US' IRA drives global hydrogen subsidies past USD 280bn - BNEF

The US and its Inflation Reduction Act (IRA) have helped propel global subsidies announced for low-carbon hydrogen to over USD 280 billion (EUR 259bn), BloombergNEF said on Wednesday.

This represents a fourfold increase over the last two years and a rise of 43% this year to date.

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The US is expected to provide USD 137 billion in subsidies to eligible projects over the next 10 years. Its IRA offers USD 3 per kilogram of low-carbon hydrogen, making it competitive with hydrogen from natural gas. BNEF’s estimates currently put the cost of clean hydrogen production at between USD 2.3 and USD 4.8 per kilogramme.

According to the research firm, the US subsidies will make a difference for the whole world as US demand is expected to lead to cost reductions for hydrogen technologies.

BNEF says that while other markets are responding to the IRA, they are unable to equal its strength. European subsidies are some 27% below the US’ and are dispersed across numerous national grant programmes, which reduces their accessibility compared to the US. In Europe, newer funding mechanisms like contracts for difference (CfDs) and fixed premium subsidies are emerging but their impact is not yet meaningful.

The US subsidies under the IRA are chiefly in the form of tax credits. The subsidies in Asia Pacific, meanwhile, account for only 4% of the global figure and mainly represent research and development support.

(USD 1 = EUR 0.925)