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May 16, 2023

Carrots and Sticks of Green Hydrogen

In order to achieve net-zero goals, green hydrogen will play a crucial role in decarbonizing the industrial and transportation sectors. Although the US, EU, and Australia are seeking to achieve similar goals, each has its own approach. 

The United States is focused on increasing domestic production of green hydrogen, the European Union is focused on reducing the environmental impact of imported goods, and Australia has placed a heavy emphasis on expanding its hydrogen exports.


The Policy Constellation Map lets us compare global policies readily by how they constrain (“Stick”) or incentivize (“Carrot”) supply and demand within any particular product, technology, or process.  

  • Carrots: The US, EU, and Australia all provide tax incentives and funding to increase the production of green hydrogen and renewable energy infrastructure. 

  • Sticks: There are only a handful of policies that disincentivize the use of fossil fuels, and the EU is alone in applying them on the supply side. 


* Relevant policies are linked at the bottom of the newsletter. 

Unlike the US and Australia, which prioritize carrot policies, the EU’s position of supply/carrots less effectively provides resources that bolster alternative green infrastructure.

How will these policies affect transportation, utilities, and the oil & gas industries?

  • Transportation: Within the US, some states have adopted policies banning the sale of new gas cars and freight trucks, while the EU and Australia have both outlined plans and funding to invest in transportation-focused hydrogen infrastructure. 

  • Utilities: Given the differing overarching objectives, the pathway to adopting green hydrogen will vary.

    • The US aims to expand renewable energy infrastructure and hydrogen production. 

    • Since all new hydrogen production facilities have to be connected to renewable electricity sources for eligibility in the EU, energy infrastructure and green hydrogen production will grow hand in hand in the EU. 

    • Australia emphasizes ‘hydrogen hubs’ and aims to work cross-functionally with the energy and transportation industries to build an interconnected system.

  • Oil & Gas: It is inevitable that nations will require less and less fossil fuels. With the ambitious goal of expanding the green hydrogen fuel market, Australia will likely play a hand in introducing a new competition for oil and gas industries. 

If leveraged properly, these policies will create opportunities for industries to move to a different space on the Policy Constellation Map, ranging from investment in low-carbon technology and using hydrogen industrial feedstock to produce fertilizers.

Until next time, 

*Policies Linked: 1. United States: Inflation Reduction Act, Methane Fines 2. Australia: National Hydrogen Strategy, Safeguard Mechanism 3. EU: EU Green Industrial Plan, TCTF, Supplement Directive, Carbon Border Adjustment Mechanism

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