Advancing the hydrogen economy: Economic, technological, and policy perspectives for a sustainable energy transition

Abstract

This paper examines the pivotal role of hydrogen in transitioning to a low-carbon energy future. It provides an in-depth review of the hydrogen supply chain, encompassing production, storage, transportation, and end-use distribution, and offers a data-driven assessment of the economic, technological, and policy-related challenges. Key discussions include economic and operational challenges, risk assessments, and policy frameworks necessary to establish a robust hydrogen economy. The study emphasizes the cost dynamics across various production methods, infrastructure needs for efficient storage and distribution, and the environmental implications of hydrogen technologies. It also evaluates global and regional policy strategies, including financial incentives and regulatory mechanisms, to scale hydrogen adoption. By integrating supply and demand-side measures, this analysis offers comprehensive insights into the socioeconomic impacts and potential pathways to mitigate risks, supporting the development of a sustainable and economically viable hydrogen ecosystem. Through a statistical review of recent international reports and journal papers, the study identifies strategic instruments such as contracts for difference (CfDs), power purchase agreements (PPAs), regulated asset base (RAB) models, and end-user obligations as key levers for de-risking investment and accelerating hydrogen market growth. Green hydrogen costs are decreasing, with projections showing a drop from 5.3 €/kg in 2020 to as low as 2.7 €/kg by 2050. In cost breakdowns for electrolyzers, the average share of the balance of plant and stack components is 55 % and 45 %, respectively. Underground hydrogen storage is cost-effective but geographically limited, whereas compressed and liquid hydrogen incurs higher energy and equipment costs. Key findings emphasize the need for substantial investments in infrastructure, innovative financial mechanisms, and harmonized global certification systems to support sustainable hydrogen adoption. The study also supports targeted policy interventions, such as contractual frameworks to mitigate cost volatility, subsidies for green hydrogen production, and public-private partnerships to share investment risks.