The application of green finance to the production of blue and green hydrogen: a comparative study

There is widespread agreement" and in particular between the IPCC and the IEA - that to meet global decarbonising goals a large scale and rapid scaling up of hydrogen production is necessary. However, there is a growing debate over the comparative economics of green renewable and blue gas derived hydrogen. This raises the question of where green finance should be most cost effectively directed. We highlight that when the most recent data on fugitive emissions and rises in the EU's carbon price are accounted for, green hydrogen is shown to be approaching cost parity with blue hydrogen - particularly where reasonably low-cost renewable energy is available - and exceeds it in cases in the most favourable locations. Indeed, this study indicates that, in most cases, given the high-risk levels attached to the production of blue hydrogen, the most cost-effective use of green finance would be to focus on supporting the scaling up of green hydrogen production in the early stages at a time when the investment environment may not fully reflect the medium to longer term prospects.