EU: impact of carbon price on hydrogen production| ��ƽ��

Forecast impact of carbon pricing on hydrogen production costs in the European Union in 2030, by hydrogen type* (in euros per megawatt hour)

Euros per metric ton of carbon dioxide	Natural gas	Fossil based H₂	Fossil based H₂ with carbon capture	Renewable H₂ (low cost)**	Renewable H₂ (high cost)**
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Release date

August 2021

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Survey time period

2021

Supplementary notes

* The source assumes a price of 20 euros per megawatt hour for natural gas.
The capture rate for fossil-based hydrogen with carbon capture is assumed to be around 75 percent.

** Renewable hydrogen has a production cost that can vary between 60 to 163 euros per megawatt hour, according to the renewable source used.

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Carbon pricing needs to reach roughly 100 euros per metric ton of carbon dioxide by 2030, for the cheapest renewable hydrogen to be competitive with fossil-based hydrogen. Nonetheless, carbon pricing need to reach as high as *** euros per metric ton of carbon dioxide for all renewable hydrogen to have a production price that breaks even with fossil-based hydrogen production cost. Furthermore, natural gas costs remain cheaper than any hydrogen type if carbon prices do not exceed 100 euros per metric ton of carbon dioxide.

Hydrogen has been explored as an energy source to mitigate climate change impacts, and alongside its production, new strategies, incentives, and guidelines are also being developed. Currently, global hydrogen production is dominated by natural gas reforming, and green hydrogen prices are not competitive enough to attract customers. Consequently, as of 2021, the market demand for fully decarbonized green hydrogen is still very low compared to the demand for other fuels.