How to incentivise hydrogen energy technologies for net zero: Whole-system value chain optimisation of policy scenarios

Christopher Quarton, Sheila Samsatli

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Policy intervention is essential for enabling energy decarbonisation, and historic examples such as wind and solar power show how well-designed policy can lead to long term system benefits. Hydrogen technologies are emerging technologies that, with sufficient policy support, can also become established and provide valuable energy services. In this study, the policies available for supporting emerging energy technologies and encouraging system decarbonisation are analysed, and their relevance to hydrogen technologies is considered. Value chain optimisation is used to assess the effectiveness of these policies in a system undergoing transition to net-zero emissions. The optimisation results show that both carbon budgets and carbon taxation approaches can be effective in achieving net-zero emissions, but that the details of the policy design can significantly influence overall costs and emissions. The results also show that in a net-zero energy system, hydrogen technologies have a role in industry without needing specific policy support, but policy intervention is needed for hydrogen to become established in other sectors (such as domestic and commercial heating). Both feed-in tariffs and obligations for hydrogen injection were found to be effective at increasing hydrogen uptake, although with an increase in overall system cost of £11-14 for each additional MWh of hydrogen in the system. This study shows the benefits of using value chain optimisation to analyse energy policies and technologies. It also emphasises the importance of careful policy design in order to achieve the best overall system outcomes.
Original languageEnglish
Pages (from-to)1215-1238
Number of pages24
JournalSustainable Production and Consumption.
Early online date9 Feb 2021
Publication statusPublished - 31 Jul 2021

Bibliographical note

Funding Information:
Dr. S. Samsatli would like to thank the EPSRC for partial funding of her research through the BEFEW project (Grant No. EP/P018165/1).

Funding Information:
The funding and support of BEIS and the Engineering and Physical Sciences Research Council (EPSRC), through C.J. Quarton’s PhD studentship, are gratefully acknowledged.

Funding Information:
The authors would like to thank Dr. Ian Llewelyn from the UK Government Department for Business, Energy and Industrial Strategy (BEIS) and Dr. Jose M. Bermudez from the International Energy Agency for their valuable comments on this work and wider support of the project.


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