GREEN HYDROGEN FOR INDUSTRY

1 GREENHYDROGENFOR INDUSTRYA GUIDE TO policy MAKING IRENA 2022 Unless otherwise stated, material in this publication may be freely used, shared, copied, reproduced, printed and/or stored, provided that appropriate acknowledgement is given of IRENA as the source and copyright holder. Material in this publication that is attributed to third parties may be subject to separate terms of use and restrictions, and appropriate permissions from these third parties may need to be secured before any use of such : IRENA (2022), GREEN HYDROGEN for INDUSTRY : A guide to policy making, International Renewable Energy Agency, Abu : 978-92-9260-422-6 ABOUT IRENAThe International Renewable Energy Agency (IRENA) serves as the principal platform for international co-operation, a centre of excellence, a repository of policy , technology, resource and financial knowledge, and a driver of action on the ground to advance the transformation of the global energy system.

2 An intergovernmental organisation established in 2011, IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity. publication and the material herein are provided as is . All reasonable precautions have been taken by IRENA to verify the reliability of the material in this publication. However, neither IRENA nor any of its officials, agents, data or other third-party content providers provides a warranty of any kind, either expressed or implied, and they accept no responsibility or liability for any consequence of use of the publication or material herein.

3 The information contained herein does not necessarily represent the views of all Members of IRENA. The mention of specific companies or certain projects or products does not imply that they are endorsed or recommended by IRENA in preference to others of a similar nature that are not mentioned. The designations employed, and the presentation of material herein, do not imply the expression of any opinion on the part of IRENA concerning the legal status of any region, country, territory, city or area or of its authorities, or concerning the delimitation of frontiers or INDUSTRYA GUIDE TO policy MAKINGACKNOWLEDGEMENTSThe report was developed under the guidance of Rabia Ferroukhi and Ute Collier and authored by Emanuele Bianco, Sufyan Diab and Herib Blanco.

4 IRENA colleagues Diala Hawila, Hanbit Lee, Emanuele Taibi, Barbara Jinks, Ranya Oualid, Gabriel Castellanos and Francisco Boshell provided valuable input. Massimo Santarelli and Marta Gandiglio (Polytechnic University of Turin) provided technical contributions to the report. C dric Philibert provided important and welcomed contributions and observations. The report benefited also from the reviews and comments of experts, including Elvira Lopez Prado and Andrea Real Ruiz (Acciona), Matthias Deutsch, Gniewomir Flis and Paul M nnich (Agora Energiewende), Suhail Shatila (Apricorp), Martino Comelli (American University of Central Asia), Lin Zhang (China HYDROGEN Alliance), Frank Wouters (EU-GCC Clean Energy Technology Network), Eva Vitell (Hybrit), Jose Miguel Bermudez (IEA), Marta Mart nez (Iberdrola), Tomas K berger and Yuko Nishida, (Renewable Energy Institute), Ji Chen (Rocky Mountain Institute), Aidan Cronin (Siemens Gamesa), Thierry Lepercq (Soladvent), Petra Schwager and Smeeta Fokeer (UNIDO), Christin T pfer (Vattenfall)

5 , Sripathi Anirudh, Kajol and Deepak Krishnan (World Resources Institute).Available for download: further information or to provide feedback: 06 Units of measure 06 INTRODUCTION 08 About this report 08 Hard-to-abate sectors and GREEN HYDROGEN 11 Priority setting in GREEN HYDROGEN policy making 12 The experience in the power sector 151. POTENTIAL GREEN HYDROGEN USES IN INDUSTRY AND RELATED BARRIERS 16 Current status and potential uses 16 Barriers 232. POLICIES TO PROMOTE GREEN HYDROGEN IN INDUSTRY 30 GREEN ( HYDROGEN ) industrial policies 34 Industrial decarbonisation strategies 35 Technological mandates 38 Carbon pricing 40 IN FOCUS: Addressing carbon leakage 44 Financial and fiscal support 48 Creating the market for GREEN products 54 R&D 603.

6 THE WAY FORWARD 61 References 644 TABLE OF CONTENTFIGURESF igure GREEN HYDROGEN value chain and the focus of this report .. -000 09 Figure GREEN HYDROGEN policy priority ..13 Figure Pure HYDROGEN demand in INDUSTRY , global, 2020 ..17 Figure Main steel production pathways ..20 Figure Working temperatures for selected renewable heat technologies and temperature requirement of selected industries ..22 Figure Barriers and policies to support GREEN HYDROGEN uptake in the industrial sector ..31 Figure Selected GREEN HYDROGEN for INDUSTRY policies by status, selected countries, 2022 ..32 Figure Estimated carbon prices needed to cover the cost gap between GREEN and grey materials ..40 Figure Carbon allowance price in the European Union, 2008-2020.

7 42 Figure Schematic of a BCA ..45 Figure Flat vs carbon content BCA tariffs ..46 Figure Relationship between average ETS price and CCfD subsidy at strike price of USD 65/tCO2 ..50 Figure Bilateral auction system schematic ..53 Figure Material required to build a 500 MW solar plant, onshore wind plant or offshore wind plant ..57 Figure Roadmap of policies to promote HYDROGEN use in INDUSTRY across three stages of deployment ..62 BOXESBox IRENA s work on GREEN HYDROGEN and hard-to-abate sectors ..10 Box Priority setting in GREEN HYDROGEN policy making .. 12 Box HYDROGEN in oil refineries ..17 Box Costs of GREEN HYDROGEN and materials ..24 Box Industrial companies with HYDROGEN -related decarbonisation targets selected examples.

8 26 Box The Glasgow Breakthroughs ..29 Box German HYDROGEN strategy ..33 Box UK Industrial Decarbonisation Strategy ..37 Box Procurement of GREEN steel through auctions for renewable energy ..56 Box Ecoleaf ..595 BCA Border carbon adjustment BECCS Bioenergy with carbon capture and storageBF Blast furnaceBF-BOF Blast furnace-basic oxygen furnaceCCfD Carbon contract for differenceCCS Carbon capture and storageCCUS Carbon capture utilisation and storageCO2 Carbon dioxideCOP Coefficient of performanceDAC Direct air captureDRI Direct reduction of ironEAF Electric arc furnaceETS Emissions trading systemEV Electric vehicleFCEV Fuel cell electric vehicleFIP Feed-in premiumFIT Feed-in tariffGHG Greenhouse gasH2 HydrogenNOx Nitrogen oxideOBPS Output-based pricing systemPtH Power-to-heatPV PhotovoltaicSMR Steam methane reformingSPP Sustainable public procurementWTO World Trade OrganizationEJ ExajouleGJ GigajouleGt

9 GigatonneGW Gigawattkg KilogramkW KilowattkWh Kilowatt hourm3 Cubic metreMt MegatonneMW MegawattMWh Megawatt hourPWh Petawatt hourt TonneTWh Terawatt houryr YearABBREVIATIONSUNITS OF MEASUREABBREVIATIONS6 GREENHYDROGENFOR INDUSTRYA GUIDE TO policy MAKING7 INTRODUCTIONABOUT THIS REPORTG reen hydrogen1 is benefiting from a new wave of interest due to its potential to make a significant contribution to meeting climate goals and advancing the energy transition. In response, IRENA has been analysing options for the production and consumption of GREEN HYDROGEN , along with devising policies to support and accelerate its commercialisation and wide adoption (see Box ).In 2020 IRENA published an initial report focusing on GREEN HYDROGEN policies: GREEN HYDROGEN : A guide to policy making (IRENA, 2020a).

10 It outlines the main barriers to the uptake of GREEN HYDROGEN and the key pillars for effective policy making. It also creates a framework for discussion about GREEN HYDROGEN policy GREEN HYDROGEN value chain, from production to consumption, consists of multiple elements that are interlinked with the broader energy sector. Each of these element can face specific barriers and challenges. IRENA, therefore, conceived a series of reports focusing on these challenges and the options to overcome them. The IRENA report, GREEN HYDROGEN supply: A guide to policy making, examines the policy options to support the production of GREEN HYDROGEN by water electrolysis, its transport, and the options for storage (IRENA, 2021a).The present report explores the challenges that GREEN HYDROGEN faces in the industrial sector and the policy options available to policy makers to address these challenges.