Work

Bridging the financial gap: Analysis of parity prices and policy instruments for green hydrogen applications in hard-to-abate sectors in Germany

Year: 2026

Type: article

Abstract: Green hydrogen technologies are crucial for decarbonizing hard-to-abate sectors in Germany. This paper applies a cost-based analytical framework to quantify financial gaps between projected green hydrogen supply costs and sector-specific parity prices through 2050 in 6 key applications (chemical industry, primary steel, reconversion, heavy-duty transport, shipping, aviation) and assesses the implications for policy support instruments. Key findings include: (1) Power purchase agreement (PPA) based green hydrogen costs depend on renewable energy market trends, grid fee exemptions, and free emission allowance allocations for electrolyzers; (2) Only the heavy-duty transportation and shipping sectors achieve cost parity with PPA-based hydrogen by 2050; (3) The chemical industry and aviation sector are highly sensitive to green hydrogen costs and regulatory changes, resulting in conditional technology shifts depending on hydrogen sourcing; (4) Closing the remaining financial gaps will require supply-side subsidies, as CO 2 price increases alone are insufficient. Policymakers should implement sector-specific support mechanisms for green hydrogen technologies, considering the varying effectiveness of CO 2 pricing and the different cost structures across technologies.

Source: Next Energy

DOI: 10.1016/j.nxener.2026.100610

Authors: Valerie Ziemsky, Simon Pichlmaier, Markus Gyetko

Institutions: Research Center for Energy Economics, Technische Universität Berlin

Language: English

Topic: Hybrid Renewable Energy Systems

Subfield: Energy Engineering and Power Technology

Field: Energy

Domain: Physical Sciences

SDGs: Climate action, Affordable and clean energy, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $1,280