Abstract

Adoption of Low-Carbon Hydrogen (LCH) technologies is considered promising to curtail carbon emissions in the industrial sectors and substitute high carbon-intensive fuels. However, LCH technologies are still evolving and face several technical & commercial barriers. On the commercial side, they face economic viability and financial risks and, therefore, fail to attract investments. Recently, some countries have developed policy support to incentivize LCH technologies, but their reward mechanisms and design vary widely and lack a standardized approach. The paper aims to contribute to the current knowledge by discussing the theoretical underpinning of LCH revenue models. It reviews emerging revenue models for LCH technologies in Germany, the Netherlands, and the UK. The review covers CCfD (Carbon Contract for Difference) in Germany, SDE++ (Stimulation of Sustainable Energy Production and Climate Transition) in the Netherlands, and HPBM (Hydrogen production Business Model) in the United Kingdom (UK). The review highlighted CCfD acts as simple hedging instrument against CO2 market price fluctuations without any visibility on hydrogen prices in the market. In contrast, SDE++ and HPBM are found to more comprehensive incentive schemes for LCH development.

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