Published: January 25, 2023
With a record number of projects taking place from Scotland to Mallorca and across the Middle East, green hydrogen looks like a sensible option for energy transition. Little used at present, governments, developers and investors are beginning to bet big on the future promise of sustainably produced H2.
When the US signed into law its new climate bill last August, eagle-eyed observers spotted a well-hidden, but critical, detail. The US Inflation Reduction Act includes generous incentives for green hydrogen, introducing tax credits that will bring the price down as low as US$0.73 per kilogram.
Not only is that significantly lower than its current prices, averaging between US$2 and US$6 according to KPMG, but also it is lower than the prices charged for polluting ‘grey’ hydrogen, which is hydrogen produced using fossil fuels. That means American hydrogen buyers are likely to switch en masse to green hydrogen, which is produced using renewable energy. Environmental activists and renewable energy advocates see the legislation as a watershed event that marks a turning point for energy consumption and development.