Hydrogen conference 2024: our biggest takeaways

Last week, Wood Mackenzie hosted its annual low-carbon Hydrogen Conference in London. The event brought together global stakeholders from across the value chain to discuss the most pertinent topics in this fast-changing industry.  

There was a growing consensus that sentiment has shifted over the last year. Industry participants are reviewing strategic priorities, and uncertainty hangs over the sector, but the conference also highlighted many successes and the key themes influencing the near-term outlook. 
 

"Back then, hydrogen was the solution to every problem. Now, though the market has slowed down, we don’t see a pathway to net zero without low-carbon hydrogen.” – Andrew Beard, President, Hydrogen, Shell 

Our latest insight, ‘Wood Mackenzie Hydrogen Conference 2024’ is our deep dive into five of our biggest takeaways from the event, and the Wood Mackenzie take on each of them. Fill out the form at the top of the page to download your complimentary copy of the full insight, or read on for a sneak peek at just two of our five biggest takeaways:  

1. Political outcomes – the greatest influence for hydrogen’s near-term trajectory 

Republican party success in the US presidential election, as well as turmoil in German politics, served as a timely reminder of the vital importance of political stability and predictability when it comes to facilitating investment. The biggest question mark was, predictably, around the fate of the Inflation Reduction Act (IRA) and whether a full repeal is on the cards once President-elect Trump takes power.  

Panelists believed that a full repeal is unlikely due to bipartisan support, and since many benefits of the IRA will be felt strongly in Republican-supporting states. The election result has nonetheless planted uncertainty in the mind of industry players, who are likely to hold off on investments until the future of keystone policies becomes clear: “anything that creates uncertainty has the potential to slow the pipeline down”. As such, further delays can be expected in the US, extending the stalemate brought about by 45V uncertainty over the last 12 months. Despite this, industry figures felt that the US will still emerge as a dominant player in low-carbon hydrogen – especially due to its advantaged position as a blue ammonia exporter. However, the outlook for electrolytic hydrogen as well as domestic demand is less certain.  

In Germany, political upheaval is expected to result in a drift to the right, putting decarbonisation policies and timelines at risk. Germany has led the world in terms of the breadth of policy support offered, and the generosity of funding on the table for low carbon (predominately electrolytic) hydrogen. Should measures like domestic subsidy programmes, or support for the core pipeline network be delayed, reshaped, or withdrawn altogether, then this could deal a blow to German prospects at a time when momentum has been building.  

Wood Mackenzie take: A full repeal of the Inflation Reduction Act remains unlikely but various elements – including tax credit guidelines, financing mechanisms or bonus adders – are likely to be removed or modified. The 45Q is expected to hold, with blue hydrogen and ammonia export projects remaining on track. Read more on Wood Mackenzie’s view of a second Trump administration here. 
 

2. Policymaker focus shifts to value for money and project delivery 

One of the key themes reflected on throughout the conference was the comparison between contracts for difference, tax credits, and direct subsidies with reference to the British, American and European experiences so far. 

The UK’s approach of offering support through CfDs (contracts for difference) received broad praise as this provides the greatest level of certainty for developers, offtakers, and investors. The UK was also lauded for its “twin track” approach in funding both blue and green hydrogen projects. The UK’s mechanisms were reflected on by the Department of Energy Security and Net Zero (DESNZ), which emphasized the focus on “value for money” in the upcoming second round of allocations. HAR1 saw a lack of projects targeting industries of scale with considerable emissions savings potential being awarded, an aspect which DESNZ hopes to rectify in HAR2 – further details of which will be shared by the end of 2024. DESNZ also acknowledged one of the major flaws of the first round which was the lengthy timeframe between the awards and the contract signatures – with no HAR1 project yet reaching FID. 

Industry players are eagerly awaiting the results of CfD schemes underway in Japan and South Korea. Results in South Korea are expected at the end of November, with Japan following shortly after – with a trickling of successful bids being awarded over a four to five month period. 

Wood Mackenzie take: The UK’s “twin track” approach is pragmatic given the uncertainties surrounding the sector, as it leaves the door open for the UK to respond to the market as it develops. “Single track” approaches like the EU’s current focus on electrolytic hydrogen risks closing the door on alternative avenues which might emerge as more commercially feasible decarbonisation pathways. We also expect CfD support to carve out greater value in the near term due to its effectiveness in reducing project risk and creating certainty for investors. 

Read our full list of takeaways from the event 

To download the full insight and gain access to our other three key big takeaways from the event, fill out the form at the top of the page to download your free copy of ‘Wood Mackenzie Hydrogen Conference 2024’ today.