Amir Sharifi, chief investment officer of the Paris-based hydrogen fund Hy24, said that the first likely buyers of green hydrogen, regardless of the price, will be producers of green steel and e-fuels.
In an interview with Hydrogen Insight, he said that the high cost of H2 will not have a significant impact on the cost of goods in the short term.
Sharifi explained that, for example, the cost of a car that already costs more than €30,000 will increase by only a few hundred euros. A similar trend is expected for synthetic e-fuel produced from green hydrogen and captured carbon dioxide. Thus, a 50% markup on e-fuel with a 10% blend of traditional fuels will result in only a 5% increase in overall prices.
It is noted that the first batch of synthetic gasoline cost €50 per liter, which is 100 times more expensive than fossil gasoline. However, the scaling of such projects will lead to a sharp drop in price. Additional subsidies are also likely to be needed to encourage industries such as oil refining to use renewable H2.
Sharifi emphasized that e-fuels for marine shipping and aviation, in particular, are due to the threat of fines if planes and ships do not use enough synthetic fuel by 2030. Also, the metallurgical sector will face additional costs due to the introduction of the European import adjustment mechanism (CBAM) and the cancellation of free quotas in the EU emissions trading system.
According to some analysts, it is more economically feasible to produce green steel in countries with cheap hydrogen and export the metal to steel mills.
"While cheap power is a key factor, in the short term you need to design projects where you have a clear idea of who your customer will be," Sharifi said.
As EcoPolitic previously reported, the Middle East and North Africa (MENA) region has significant green steel production (DRI) potential, particularly due to significant solar resources for renewable hydrogen production.