Carbon Intensity Regulations: Key Determinant for the Global Low-Carbon Hydrogen Market, WoodMac Report Highlights

Wood Mackenzie, a leading energy research and consultancy firm, emphasizes in its recent report the pivotal role of global policymakers in shaping the future of low-carbon hydrogen. The report, titled ‘Over the rainbow: Why understanding full value-chain carbon intensity is trumping the colour of hydrogen,’ underscores the necessity for regulations and subsidies that prioritize the carbon intensity of hydrogen production over its color designation.

According to Flor De La Cruz, Principal Analyst and author of the report, there’s a growing emphasis on accurately measuring efforts to reduce emissions worldwide, particularly focusing on the carbon intensity of various hydrogen sources. While green hydrogen garners significant attention due to its potential for near-zero carbon emissions, it’s imperative for exporters and developers to assess the entire value chain given the increasing regulatory scrutiny.

The report highlights that green hydrogen production, reliant on electrolysis powered by renewable energy, could still result in significant emissions if connected to grids with high carbon intensity. Similarly, blue hydrogen, which involves capturing emissions from natural gas production, faces challenges in achieving substantial carbon capture rates at scale.

Moreover, the carbon intensity of hydrogen extends beyond production to include processing, transportation, and even the carrier used, such as ammonia. This full life-cycle assessment is crucial, especially as many countries establish carbon-intensity thresholds for low-carbon hydrogen.

De La Cruz emphasizes the necessity of subsidies to support the supply and demand for low-carbon hydrogen, underscoring their significance in project economics. However, adherence to regulatory requirements, particularly regarding emissions thresholds, remains a critical challenge for hydrogen exporters.

While some regions like the EU are comprehensive in their approach, incorporating emissions across the full life cycle, others like the US are gradually expanding their scope. Japan and South Korea have also signaled intentions to broaden emissions assessment criteria, although implementation is pending.

In essence, the report underscores the complex landscape of low-carbon hydrogen production and the imperative for policymakers to enact regulations and incentives that holistically address carbon intensity throughout the value chain.