Catalyze clean hydrogen supply and demand

Advancing the clean hydrogen value chain

The low carbon intensity—or ‘clean’—hydrogen market is far from where it needs to be to meet 2050 global decarbonization objectives. To achieve net-zero greenhouse gas emissions by the same year, the clean hydrogen market will need to produce roughly six times current global hydrogen supply. According to Deloitte analysis, that is achievable under the right conditions. Those conditions cannot exist without decisive policy support to help create the foundation for market development.

In this report, our focus turns to players in the private sector who struggle with how to mitigate perceived risk in the early stages of market development, even in regions with relatively attractively policy conditions on account of a simple realty. While we know how to produce clean hydrogen, it remains prohibitively expensive relative to alternatives for many businesses. While costs will likely come down, progress toward a robust global hydrogen economy has been slowed by uncertainty across the value chain. Many would-be hydrogen suppliers fear demand is inadequate, and many would-be buyers fear that cost-competitive supply is uncertain. For potential investors in infrastructure that could catalyze future growth, that uncertainty is palpable.

Many have come to refer to this as the “chicken-or-egg” problem in clean hydrogen: what comes first, the supply or the demand signals…or even the enabling infrastructure? That likely understates the complexity of the situation: It might more aptly be described as the “systemic first mover dilemma” in clean hydrogen.

Deloitte and Princeton University’s Andlinger Center have recently teamed up to explore the issue. Working with industry participants at every stage of the hydrogen value chain, we identified at least a dozen points in the development, production, and distribution of clean hydrogen where the first mover problem exists, and it goes well beyond suppliers and off-takers of the clean hydrogen itself.

Achieving clean hydrogen’s potential

Clean hydrogen’s potential to enable a net-zero future is immense but achieving that potential will require thoughtful investment and fresh approaches from businesses across the value chain. With the help of innovative business models, business leaders can crack the systemic first mover dilemma and capitalize on the clean hydrogen boom that recent advances in technology and policy have enabled.