The Green Hydrogen Landscape is Taking Shape- How to Navigate It

For sectors with hard-to-abate emissions, green hydrogen and its derivatives have become the silver bullet for decarbonization efforts. While the hydrogen supply landscape is still in its infancy, it is gaining momentum, driving corporates to seize the early opportunity. In this piece, we’ll delve into the challenges of procuring green hydrogen and explore potential solutions to unlocking its full potential.

Europe leads the way in green hydrogen adoption

Green hydrogen’s uptick has been strengthened by the EU’s efforts to clarify its definition, coupled with the initiation of a subsidy program for hydrogen producers through the European Hydrogen Bank. Regulatory pressures, such as the recent Renewable Energy Directive (RED III), further emphasize urgency for corporations by setting clear targets for the industry and transport sectors, including aviation and maritime. Infrastructure development is also accelerating to meet demand, with European grid planning already underway.

The frontrunners leveraging hydrogen for decarbonization

In high-emission sectors like Industry and Transport, including chemicals, steel, iron, fertilizer, and long-haul transport, green hydrogen unlocks new paths to reducing scope 1 carbon emissions. First movers are already well on their way; Total Energies and ThyssenKrupp have announced first corporate hydrogen tenders scaling up their efforts to source large volumes of clean hydrogen (more than 100,000 tons per year) to accelerate their decarbonization journey.

Snapshot: Sector Insights

The industrial sector is the world’s largest consumer of energy, contributing to approximately 38% of the overall global final energy consumption according to latest IEA World Energy Outlook 2023. The vast majority of these energy needs are met by coal, natural gas and oil derivatives, causing enormous greenhouse gas emissions.

The transport sector is responsible for 26% of total final energy consumption, where despite the uptake of electric vehicles, fossil fuel-powered vehicles, ships and aircrafts are still predominant. 

It’s clear that something has to change as we strive for a more sustainable.

Our view: the 4 major challenges facing green hydrogen

The emerging green hydrogen market is still illiquid and volatile, and procurement is linked with a range of challenges, including:

1. Uncertain sourcing success

Despite numerous electrolyzer projects progressing past the feasibility stage, uncertainty persists regarding which projects will materialize and the associated hydrogen pricing. Making such projects bankable will require long-term subsidies and offtake agreements. Compounding the uncertainty is the possibility of delays or unexpected changes in the development of the grid infrastructure, which could impact the timing for the transition.

2. Price risk

While green hydrogen costs were initially expected to fall below 3 EUR/kg, an increase in equipment prices and interest rates (among other reasons) has led to recent production costs ranging between 5 EUR/kg to 8 EUR/kg. While uncertainty on prices can be mitigated to some extent using subsidies, there remains a high price risk for corporates when entering into agreements, an important hurdle to overcome if corporates want to benefit from future cost decreases.

3. Delivery profile and consumption profile alignment

Due to the EU’s criteria on temporal correlation between renewable energy plants and electrolyzer operations, it will be difficult for hydrogen producers to supply the baseload-like hydrogen profiles that are often required for many processes.

4. Lack of market standards

Unlike the Power Purchase Agreement (PPA) market there are still no established market standards; nothing is formalized in terms of delivery and price structures, or tenor and contract templates. It is likely that a combination of instruments will arise from PPA and LNG contracts, however the lack of blueprint means risks need to be carefully managed — especially in case of long-term Hydrogen Purchase Agreements (HPA).

Making the most of the green hydrogen opportunity

For many corporates in hard-to-abate sectors, meeting emissions reduction targets demands action now. Here’s what is needed to drive progress in the green hydrogen transaction:


  • Extensive expertise in navigating the rapidly evolving overall renewable energy market given the numerous interdependencies.
  • Staying informed about recent developments and opportunities in the green hydrogen sector — this is especially important for large industrial corporates, which need to adequately prepare in order to capitalize on opportunities.
  • In-depth knowledge of regulatory compliance and subsidy programs.
  • Developing a tailored corporate hydrogen strategy outlining timelines, volumes, expected costs, and other key factors.
  • Conducting structured tender processes to secure competitive bids, especially in a non-liquid market like hydrogen, and negotiate contracts effectively.

Did you know?

 act renewable is proud to support ambitious corporations on their decarbonization journey, including developing a hydrogen strategy and procurement for a client that is responsible for 1% of Germany’s emissions.

Could green hydrogen unlock your emissions reduction potential? Connect with to learn more.

-Felix Fink

Renewable Energy Strategy Consultant

get in touch

Need assistance in other RE topics? Reach out to the team for support:

Title here
Thank you for signing up
to our Insights.
Click here to download