Arup and the Global Infrastructure Investor Association (GIIA) have teamed up to launch a new report exploring how to enable greater investment in the hydrogen sector.

The report, which is based on a survey of GIIA investor members, found that 90% of participants believe hydrogen will play a role in the future energy system and 70% believe it will be important for some applications by 2030, and yet only 16% of those surveyed have already concluded deals or are currently engaged in hydrogen-related infrastructure transactions.

It goes on to explore the discrepancy between the role investors think hydrogen will play and the current landscape to identify what the barriers to investment are for this technology, looking at production, adoption in end-use applications, and the transport and storage of hydrogen.

The report goes on to outline the enablers that could be considered to help quickly boost future investment, although it is important to note that there is no ‘one size fits all’ approach. The report provides a menu of interventions that can be selected from to suit the unique characteristics of each jurisdiction and a range of economic and social implications need to be considered by governments when planning and making any interventions.

The report points to the lessons that can be learned from the successful roll-out of renewables, and provides the below overall conclusions for hydrogen:

• Governments need to articulate a clear, time-bound plan with tangible actions to provide the certainty that the private sector needs to make investment decisions;
• Price certainty should be provided and demand fostered to encourage growth in the hydrogen supply chain over the next few years;
• In the early stages of the market, end-use interventions should focus on applications where there are low risks of future regret and where the marginal costs of carbon abatement are high;
• Production pathways should be evaluated on their merits by considering all low carbon production methods, provided the emissions reductions are assessed over the full lifecycle according to clearly defined standards that are monitored, certified, and enforced;
• For jurisdictions with existing gas networks, regulations should be developed to enable hydrogen blending;
• Increased public sector funding for research and development is required across all stages of the supply chain to foster competition and increase efficiencies.

Filippo Gaddo, head of economics at Arup, said: “This report comes at a time when climate change is dominating headlines around the world and governments are developing hydrogen-focused strategies to drive forward the journey to net zero. Our expert advisory team has worked closely with the GIIA to explore and identify the opportunities and challenges for investment in hydrogen.

“The findings show that investors are keen and poised to support the decarbonisation of the energy sector and they believe that hydrogen will have a significant role to play. Whilst our research has identified a number of barriers to investment, it also shows that there are many enablers that governments and regulators can consider which will, if implemented appropriately for their unique circumstances, enable private sector investment in hydrogen infrastructure.”

Lawrence Slade, CEO, GIIA, said: “GIIA members currently own and manage nearly US$1tn of infrastructure assets on six continents, $4bn of which is hydrogen infrastructure. There has been impressive growth seen in investment in renewables, and we estimate that at any given point in time there is at least US$200bn of new capital ready to invest in infrastructure. This is a positive indicator of investor appetite to kickstart a global effort to reach our climate goals. To meet society’s growing future energy needs whilst decarbonising the global economy, we need to combine government funds with private capital so we can achieve much, much more, and faster.”

Click here to read the report in full.