Could oil refiners unlock the green hydrogen economy?

AI generated summary

Low-carbon hydrogen has seen significant growth over the past decade, driven by climate initiatives and supportive policies. However, project development is facing challenges due to high costs and long-term supply agreements. European oil refiners may play a pivotal role in advancing the green hydrogen economy, especially as EU regulations push for faster decarbonization. This shift not only addresses the declining demand for road transport fuels but also supports the hard-to-decarbonize marine and aviation sectors. With over $5 billion already committed to green hydrogen projects, European refiners are poised to become major producers or buyers of green hydrogen.

Despite the promising outlook, several hurdles remain, including the need for further cost reductions in green hydrogen production and enhanced regulatory frameworks. The EU's Renewable Energy Directive (RED III) aims to facilitate this transition by promoting renewable fuels and setting compliance targets for the refining sector. However, the current policy landscape requires further action to ensure long-term growth, including addressing technology risks and regulatory uncertainties. As the marine and aviation sectors also seek to reduce emissions, green hydrogen presents a viable solution, but sustained investment and government support will be crucial for unlocking its full potential.