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Green Hydrogen Policy Brief

Can demand for green fertiliser accelerate electrolytic hydrogen supply?

A new policy brief by Cambridge Econometrics and the University of Exeter explores whether targeted supply-and demand-side policies could support the scale-up and commercialisation of electrolytic hydrogen production.

Using FTT:H2, a new model developed to simulate the the diffusion of different hydrogen production technologies, the policy brief assesses the impacts of a global mandate for green ammonia for use in fertilisers and a global carbon price on hydrogen production.

Cambridge Econometrics modelled a global carbon price levied on hydrogen production that starts at zero in 2025 and increases linearly to $200/tCO2 in 2050.

The policy brief is part of the Economics of Energy Innovation and System Transition (EEIST) project, funded by the UK Government’s Department for Energy Security and Net Zero.

Hydrogen Policy Brief option B -1
Can Demand for Green Fertiliser Accelerate Electrolytic Hydrogen supply?

Authors: Pim Vercoulen, Jamie Pirie, Simone Cooper-Searle, An Vu, Barnabás Benyák, Áron Hartvig and Femke Nijss.

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Key Findings

Results show that additional policy support is needed to kickstart the market for electrolytic hydrogen production. A carbon price alone is unlikely to be sufficient to phase out the production of high-carbon hydrogen; strong demand-side policies will also be required, such as mandates in specific end-use sectors.

1

Electrolytic hydrogen can compete with fossil-fuelled hydrogen when a mandate and carbon price are implemented together. However, this does vary from region to region.

2
The cost of fossil-fuelled hydrogen reaches the same level as electrolytic hydrogen with 
dedicated renewables in some world regions in 2050. When this is combined with a mandate on electrolytic hydrogen for use in ammonia production, cost parity is achieved earlier due to faster learning-by-doing effects.
3

Mandates on electrolytic hydrogen for fertiliser production are effective at 
kick starting off-grid electrolytic hydrogen production in regions with cheap 
renewable resources. 

4

While these regions can produce electrolytic hydrogen that is price competitive with fossil-fuelled hydrogen, it will require large-scale 
deployment of dedicated renewable electricity generation.

5

Access to affordable renewable energy resources is a greater driver of reducing electrolytic production costs than the effects of learning-by-doing in reducing electrolyser equipment costs. In most regions electrolytic hydrogen produced from dedicated renewables will be more cost-effective than hydrogen produced from grid-connected electricity.

Get in Touch

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Simone Cooper-Searle

Global Head of Environment

t: +44 1223 533 100

e:scs@camecon.com

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