; accelerating initial deployment with public support to test the economic viability and enable learning; and continued strengthening of climate policies such as the EU emissions trading system to stimulate the growth of hydrogen-based solutions in the areas for which hydrogen is most suitable.

Recommended citation

McWilliams, B. and G. Zachmann (2021) 'Navigating through hydrogen', Policy Contribution 08/2021, Bruegel

About the authors

Georg Zachmann

Georg Zachmann is a Senior Fellow at Bruegel, where he has worked since 2009 on energy and climate policy. His work focuses on regional and distributional impacts of decarbonisation, the analysis and design of carbon, gas and electricity markets, and EU energy and climate policies. Previously, he worked at the German Ministry of Finance, the German Institute for Economic Research in Berlin, the energy think tank LARSEN in Paris, and the policy consultancy Berlin Economics.
Ben McWilliams

Ben is working for Bruegel as an Affiliate fellow in the field of Energy and Climate Policy. His work involves data-driven analysis to critique and inform European public policy, specifically in the area of the energy sector and its decarbonisation. Recent work has focussed on the implications of the ongoing energy crisis and policy options for responding. Other topics of interest include tools for stimulating industrial decarbonisation and the implications for new economic geography from the advent of new energy systems, particularly from hydrogen.

He studied his MSc in Economic Policy at Utrecht University, completing a thesis investigating the economic effects of carbon taxation in British Colombia. Previously, he studied his BSc Economics at the University of Warwick, with one year spent studying at the University of Monash, Melbourne.

Ben is a dual British and Dutch citizen.