Hydrogen is a key enabling vector of the energy transition. Multiple studies have demonstrated the potential of hydrogen to reduce carbon emissions and serve as a new energy medium in industries where electricity cannot be easily used. Along with continued research and development efforts, currently, the challenge is to upscale hydrogen production and deployment, thereby triggering further dramatic cost reduction. An adaptive energy policy instrument is essential to support necessary investments, while considering the regional diversity of energy and industrial policies.
Certificates are a versatile and preferred energy policy instrument for leveraging hydrogen production and deployment. They can facilitate the scaling up of both green hydrogen produced via electrolysis using renewable or nuclear energy, and blue hydrogen produced from fossil fuels with carbon capture and storage. Transportation (including aviation) and the existing industrial usage are easy avenues for upscaling hydrogen deployment and reducing cost. Thus, hydrogen certificates are a key mechanism to ensure a decarbonized world enabled by burden sharing among the Group of Twenty (G20) countries.
The transition from gray to blue and green hydrogen offers an adaptive path for hydrogen production and deployment in both energy resource-rich and consuming countries. An exchange platform and working group unifying industry practitioners, policy makers, and academics from the G20 countries, especially from hydrocarbon producing countries, will foster a better understanding of environmental certificates and carbon credit-based hydrogen policies. This will accelerate hydrogen deployment in the G20 countries by integrating positive and negative economic externalities in international trade mechanisms, and by clarifying the financial treatment of policies supporting large investments in hydrogen.
