A new report from the International Energy Agency (IEA) warns that the burgeoning low-emissions hydrogen production sector is at risk due to inadequate government policy support. Despite impressive growth over the past two years, challenges such as inflation, supply chain disruptions, and exorbitant capital expenses are casting shadows over the sector's profitability.
“Inflation and the escalating costs of borrowing are reverberating throughout the hydrogen value chain, amplifying financing burdens for developers and diminishing the impact of government backing,” states the IEA in a press release accompanying the report. Fatih Birol, Executive Director of the IEA, emphasised the need for greater strides in technology, regulation, and demand generation to ensure that low-emissions hydrogen can fully realise its potential.
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While government programmes are in place in countries such as the United States, the United Kingdom, and the European Union, the report highlights that prolonged intervals between policy announcements and their actual implementation are causing developers to postpone crucial projects.
The report outlines a series of policy recommendations centred on risk reduction within the sector and the stimulation of investments. Additionally, the report calls for the establishment of uniform international standards and regulations to foster growth and stability in the low-emissions hydrogen industry.
