Demand is important for the future of green hydrogen

New research shows that not only the supply, but also the demand for green hydrogen must be stimulated to bring the market to life. Green hydrogen plays an important role in the transition to a sustainable energy system, as it helps reduce the industry's carbon footprint. Despite its potential, the development of green hydrogen lags due to high production costs and a lack of stable demand.

The report, prepared based on research by Deloitte commissioned by Invest-NL and Energie-Nederland, shows that targeted regulation and policy measures are essential to stimulate demand for green hydrogen. The analyses emphasize that demand obligations are most effective when they are introduced as far along the supply chain as possible, towards the end-user. A stable and predictable demand can promote the financing and further development of green hydrogen projects.

Another important insight from the research is whether these obligations should be established nationally or at European level. A harmonised European approach can not only lead to greater impact but also to a fairer playing field for the entire industry. Currently, European climate policy is heavily focused on emissions trading and guidelines that require industrial producers to decarbonise. While this is an important step towards a greener future, it also entails extra costs for European companies investing in sustainable solutions, such as green hydrogen. This often makes their products more expensive than conventional alternatives and imported goods.

This is where the problem lies: as long as importers are not subject to the same decarbonisation obligations, an unfair playing field arises. This is not only unfair to companies that do invest in sustainability but also delays the necessary transition to a climate-neutral economy.

Without additional policy measures, there is a risk that the energy transition will stagnate in sectors where green hydrogen is crucial, such as heavy industry. The insights from the report provide policymakers, industry partners, and other stakeholders with a valuable guideline. It shows how regulation can ensure a stable demand for green hydrogen and thus contribute to a sustainable energy system and a future-proof, competitive European industry.