The global market for hydrogen could develop in such a way that demand for different types of green hydrogen emerge in different parts of the world, according to panellists speaking at a Hydrogen Economist Mena briefing in Dubai.

Regions such as the EU will require certificates of origin to prove green hydrogen has been generated using captive power from renewable resources that are additional to the grid, Dan Feldman, of law firm Shearman & Sterling, told the briefing.

But countries such as China may have less stringent standards, meaning they will have demand for green hydrogen generated from grid power alone.

“You are going to see different types of hydrogen or ammonia acceptable to different parts of the world,” Feldman notes.

“It is a geographic story based partly on global regulation around reducing carbon and then more specifically about certain types of hydrogen and hydrogen production in different places and what that does to the cost.”

“You are going to see different types of hydrogen or ammonia acceptable to different parts of the world” Feldman, Shearman & Sterling

Projects may even be set up in certain regions targeting demand markets with less stringent regulations because the cost of meeting demand in those regions will be lower, Feldman says.

Once some large-scale green hydrogen projects are operational it will open the door to more debt finance, because subsequent projects will be more bankable, Feldman adds.

“If some of these projects can get finance and show it works it will open the door and give the green light to banks and others to move forward,” he says.

Feldman and fellow panellist Anuj Chabra, executive director of project and export finance at bank Standard Chartered, agreed that having offtake contracts in place with reputable counter-parties would be the key factor in unlocking project finance from banks.

“When we are talking about green hydrogen projects, most of the offtakers are going to be from the private sector [rather than state-backed entities as was often the case in the renewables industry],” said Chabra.

“Everyone will now have to show some more flexibility in terms of evaluating private-sector corporate as offtakers.”

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Author: Tom Young