Clean hydrogen will expand in 2024, but needs a regulatory push

With the US leading globally on developing a clean hydrogen industry, other territories will start catching up next year, but strong regulatory support will be a major driver

Clean hydrogen is a hot topic, both as an energy source and energy storage solution. However, development in this space is something of a ‘chicken and egg’ situation, in that it is necessary to build a market for clean hydrogen if projects are to attract private investors, but the sector needs to reach sufficient scale to be competitive.

The United States currently leads the field in supporting and encouraging clean hydrogen production and will continue to do so in 2024. The Inflation Reduction Act (IRA), which came into force in January 2023, is a major driver of production, offering significant tax breaks and major subsidies to developers, and making clean hydrogen competitive.

However, the European Union (EU) is set to catch up in the next year, having established its regulatory framework and a growing desire among member states to embrace clean hydrogen projects.

The challenge the EU faces is that, compared to the IRA, its regulatory framework for clean hydrogen is more complex and can be difficult for companies to navigate and understand what incentives are offered.

The Middle East is also likely to make progress in this area in 2024, with governments and the biggest national oil companies showing a great deal of interest in blue hydrogen projects (hydrogen produced from natural gas, using carbon capture and storage technology to eliminate or reduce greenhouse gas emissions).

Saudi Arabia and the UAE are particularly highly supportive of clean hydrogen, with a US-Saudi joint venture planning to build the world’s largest green hydrogen plant as part of the Neom development.

In the UK, where the government has recently shifted towards support for new oil and gas exploration and away from policies phasing out petrol/diesel powered vehicles and gas boilers, there is nonetheless a potentially effective regulatory regime for hydrogen production. But it is still in a nascent phase.

In order to catch up with the US, the UK will need to build on the existing regulatory framework, which may depend on the likelihood and outcome of a general election next year.