Decarbonizing Hard-to-Abate Industries in Northwestern Europe

Abstract

Within the energy transition, green hydrogen stands as a key solution for decarbonizing sectors where direct electrification is not viable. This thesis focuses on the competitive landscape of hydrogen production in North-Western Europe, addressing the technological and geographical competition of locally produced green hydrogen. This research introduces a comprehensive analytical tool to assess the viability of various hydrogen production methods, which are competing value chains of European green hydrogen. By synthesizing institutional, economic, societal, and technical considerations, the model facilitates a direct comparison between different green hydrogen alternatives.

The research commenced by applying Hekkert’s (2011) TIS analysis as a tool for structural analysis to systematically map the system. The goal was to delineate its structure and identify potential key competing value chains within the scope of Europe. This initial phase involved a literature review and interviews to select value chains. The subsequent phase, which also used the TIS as a tool, focused on identifying key drivers and barriers within the system through a functional analysis, utilizing a structured approach to examine system functions. Expert interviews played a pivotal role in this stage, providing an understanding of the system's dynamics. In the last phase, the techno-economic analysis was performed by introducing barrier-driven scenarios. Allowing for insights into the cost components and the overall comparison in the levelized cost of hydrogen for every scenario.

The structural analysis showed that the European Commission set the scope with institutions, allowing for technologically mature low-carbon alternatives in this comparison. The functional analysis revealed the intricate interconnectivity of the system functions, illustrating how drivers and barriers can swiftly transform, reflecting the system's complex status. The primary barrier to green hydrogen adoption is its high cost, creating a deadlock with no demand or supply. Technological advancement and governmental intervention emerged as key solutions to this challenge. The techno-economic results show that the least cost-effective value chain is local green hydrogen, and the most cost-effective value chain is local blue hydrogen. Local green hydrogen faces challenges in competitiveness due to high energy prices and low capacity factors compared to other electrolyzer-based methods. Additionally, compared to other types, like blue hydrogen, it has higher overall investment and energy costs.

The ultimate aim is to navigate through the complexities of the hydrogen system, clarifying how various variables interconnect and influence each other. Tools like the one developed in this research provide a foundation for understanding this complexity. By understanding the impact of governmental interventions and other factors on final prices, stakeholders can engage in more strategic decision-making. To deepen the understanding of the system, it is recommended to conduct further interviews and research, exploring the alternatives within and outside the European system more comprehensively. Investigating what drives prices beyond mere economic factors will offer a clearer picture of their current status and potential future developments. This broader analysis will equip users with the insights needed to make informed decisions, considering both the economic and socio-technical dimensions that shape the hydrogen market's evolution.