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Fueling the Transition: Accelerating Cost-Competitive Green Hydrogen



An achievable zero-carbon solution for decarbonizing industry


Green hydrogen production costs could fall below $2 per kilogram in many locations in the next five years. This zero-carbon fuel will be critical to decarbonizing some of the hardest-to-abate sectors, such as shipping and steelmaking. Achieving the crucial $2/kg target for cost-competitiveness will enable decarbonization of multiple sectors and play an important role in aligning the globe to a pathway that limits warming to 1.5°C.


RMI’s report, Fueling the Transition: Accelerating Cost-Competitive Green Hydrogen, analyzes the cost reduction opportunity and the critical enabling tools required to bring cost-competitive green hydrogen to market this decade. This report is intended for industry executives, regulators, and policymakers.

Reduced electrolyzer capital expenditure is the largest driver to realize near-term cost reduction. From today’s price range, a 50%–70% cost reduction is achievable in 2026–2030 via a combination of economies of scale, system design improvements, manufacturing optimization, and power system optimization. This makes sub-$2/kg production costs achievable in locations that were previously not cost-competitive producers of green hydrogen.


Among the report’s main conclusions:

  • Low-cost green hydrogen production can be achieved faster with lower volumes of deployment than currently expected.

  • Policy support will be needed for development of projects, realization of market off-take, infrastructure development, and further de-risking. While there is significant policy momentum, current policy support in most locations falls short of supporting announced targets.

  • There are multiple paths to scale, from large off-take in hard-to-abate sectors, partial off-take from existing demand sectors, or a combination of these. Several sectors, such as refining and ammonia, can start scaling ahead of policy implementation, with the support of first movers.


Original Source: RMI


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