COP26: Hydrogen in the spotlight | White & Case LLP

Hydrogen was very present at COP26, prompting optimism for the transition to a low carbon hydrogen economy. This alert highlights the key hydrogen developments that emerged during COP26.

The global push towards a hydrogen economy

In recent years, the global push towards a hydrogen economy has accelerated as the focus on climate change has intensified. Hydrogen is called upon to play a key role in the energy transition. The rapid deployment of large-scale renewables and the falling cost of electrolyzers mean that hydrogen could provide reliable base power with a low carbon footprint. Further information on the development of the global hydrogen economy is provided in our Hydrogen Economy Series and our Global Hydrogen Guide, which track and monitor hydrogen regulatory developments and incentives around the world.

Hydrogen took center stage at the 2021 United Nations Climate Change Conference (“COP26Most of the national pavilions have hosted hydrogen-related events, and many used the conference to highlight their respective hydrogen strategies or plans. COP26 also served as a platform for some of the most important global discussions to date on the use of hydrogen as the source energy.

Complementing the official COP26 conference program, Climate Action (a global media and events platform) also hosted a Hydrogen Transition Summit where key stakeholders from policies, investments, tech, regulators and governments discussed the opportunities, initiatives and obstacles related to the transition to a low carbon hydrogen economy.

Hydrogen developments at COP26

Several hydrogen-related commitments and initiatives were announced at COP26:

Revolutionary agenda

One of the main outcomes of COP26 was the groundbreaking agenda – a commitment endorsed by 42 countries to work together in the 2020s to accelerate the actions needed to achieve the goals of the Paris Agreement (which include maintaining the increase in global average temperature to well below 2 degrees Celsius).

The Breakthrough program launched four distinct goals known as Glasgow Breakthroughs which “aim to make clean technologies and sustainable solutions the most affordable, accessible and attractive option in every emitting sector globally by 2030”. Glasgow’s breakthroughs include a ‘hydrogen breakthrough’ goal of ensuring that affordable low-carbon hydrogen is available worldwide by 2030.

While the global hydrogen market is still in its infancy, market research is a key tool in promoting a globalized hydrogen economy. To this end, COP26 delegates sought to co-opt global bodies such as the International Energy Agency and the International Renewable Energy Agency (“IRENA“) to conduct an assessment of progress towards achieving the hydrogen breakthrough, including providing detailed evidence of the costs, volumes and affordability of hydrogen production. Based on this collection of evidence , it was assumed, a robust and market-tested framework for hydrogen project development could be assembled.

Green Hydrogen Toolbox

The World Economic Forum and IRENA have launched a series of jointly developed policy recommendations entitled “Green Hydrogen Action Roadmaps”. Dubbed the ‘Green Hydrogen Toolkit’, the roadmaps aim to enable policymakers to prioritize policies for green hydrogen and accelerate its deployment internationally in pursuit of a clean energy system. zero.

National commitments and international partnerships

The United Arab Emirates and Germany have signed a declaration of intent to expand their cooperation on green hydrogen. The UAE has separately announced its ‘Roadmap for Hydrogen Leadership’ and is targeting a 25% global low-carbon hydrogen market share by 2030.

Japan has announced an investment of US $ 100 million to convert thermal power plants to ammonia and hydrogen power plants.

The European Commission has announced a partnership between the European Investment Bank and Breakthrough Energy Catalyst, which will mobilize up to € 820 million (US $ 1 billion) between 2022 and 2026 to accelerate the deployment of technologies to achieve the ambitions of the European Green Deal and the objectives of the EU. Climate objectives for 2030.

Industry announcements

Many industry players have also taken the opportunity offered by COP26 to announce notable initiatives and projects in the field of hydrogen.

Key themes of the hydrogen transition

The Hydrogen Transition Summit held in conjunction with COP26 featured a full day of events focused on adopting hydrogen as a central part of the road to net zero. Key themes included:

The low carbon hydrogen market

While much of the current global hydrogen debate has focused on the prospects for hydrogen production, as was discussed at the hydrogen panel session that White & Case recently hosted with ENGIE, BNP Paribas, Arup and InterContinental Energy, a hydrogen market can only function where there is sufficient demand for the hydrogen produced. Demand side and supply side initiatives must be actively pursued in tandem to facilitate a successful hydrogen economy.

Removal of barriers for producers

Regulatory risk remains a priority for current and potential hydrogen producers. In order for the industry to move forward with certainty, governments were encouraged to review and revise relevant regulatory frameworks, remove unnecessary administrative barriers and adopt measures designed to promote the development of hydrogen projects.

Promote the hydrogen transition

Governments were encouraged to consider promoting the transition to a low carbon hydrogen economy through a series of measures:

• Carbon pricing – establish a market-based carbon price in national markets (with the potential to develop international pricing);

• Carbon trading markets – work with industry to develop carbon trading markets to unlock the value potential of low carbon hydrogen;

• Financial aid – offer government support in the form of grants, grants, loans, R&D investment contracts for difference and national and multinational public-private partnerships;

• Facilitate international trade – forming bilateral and multilateral partnerships to facilitate international hydrogen trade; and

• Political vision – work with industrial partners to establish a comprehensive hydrogen strategy to guide the design and implementation of measures to support the transition to a low carbon hydrogen economy.

Certification of the hydrogen guarantee of origin

The establishment of “guarantee of origin” certification programs to verify the source of low carbon hydrogen is seen as an important catalyst towards a hydrogen economy. Ideally, this would be linked to existing and potential carbon trading frameworks to unlock a key financial incentive for the transition to low carbon hydrogen.

The role of transitional fuels

“Gray” hydrogen (produced by steam reforming methane, with carbon emissions) and “blue” hydrogen (gray, combined with carbon capture and storage) were discussed as fuels for carbon dioxide. transition towards a more widespread use of green hydrogen. The capacity to produce gray and blue hydrogen already exists, and scaling these systems may be easier than starting from scratch with green hydrogen. Additionally, gray and blue hydrogen is currently less expensive than green hydrogen, and the adoption of lower cost hydrogen could help create a larger market for hydrogen, which could eventually be phased out. ‘green hydrogen.

Outlook

COP26 has helped bring hydrogen further to the forefront of the world stage. Never before have governments, industrial organizations and businesses discussed the subject with such a goal. While there is still a long way to go before a global low-carbon hydrogen economy becomes a reality, COP26 has given the industry the momentum needed to drive policy reform, the innovation and partnerships necessary to achieve a hydrogen economy.

COP26 provided governments with a key benchmark for the development of national hydrogen markets and reinforced the truly global nature of the industry. If momentum is seized, COP26 may well be remembered as the conference that ultimately catalyzed international cooperation towards the development of a low-carbon hydrogen-based economy.