H2Tech Market Data 2023 - 39

d. Support electrolyzer investment costs
(e.g., grants and loans).
2. Deploy market mechanisms to close the gap
for H2
in hard-to-abate sectors
a. Create a one-stop-shop for H2
finance.
This initiative will bring together project
developers, private financing, development
financing and government support under
one roof to accelerate final investment
decisions (FIDs).
b. Provide fiscal incentives (tax level
differentiation and tax relief for green goods).
This implies lowering tax rates or providing tax
relief for consumers and businesses that use
products made using green H2
or steel. This would help overcome the added
expense of using a more-expensive form of H2
c. Implement CCfD. These CCfDs are defined
as " contracts that provide certainty on the
costs for a H2
consumer by paying the
difference between the carbon market price
and an agreed strike price. "
d. Introduce eco-labeling to green products,
including H2
production routes.
e. Phase out free EU Emissions Trading System
(ETS) allowances for gray H2
and use
revenues for green H2
.
3. Drive critical mass demand through projects
a. Identify high-value/efficient applications
and define targets by end-use sector in line
with net-zero. This intends to rule out the
use of H2
for heating and fuel cell cars,
for which the direct use of electricity is
considered to be a more efficient and a
faster route to decarbonization.
b. Incentivize the development of H2
valleys
through the promotion of regional and
sectoral targets. The term " H2
valleys " refers
to industrial clusters or hubs (i.e., locations
where green H2
would both be produced
and consumed to reduce the considerable
costs and difficulties of transporting H2
).
.
c. Drive sustainable public procurement.
This implies governments/public authorities
buying products made using green H2
.
d. Accelerate the fuel shift in industrial
applications through major transformation
policy. This calls for the introduction of quotas
or mandates requiring certain industries to use
increasing amounts of green H2
, in addition to
loans, grants or other funding to help absorb
the added costs of doing so, as well as a
certification scheme that ensures a greenhouse
gas (GHG) emissions intensity standard.
, such as fertilizer
4. Drive efficient allocation of capital
a. Ensure alignment of efforts and strategies
across member states through coordination
and continuous knowledge exchange.
b. Set ambitious capacity targets for trade
facilities. This includes ports, ships, storage
and equipment that can manage unspecified
H2
carriers (ammonia, methanol and toluene,
and compressed and liquefied H2
). This
includes defined milestones that would
enable economies of scale to reduce costs;
targets for H2
to standardized designs with equipment
manufacturers; and participation in global
initiatives for the import and export of H2
from pilot projects and beyond.
c. Define market design and operating rules
for H2
trading.
5. Reduce fossil-fuel consumption through mandates
a. Phase out fossil fuel-based technologies
in hard-to-abate sectors. This refers to grey
H2
and the use of coal for steel production,
as well as, for example, the UK's planned
phase-out of gas boilers and bans on new
petrol and diesel cars.
b. Introduce quotas and mandates for H2
,
green products and " basic materials "
such as green fertilizer and green steel.
This also includes green H2
quotas for existing
large H2 consumers (which are not specified,
imports and exports; agreement
but include ammonia and chemicals producers
and oil refiners), and " sectors other than
industry (e.g., aviation). "
c. Design a carbon border adjustment mechanism
based on lifecycle carbon content to promote
green goods. This means the imposition of a
carbon tax on imported goods to ensure that
European companies do not face higher CO2
charges than non-EU competitors.
6. Ensure ramp-up of infrastructure
a. Clarify governance of the H2
network
b. Set up a flexible regulatory framework
based on market developments
c. Integrate long-term planning of H2
and gas infrastructure
, power
d. Specify interoperable quality standards
and definitions
e. Introduce capacity payments to support
the ramp-up of infrastructure.
7. Maintain clarity on technical and safety standards
for project development
a. Define technical standards for new parts
of the value chain beyond production
(transportation, storage, conversion).
b. Define technical standards for H2
(e.g., ammonia, synthetic fuels).
derivatives
c. Develop safety standards for new H2
and up-and-coming solid-state H2
like sodium borohydride.
carriers.
This ensures that safety standards are in place
for liquid organic H2
carriers such as toluene,
carriers
8. Ensure clarity on carbon intensity standards
through guarantee of origin scheme
a. Set clear carbon intensity, definitions,
thresholds, boundaries for H2
For the H2
transmission
production.
sector to have integrity as a route
to decarbonization, it is vital to ensure that
every particular batch of H2
is " green. " This will
require a certification scheme similar to the
" guarantees of origin " used in the power
sector for renewable energy.
39
MARKET DATA 2023 | H2
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H2
POLICIES
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H2Tech Market Data 2023

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