The deployment of hydrogen in the Netherlands

Abstract

In the Netherlands, it is envisaged that hydrogen will play a crucial role in the energy transition. Especially in this heavy industry, hydrogen will become essential to make this sector sustainable. In general, three types of hydrogen are used: grey, blue, and green hydrogen. This study focuses on green hydrogen, as it is produced without CO2 emissions and therefore complies with the climate goals of the Netherlands. Using green hydrogen in these industries is useful because it can accomplish easy and cost-efficient significant reductions in this sector. However, some stabilizing pressures (stabilizing pressures), such as the suppliers' lack of a business case and there are more, hinder this transition and keep the incumbent regime based on fossil fuels in position. Fortunately, some destabilizing pressures (destabilizing pressures) stimulate the transition, such as the Paris Climate Agreement. Policy instruments can stimulate these destabilizing pressures and overcome stabilizing pressures. To get the transition started, the Dutch government will have to deploy policy instruments. For the Dutch government, it is currently unknown which policy instruments can accomplish this. The aim of this research is to conduct an analytical framework to assess policy instruments on the identified pressures and give an advice to the Dutch government which policy instruments should be deployed. Two streams of literature are combined into an analytical framework that can assess policy instruments to answer this research question: the transition literature and the economic literature. The outcome of the case study of the heavy industry in the Netherlands is the identification of six stabilizing pressures. The first is a lack of coordination as the necessary policies and regulations are not yet to facilitate the transition. Furthermore, there is no business case for green hydrogen yet. Next, the learning process has to be stimulated, as the development of the technology is moving slow. To foster the transition, it is crucial to have powerful actors involved. At last, a hydrogen market has to be established to accelerate the transition. Also, one destabilizing pressure is identified: the industry sector has a lot of hydrogen experience, which positively influences the transition. These are the pressures on which the policy instruments will be assessed in this research. The following policy instruments will be assessed on their contribution to transition: a higher national CO2 price for the industry sector, Carbon contracts for Difference, a subsidy of the supply, a subsidy for demand, and a financial contribution for the construction of the infrastructure. These are the policy instruments that will be assessed by the identified pressures. It is advisable for the Dutch government to deploy a policy mix of multiple policy instruments to impact all identified pressures positively. This research shows that a combination of a subsidy for supply, financial support for infrastructure development, and CCfD complement each other. This policy mix has therefore been found adequate to stimulate the hydrogen transition in the heavy industry in the Netherlands.