1There has been relatively little (academic) work on the political economy of hydrogen, nor even on the specific economic actors that can be expected to back it. The political economy of hydrogen is closely connected to the literature on the political economy of the energy transition in general, and, for blue hydrogen, on that of CCS. This chapter first discusses the general political economy of hydrogen before looking into specific actors and sectors, as well as its economic geography.

4.1 Political Economy of Hydrogen

2Market conditions for economic actors in energy transitions are predominantly shaped by governments (Hisschemöller et al., 2006; McDowall & Eames, 2006; Meadowcroft, 2005; Meadowcroft & Langhelle, 2009). There are, however, doubts on the desirability of government pushes for specific technologies, amplified by the many competing alternatives in some sectors, such as the small vehicle market where fuel cell vehicles (FCVs) compete with BEVs, hybrids and biofuel cars (Torvanger & Meadowcroft, 2011). Moreover, there is a lot of issue overlap, which makes specific government policy support more difficult: think of legal and regulatory obstacles, economic interests, and public acceptability (Flamme et al., 2019; Kern et al., 2016; Meadowcroft & Langhelle, 2009). Such policies for encouraging specific technologies are decades long processes, where some (e.g. Victor et al., 2003) have rightfully pointed at the risk of path dependencies.

3The role of blue hydrogen is an important issue here. CCS balances several economic interests as a possible ‘bridge’ technology between grey and green hydrogen. The roll-out of CCS suffers from an image problem as being a temporary fix rather than a long-term solution in the energy transition. It is not truly green and cannot mobilise support that way. Subsidies for CCS are vulnerable to accusations of violating the argument that polluters should pay, as it has the public image of subsidies for the fossil fuel industry (Meadowcroft & Langhelle, 2009). This is not unfounded, as industry and government have different motivations for backing CCS (Kern et al., 2016; Markusson et al., 2011; Meadowcroft & Langhelle, 2009). Whereas governments back CCS to reduce carbon emissions and bridge the gap to cleaner technologies, industries also do so because it allows the continued use of fossil fuel (infrastructure). This raises problems, as the public image can be an important factor in guiding economic actors, for instance by steering investment and shaping investor views on long-term profitability. It is a key factor in the hydrogen transition (Flamme et al., 2019; Kern et al., 2016; Meadowcroft & Langhelle, 2009; Torvanger & Meadowcroft, 2011). James Meadowcroft and Oluf Langhelle (2009) stress, in the context of CCS, the importance of widespread endorsement of transition technologies by many different sectors to gain public acceptance.

4William McDowall and Malcolm Eames (2006) also note public acceptability as a key barrier in the hydrogen transition, along with the absence of infrastructure, industry standards, surplus renewable electricity, and global cooperation. Other factors include high costs, technological immaturity, safety, the ability to adapt to hydrogen competition, the limited skills base, the limited availability of industrial components, the difficulty of technological development, lack of demand for hydrogen, social opposition and uncertainty about the technology’s future. Underlying problems for these interests are climate change, energy security, air quality, and competitiveness. Important positive drivers are social/environmental values, political will, technology and of course price competitiveness and economic interests.

5 One thing to note on top of the above is the organisation of political interests itself, in what Carl-Jochen Winter (2005) calls “energy technology politics”. Existing interests organise much more readily than newcomers (Victor et al., 2003). Concretely, this means that future beneficiaries of the hydrogen system are much less influential than companies benefitting from the current system. In the energy transition at large this has been exemplified by the suppression of cautionary climate change reports by ExxonMobil and Shell in the 1980s (Franta, 2018). However, the changing stance of some fossil fuel companies toward hydrogen makes this more complicated: some energy incumbents have begun to co-opt changes rather than resist change.

4.2 Literature Economic Sectors

6The IEA (IEA, 2019c, p. 19) sums up “renewable electricity suppliers, industrial gas producers, electricity and gas utilities, automakers, oil and gas companies, major engineering firms and the governments of the world’s largest economies” as actors in support of the hydrogen transition. Much of the existing literature on the hydrogen transition, however, focuses specifically on the role of the fossil fuel (most notably oil and gas) and automotive industry, more so than other industries.

7 This is understandable. Integrating blue hydrogen has various direct benefits for oil and gas companies, pipeline owners, and even the coal industry (Kern et al., 2016; Markusson et al., 2011; Meadowcroft & Langhelle, 2009). They get access to cheap or free CO₂ in pipelines from CCS which they can use for enhanced oil recovery (EOR). Secondly, CCS allows the continued use of natural gas, which means that producers can continue to sell it to a big energy market. Thirdly, they can sell the now-redundant CO₂ emission rights to other parties and earn extra money that way. Fourthly, blue hydrogen guarantees the continued use of pipelines for CCS purposes, which for pipeline owners is preferable compared to them falling into disuse. Much attention has been paid to BP and Shell as long-time backers in particular (Balat & Balat, 2009; Meadowcroft & Langhelle, 2009; Royal Dutch Shell & Wuppertal Institut, 2017). Oil and gas companies in Norway, such as Equinor, are known to have pushed for blue hydrogen from the perspective of remaining able to use natural gas and the infrastructure (Meadowcroft & Langhelle, 2009). A similar argument is made for those supportive of ‘clean coal’ technologies, and the possibility of making hydrogen with CCS from coal has led to speculation on the eventual willingness of the coal industry to become part of a pro-hydrogen coalition. (Victor et al., 2003; Winter, 2005).

8 The existence of both blue and green hydrogen creates the possibility for actors to pursue relatively narrow interests (Moliner et al., 2016). Concretely, this means that hydrogen is perceived by some environmentalist groups through a green lens and is promoted as such. In other respects, hydrogen is seen as capable of replacing oil and gas, but also coal, specifically. This perspective tends to focus more on the potential of blue hydrogen. This creates the potential for strange coalitions between oil and gas majors, as well as between environmentalists and renewable energy companies.

4.3 Literature Economic Geography

9 Which sectors support the hydrogen transition is strongly related to where these actors are located. At a global level the IEA (2019c, p. 20) makes clear that while investment in the US and China has changed significantly, most still comes from Europe and Japan. Research by A.N. Madsen and P.D. Andersen (2010) on hydrogen clusters in Europe marks a geographically relatively spread-out set of clusters, although heavily skewed towards Western Europe. Notable regional clusters they mention are southern Scandinavia, North Rhine-Westphalia in Germany, Aragon in northeast Spain, and several projects in northern Italy. They see little evidence of clustering in areas with existing hydrogen facilities and pipelines, and more in innovative regions with strong representation of chemical, energy, manufacturing, oil and gas, automotive, and aerospace industries (2010, p. 25). This is slightly at odds with the IEA’s (2019c, p. 177) view. The IEA expects more from (coastal) industrial clusters, and areas with existing natural gas infrastructure, rather than from innovation clusters. The focus on clusters in the hydrogen transition fits into wider discussions on the role of clusters in energy policy, exemplified by an article from Pieter Mans, Floortje Alkemade, Tessa van der Valk, and Marko P. Hekkert (2008) on Dutch hydrogen clusters.

10 Policies from national governments should be part of this discussion. France (Ministère de la Transition Écologique et Solidaire, 2018), the Netherlands (Government of the Netherlands, 2020), and Norway (Tina Bru, 2020) for instance have official national hydrogen strategies. Norway and the Netherlands are particularly explicit in this respect. Norway emphasises CCS and maritime use, and the Netherlands puts the emphasis on decarbonising its relatively energy-intensive industries and retaining its international energy hub function. Although the Dutch strategy calls for clean hydrogen and often refers to green hydrogen, its policy output treats blue hydrogen as an important transition medium, notably for its now almost idle gas networks near Groningen. The French strategy also focuses on green hydrogen, but mostly ignores blue hydrogen and takes no clear position on it. Italy and Spain have no concrete national hydrogen strategies, although Spain has opened a public consultation.

11 Although the UK has no national hydrogen strategy, it funds projects and has a plan to convert the Northern English gas network to using hydrogen. Germany is expected to publish a national hydrogen strategy by mid-2020, and in the wake of the COVID-19 crisis it has earmarked $10 billion for hydrogen investment. The German policy discussion is marked by a focus on green hydrogen. However, recent studies (e.g. Dickel, 2020) show that it is difficult to meet the German climate commitments (including phasing lignite out) without using blue hydrogen as a bridge technology. This is similar to discussions in the European Commission, which is reviewing its energy policy in the context of the European Green Deal and the new 2021-2027 budget. Here too blue hydrogen is not popular, and is sometimes excluded from discussions or studies. The European approach seems to favour phasing out blue hydrogen by 2030, when green hydrogen is not yet expected to be competitive. This raises questions about the viability of its energy transition scenarios, and the effectiveness of new regulations developed with such scenarios in mind (Barnes, 2020).