Green Hudrogen Indutrial Cluster
Green Hudrogen Indutrial Cluster
Green Hudrogen Indutrial Cluster
INDUSTRIAL CLUSTERS
GUIDELINES
Acknowledgement
The UNIDO team would like to express its gratitude The boxes were contributed by: Lisa Buck (Hum-
to all those who contributed to these guidelines. ber cluster), Cindy Parokkil (BSI Institute), Andrea
Guati Rojo (Ammonia Energy Association), Kajsa
The preparation of the publication was headed by Ryttberg Wallgren (H2 Green Steel), GETEC Park
Petra Schwager and Luis Umanzor. EMMEN, Mónica Gasca (Asociación Colombiana de
Hidrógeno) and Carlos Leipner (GREET).
Authors from UNIDO: Petra Schwager, Amparo
González, Lukas Gast, Jan Sievernich, Mark Car- Layout: Maria Grineva (UNIDO).
rington and Luis Umanzor.
Disclaimer
This document has been produced without formal United Nations editing. The designations employed and
the presentation of the material in this document do not imply the expression of any opinion whatsoever
on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concern-
ing the legal status of any country, territory, city, or area or of its authorities, or concerning the delimitation
of its frontiers or boundaries, or its economic system or degree of development. Designations such as “de-
veloped”, “industrialized” or “developing” are intended for statistical convenience and do not necessarily
express a judgement about the stage reached by a particular country or area in the development process.
Mention of firm names or commercial products does not constitute an endorsement by UNIDO.
Foreword.................................................................................................................8
Executive Summary.............................................................................................9
1. Introduction......................................................................................................10
1.1. Green hydrogen and climate change: industrial decarbonization.............................................10
1.2. Green hydrogen and sustainable industrial development.......................................................... 11
1.3. UNIDO’s Global Programme for Green Hydrogen in Industry.....................................................12
6. Concluding Remarks......................................................................................56
List of tables
Table 1-1. Types of hydrogen and current production............................................................................................................. 11
Table 2-1. Phases of the development of green hydrogen industrial clusters (GHIC)..................................................... 15
Table 4-1. Elements to be considered during the awareness-raising activities................................................................ 30
Table 4-2. Recommended assessments for the development of green hydrogen industrial clusters........................ 33
Table 4-3. Categories of performance indicators for green hydrogen industrial clusters............................................. 39
Table 4-4. Sustainable Development Goals and indicators................................................................................................... 40
Table 5-1. Overview of main challenges and enablers............................................................................................................ 47
Table 5-2. Technology readiness level (TRL) of electrolyser technologies......................................................................... 49
Nearly all countries have committed to decarbonize their economies in the coming decades following the Paris
Agreement to limit global warming to 1.5°C. The industrial sector is a significant contributor to global greenhouse
gas (GHG) emissions, and therefore plays a critical role in meeting these ambitious goals.
Renewable or green hydrogen, produced using renewable energy sources, is an essential element of this tran-
sition, particularly in hard-to-abate sectors. As a game changer, green hydrogen offers enormous potential to
develop both national energy systems and industrial markets, while significantly reducing GHG emissions. For
developing countries, this presents a unique opportunity to leapfrog to net-zero industrial development, while
accelerating economic growth.
UNIDO’s Global Programme for Hydrogen in Industry is working towards accelerating a just hydrogen transition
in developing countries and transition economies. As a key element of this programme, UNIDO has developed
a three-phase model for establishing green hydrogen industrial clusters (GHIC), which we define as industrial
clusters that share green hydrogen and renewable energy for various purposes, including material production,
heating and cooling, power balancing, local mobility, and industrial feedstock. The present guidelines provide
recommendations for governments and industries in the preparation, implementation, and upscaling of green
hydrogen industrial clusters.
By building GHIC, developing countries can reduce their dependence on imported fossil fuels, promote invest-
ment, create employment, and drive innovation. These clusters provide a framework for decarbonizing industries,
and developing local production and application capacities. They also offer a unique opportunity to create a new
low-carbon industry, opening up new markets and generate new economic opportunities for developing countries.
UNIDO is committed to promote the establishment of GHIC in developing countries, leveraging a versatile and
scalable model that supports multi-stakeholder engagement and coordination in the design and implementation
of said clusters.
It is my great pleasure to introduce these guidelines for developing green hydrogen industrial clusters. I would like
to thank the UNIDO team and the international experts who provided insights for the preparation of these guide-
lines. It is my hope that it will be useful for policymakers, industry leaders, and other stakeholders as we work to-
gether to achieve the goal of sustainable and inclusive industrial development, and create a better future for all.
Gerd Müller
Director General
Nearly all countries have committed to decarbonize their economies in the coming decades following the Paris
Agreement to limit global warming to 1.5°C. Currently, industrial production accounts for 23% of global greenhouse
gas (GHG) emissions. Green hydrogen is considered a key technology to accelerate industrial decarbonization to
replace fossil fuels in hard-to-abate sectors. It can also help develop both national energy systems and industri-
al markets. Several countries are already developing green hydrogen roadmaps and strategies. These provide a
framework on how to decarbonize industries, secure green hydrogen imports, and develop local production and
application capacities.
Today, an estimated 99% of global hydrogen production (95 million tonnes in 2021) is produced with fossil fuels.
Electrolysis-based green hydrogen production using renewable energy (e.g. solar, wind) can help accelerate the
clean energy transition, but accounted for only 0.035 Mt in 2022. With decreasing renewable electricity costs, the
introduction of carbon pricing and production advancements for electrolysers, green hydrogen is predicted to
expand rapidly, covering up to 14% of the world’s total final energy consumption by 2050.
With its long-standing experience in promoting sustainable and inclusive industrial development reflected in
Sustainable Development Goal 9 (SDG9) and the application of clean energy technologies in industry, the United
Nations Industrial Development Organization (UNIDO) successfully collaborates with a wide range of partners
globally supporting industries in their pathway to net-zero emissions.
Launched in 2021, UNIDO’s Global Programme for Hydrogen in Industry aims to stimulate and accelerate the up-
take and deployment of green hydrogen in industries of developing countries and transition economies. It sup-
ports industrial decarbonization, particularly of hard-to-abate sectors, and the development of new low-carbon
industries.
As a key element of the programme, UNIDO developed a model for green hydrogen industrial clusters (GHIC),
which we define as industrial clusters that share green hydrogen and renewable energy for different purposes,
including material production, heating and cooling, power balancing, local mobility and industrial feedstock. The
GHIC can reduce greenhouse gas emissions, promote investment, create employment and foster economic growth
that is environmentally sustainable and socially responsible. The model provides guidance for governments and
industries in the preparation, implementation and upscaling of the GHIC. Several challenges persist regarding
technological readiness, socio-ecological impact and particularly market creation as well as access to finance.
Thus, the guidelines provide an overview of potential policy enablers, notably regulation that fosters investment
security and stimulates market demand.
The development of the GHIC can be broadly divided in three phases. During Phase 1, industrial clusters will be
brought to a level of readiness in which pilot green hydrogen projects can be developed during Phase 2. At this
stage, initial pilot projects will be supported as well as the adaptation of the cluster to ensure sector coupling and
future upscaling. Phase 3 will lead to a successful implementation of the green hydrogen strategies and a full pro-
vision of green hydrogen to meet the hydrogen demand of the production cluster. This will create success studies
and examples of good practices for replicability. In all phases, monitoring and evaluation exercises will be carried
out to track progress and update the model based on technological, cost and environmental developments, and
in line with compliance of the Sustainable Development Goals (SDGs).
The development of the clusters requires multi-stakeholder engagement and coordination in the design of the
overarching policy framework and in its implementation. These guidelines provide information on its develop-
ment and dialogues among government, the private sector and academia. They are published with the aim to
support the establishment of the GHIC, leveraging a versatile and scalable model. As a result, the clusters will
promote the uptake of green hydrogen in local industry, its decarbonization and the development of new low-car-
bon industries, all contributing to achieving inclusive and sustainable industrial development and the Nationally
Determined Contributions (NDCs) under the Paris Agreement.
Green hydrogen, also known as renewable hydrogen, GHG emissions.1 This requires a significant upscaling
is a crucial component for the future of energy sys- of renewable electricity generation to replace fossil
tems and industrial development. Green hydrogen fuel-based power, while still meeting the increased
not only contributes to decarbonization of the energy global demand for electricity. At the same time, a con-
intensive industrial sector, but also opens new pos- siderable share of renewable energy will be needed
sibilities for industrial growth, especially in nations to substitute fossil fuels in hard-to-abate activities
with abundant renewable energy resources. For this that cannot be easily electrified. These include the
reason, developed and developing nations are mak- production of steel, cement and base chemicals and
ing significant investments in green hydrogen as well some applications in the transport sector (e.g. avia-
as global partnerships to guarantee long-term access. tion and shipping). Within these sectors, green hydro-
To attract or develop the new low-carbon industries gen can be used as a chemical feedstock and as a fuel
and numerous downstream sectors, these countries to complement initiatives towards net-zero emissions.
can construct new industrial clusters based on green
hydrogen and renewable energy. Green hydrogen is produced via water electrolysis us-
ing renewable electricity. Today, approximately 99%
of global hydrogen is produced from fossil fuels2 (6%
of global natural gas and 2% of global coal are cur-
1.1. Green hydrogen and rently used for producing hydrogen3). According to
1
IEA (2022): Industry, URL: <https://www.iea.org/reports/industry>.
2, 3, 4, 5
IEA (2022): Global Hydrogen Review.
6
Odenweller, A., Ueckerdt, F., Nemet, G.F. et al. Probabilistic feasibility space of scaling up green hydrogen supply. Nat Energy 7, 854–865 (2022).
<https://doi.org/10.1038/s41560-022-01097-4>.
7
<https://www.worldenergy.org/assets/downloads/Working_Paper_-_National_Hydrogen_Strategies_-_September_2021.pdf>.
L
stakeholders
stakeholders
Assessing & addressing
A
Enabling dialogue &
the needs of the local market
E
exchange
C
developing countries building activities
T
knowledge products thematic instruments
D
Developing joint Tailoring pilot projects
projects development & upscaling
Box 1-1. IHEC demonstration project on commercial hydrogen fuel cell buses: lessons
learned from Beijing
The Government of China and UNIDO jointly established the International Hydrogen Energy Centre (IHEC) in
June 2021. IHEC is headquartered in Beijing, China. It is mainly engaged in core technology R&D, key equip-
ment development, industrial-scale applications and the promotion of carbon neutrality to support the
SDGs. IHEC leads four key demonstration projects on commercial fuel cell vehicles (FCVs) in Zhangjiakou,
FCV logistics, the world’s largest refuelling station in Daxing, and the largest and most comprehensive green
hydrogen metallurgical chemical demonstration park in Baotou, Inner Mongolia.
Preparation of the project started in 2016. The first batch of 25 hydrogen fuel cell buses (FCBs) was put into
operation in 2018. By 2021, 444 FCBs were in operation, covering 21 million kilometres, directly benefiting 65
million passengers, safely refuelling more than 140,000 times, and consuming around 1,700 tonnes of green
hydrogen, saving an estimated 17,000 tonnes of carbon.
All FCBs were operated by the Zhangjiakou Public Transport Group. The vehicle manufacturers were Foton,
Yutong Bus, Geely, Zhongtong Bus and ZEV (Zhongzhi Yike Chengdu Automobile Co., Ltd.). The supplier of the
fuel cell engines was SinoHytec, and the main producer of green hydrogen was HyPower.
The total investment for the 444 FCBs was about $170 million, with support from the Zhangjiakou Municipal
Government and a state subsidy of $7.5 million. SinoHytec invested $18 million in the construction of a
green hydrogen production plant and $4.5 million in the construction of two hydrogen filling stations.
• The performance of the fuel cells was significantly improved and the operation of the fuel cells in ex-
treme cold conditions was demonstrated. Hydrogen fuel cell engines were able to operate at -30°C with
the support of new technologies, and their waste heat was used to heat the passenger compartment.
• The safe support of the Beijing 2022 Olympic Winter Games was successfully realized; a total of 357 FCBs
served the Games without any accidents.
• The International Hydrogen Energy Centre, together with Zhangjiakou Municipal Government, founded
the Zhangjiakou Hydrogen Energy and Renewable Energy Institute, established the Hebei Provincial Hy-
drogen Energy Industry Innovation Centre, and built the first big data monitoring platform for the whole
hydrogen energy chain in China.
8
Industrial clusters are agglomerations of interconnected companies and associated institutions. Firms in a cluster produce similar or related
goods or services and are supported by a range of dedicated institutions located in spatial proximity, such as business associations or training
and technical assistance providers.
9
<https://hub.unido.org/about-eco-industrial-parks>.
10
<https://www.unido.org/integrated-agro-industrial-parks>.
11
<https://sipp.unido.org>.
The model has three stages that are summarized in Phase Activities in the phases
Table 2-1 and are explained below. Throughout the • Awareness-raising
phases, monitoring and evaluation exercises will be Phase 1: • Stakeholder engagement
carried out to track progress and update the model Preparation • Preparation of the objective,
based on technological, cost and environmental de- of green strategy and work plan of a
velopments. The model was presented and discussed hydrogen green hydrogen cluster
at an expert group meeting in October 2021 with differ- clusters • Feasibility studies
ent stakeholders from hydrogen clusters and valleys. • Financial mobilization
GH2 Storage
Company 1
Renewable
energies Water
GH2 Station
Company 2
Cluster’s utilities
12
<https://www.unido.org/our-focus/cross-cutting-services/partnerships-prosperity/networks-centres-forums-and-platforms/national-
cleaner-production-centres-ncpcs-networks>.
13
The hydrogen clusters and valleys evaluated include: Germany Hydrogen Valley HyWays for Future, South Africa Hydrogen Platinum Valley,
Italy Puglia Green Hydrogen Valley, Denmark GreenLab industrial park, China Suzhou Industrial Park, HEAVENN, Ukraine Danube Hydrogen
Valley, United Kingdom Humber Industrial Cluster, Austria WIVA P&G Energy Model Region, HyChico Argentina, NEDO Japan, Green Hysland
Spain, Hamburg Green Hydrogen Hub, Green Hydrogen at Blue Danube Romania, Green Energy Oman (InterContinental Energy, OQ, EnerTech,
Shell Consortium).
green hydrogen industrial The guidelines are aimed at key stakeholders with
clusters an interest in industrial parks include, but are not
limited, to the following: international institutions,
national government, local governments, park devel-
In line with UNIDO’s support within its Global Pro- opers, park operators, companies (tenants) and re-
gramme for Hydrogen in Industry, UNIDO is publish- newable power providers.
ing the first edition of these guidelines with the aim
to support the establishment of green hydrogen in- The guidelines consist of the following sections:
dustrial clusters, leveraging a versatile and scalable
model. These clusters aim to promote the uptake of • Chapter 1: Provides an overview of industrial
green hydrogen in local industry, thereby support- development and the use of green hydrogen in
ing decarbonization and the development of new industry
low-carbon industries – all contributing to achieving
inclusive and sustainable industrial development, in- • Chapter 2: Describes the UNIDO’s approach for
cluding industrialization goals and Nationally Deter- promoting hydrogen use in industrial production
mined Contributions (NDCs) to the Paris Agreement. and the objective of the guidelines.
Box 3-1. Transformation of a brownfield site: lessons learned from the Humber Cluster
The Humber region provides the United Kingdom’s biggest challenge for industrial decarbonization, and
therefore the country’s largest opportunity. It is estimated that 80% of the region’s CO2 emissions will be
eliminated via decarbonization projects.
The Humber industrial cluster is home to multiple low-carbon projects, each providing a key piece to
achieve the UK government’s net-zero 2050 targets. In addition to UK government funding, over £15 billion
($18.5 billion) of private investment will provide security to one in 10 jobs, while creating thousands more.
There will, however, be challenges to ensure the region has the transformative skills required, and that
policy and regulation at the local and national level is transformed to enable the projects move forward
at pace. The associated supply chain, from consultants to equipment suppliers, will be required to provide
proactive support.
The 2023 Humber Industrial Cluster Plan includes a comprehensive and dynamic plan for the Humber Clus-
ter to achieve net zero by 2040. The project team, composed of lead partners HEY LEP and CATCH, alongside
eight industrial partners, are bringing together all the strands of research, studies and modelling that has
taken place over the last 24 months to inform the final plan. CATCH is determined to follow through with
the plan’s recommendations, cementing its status as the leading low-carbon industrial cluster in the UK.15
14
<https://www.humberindustrialclusterplan.org/title-humber-hub-–-uniper’s-flagship-hydrogen-project-in-the-humber.htm>.
15
Humber Cluster, URL: <https://www.humberindustrialclusterplan.org>.
The following case study of GreenLab provides an overview of a new industrial cluster planned (greenfield).
GreenLab Skive is in a rural area of Denmark. The location is ideal for testing energy conversion and sector
integration, as it is close to the national 150 kV power grid and the 40-bar gas pipeline. A 60-hectare indus-
trial cluster is being built in this area, as a greenfield, integrating carefully selected companies aiming to
contribute to the green transition. The GreenLab model fully converts natural resources into value chains
– internally, using energy flows (thanks to the co-location of production and consumption), and externally,
through the production of green products and fuels, ultimately enabling the decarbonization of vertical
sectors.
• A renewable energy supplier that provides 80 MW of directly connected wind and solar power.
• A large biogas plant with an organic line, which produces biogas/biomethane from manure and waste
from the production units of various premises.
• Two pyrolysis process companies that are using green hydrogen – one that replaces virgin fossil fuels
with syngas-based oil from end-of-life plastics, and another that uses straw and other agricultural bio-
waste to make biocarbon.
• A protein extraction company that produces protein-rich feed from starfish and other locally sourced
marine waste.
• A factory that produces high-density fibreboard without glues or resins from wastepaper and cardboard.
GreenLab establishes and manages the cluster infrastructure and utilities for its customers through the
SymbiosisNet™.
Electrolysis
Digital Optimization Platform
It is an advantage if the country already has close to upgrade the infrastructure to be able to transmit hy-
100% renewable energy in the electricity mix. For ex- drogen, provides an opportunity for grid injection for
ample, the electricity mix in the national grid in Costa transporting green hydrogen to end use. Some coun-
Rica is almost exclusively from renewables. This will tries will also have international connections and op-
prevent competition with fossil-based alternatives portunities for green hydrogen export. Green hydro-
and makes certification of green hydrogen and PtX gen can also be stored, for example, in salt caverns or
products easier. A country’s current plans or ambi- other potential storage infrastructure. This allows for
tions for renewables as well as the life cycle analysis buffering of supplies for further regional distribution.
of the hydrogen produced should be considered. As a
rule of thumb, 1 MW of power can generate between Electrolysis requires water, and it needs to be of high
10-15 kg of hydrogen per hour, depending on the elec- quality. In cases where the quality standard is not
trolysis technology employed. met, metal ions from the water can contaminate the
electrodes and affect electrolyser performance and
lifetime. Depending on the electrolysis technology,
3.2.1. Location and access to it is estimated that between 150-180 kg of water per
utilities and auxiliary facilities hour is required for every 1 MW of installed electro-
lyser. Ideally, local sources of water other than drink-
ing water are found, chemically treated and demin-
In addition to having access to renewable electricity, eralized for electrolysis. This could be contaminated
the clusters need to be in the area where hydrogen is or percolate water from beneath a landfill facility, gas
produced, with access to the grid and other utilities station, heavy industry, or similar. Bringing the dirty
and infrastructures such as CO2 storage and utiliza- water into the water loop of a green hydrogen cluster
tion facilities. solves several problems: It maximizes utilization of
available resources, contributes to a cleaner ground-
Proximity to the electricity grid (with so-called certif- water, and is often cheaper than acquiring and treat-
icates of origin of the renewable electricity) or to the ing water of drinking quality. Close collaboration with
renewable electricity generation facilities is useful to the local water is an option to consider during the
ensure adequate renewable electricity supply. For us- design stage of the desalination plant.
ers, proximity to these is an advantage. Conversion of
green hydrogen back into electricity using fuel cells The conversion of green hydrogen to green methanol
is an option considered in some reports. Given the requires biogenic carbon source (e.g. from agricul-
expected loss due to low energy efficiency of about tural waste) or direct air capture technologies. Ons-
50%, this is a relatively poor reuse of the green hy- ite production of biogas as a biogenic carbon source
drogen compared to transportation, green fuel syn- will typically not be sufficient due the small scale of
thesis applications, or other direct uses in industrial carbon availability relative to carbon needs for meth-
processes. However, an associated shipping port con- anol production and other synthetic fuels including
nection creates new synergies for offtake and supply synthetic aviation fuels. Hence, regional piping must
chain integration. be considered. Regional advantages such as access to
and abundance of biomass from agriculture in rural
Access to an offtake market for larger volumes out- areas or marine products in harbour settings should
side the cluster will need to be considered, not just be assessed as part of the energy mix, even though
for green hydrogen, but for all accumulated outputs, not directly related to green hydrogen production.
such as heat from electrolysis, as described in the It is, however, a central component when develop-
GreenLab case. For every 1 MW of installed electroly- ing entire value chains, and creating secondary side
sis, one can expect between 200-250 kWh of heat out- stream material synergies. Direct air capture (DAC)
put, depending on electrolysis technology. An inter- technologies are often discussed as a source of CO2
play with external district heating or cooling for low for carbon capture and utilization (CCU). However, the
temperature excess heat is ideal, just as heat offtak- IEA highlights in a recent report that DAC is currently
ers within the industrial setting will make sense. Col- only available at very small scale and rapid deploy-
laboration with the local district heating and cooling ment and availability is unlikely before 2030.16
company is ideal for long-term success and could
support scaling a green hydrogen industrial cluster. Green hydrogen can be converted into other green
fuels onsite through methanol synthesis, with the ad-
Proximity to the existing gas grid or other gas trans- dition of a biogenic CO2 source (e.g. from biogas) or to
mission sectorial hubs, and a national willingness to ammonia with the addition of nitrogen, which can be
16
IEA (2022), Direct Air Capture, IEA, Paris <https://www.iea.org/reports/direct-air-capture>.
3.2.2. Composition, scale and The other essential ingredient for hydrogen produc-
synergies tion is purified water. The availability of sufficient vol-
umes of water is essential. The water needs to be of a
specified high quality because the water needs to be
Building bridges and utilizing synergies can contrib- demineralized and filtered. The demineralization as-
ute to driving down the costs of green hydrogen pro- sures that minerals such as salt (sodium chloride) are
duction, making the end products green hydrogen removed to bring the water up to the desired quali-
and other e-fuels price competitive. The potential for ty level for adequate operation of the electrolyser. In
synergies can only happen in energy-intensive indus- many cases, it will be required to have a dedicated
trial settings. These may consist of existing industrial water treatment system.
parks with high demands for energy or excess ener-
gy in significant volumes, harbours, or around exist- The production of green hydrogen using electrolysis
ing energy infrastructure such as combined heat and is the next step in the value chain. After the (renewa-
power plants (CHP) that need to transition into green- ble) electricity is generated, it can be used to split the
er alternatives. Such settings, where entities may cur- water into hydrogen and oxygen. The hydrogen and
rently rely on fossil-based hydrogen, or energy, would oxygen are then ‘collected’ in separate storage sys-
be ideal for conversion into a green hydrogen indus- tems to be utilized further. There are several ways to
trial cluster. produce green hydrogen of which electrolysis (of wa-
ter) is the most common and important technology.
In the case of GreenLab, this infrastructure is part of
the “Facility as a Service” concept that is offered to
the industrial park tenants besides land lease. The 3.4. Overview of uses for
green hydrogen in industry
concept is that the site owner manages the central
and in-between companies/facilities energy streams,
reducing CapEx (capital expenditures) and OpEx (op-
erating expenses) for the industrial tenants. Effective Green hydrogen can be used in every application
cluster and stakeholder management is key to suc- where grey hydrogen is currently used. Natural gas
cess and should be prioritized. can also be directly replaced with (green) hydrogen
17
IEA (2019), The future of hydrogen, sizing today’s opportunities, IEA, <https://www.iea.org/reports/the-future-of-hydrogen>.
in many applications either by replacing a percentage could be used in industrial processes such as in steel
of the natural gas by hydrogen or replacing in full. Hy- production (to produce direct reduced iron), transport
drogen can be and is used in industry (feedstock for and heat generation. Also, investigations are ongoing
chemicals, for products, source for high temperature to use hydrogen to replace natural gas in glass manu-
processes), energy, mobility/transport (fuel for trans- facturing, production of bricks and building materials
port) and the built environment (low temperature (e.g. cement).
heat for buildings. Global hydrogen demand reached
94 Mt in 2021.18 This hydrogen is produced based on A recent report by IRENA summarizes the use cases
fossil fuels and it is mostly used in industrial process- of green hydrogen as well as policy tools and chal-
es including chemicals production (e.g. ammonia pro- lenges for the uptake of green hydrogen as a guide
duction). Green hydrogen can replace grey hydrogen for policy making.19 The report highlights current use
and be used in new processes. The following section of hydrogen as well as promising areas for the use
presents an overview of the current and potential of green hydrogen. The main applications of hydro-
uses of green hydrogen. gen could be in industrial production since a direct
electrification of some of the processes is not possi-
Figure 3-3 provides an overview of possible use cas- ble with current production routes and technologies.
es for green hydrogen in an industrial cluster and Consequently, current industrial clusters might move
mobility sector. Hydrogen is already used in refining, to locations with excellent renewable resources. (See
ammonia and methanol production. In the future, it Figure 3-4.)
Electricity Industry
Hydrogen
Other Ammonia
Synthetic fuels
Mobility
e-fuels
Aviation Rail
Marine Road
18
IEA (2022), <https://www.iea.org/reports/hydrogen>.
19
IRENA (2022), Green Hydrogen for Industry: URL: <https://www.irena.org/publications/2022/Mar/Green-Hydrogen-for-Industry>.
TY
RI
Chemicals
IO
PR
GH
HI
ELECTRIFICATION Steel
International
shipping
Long-haul
Short-haul trucks
aviation Long-haul
aviation
Regional
trucks High
Ferries temperature
Urban heating Seasonal
vehicles storage
Short-term
storage Trains
Y
IORIT
LOW PR
Mid
temperature
Residential heating
heating
20
IEA (2018), The Future of Petrochemicals, IEA, Paris <https://www.iea.org/reports/the-future-of-petrochemicals>, License: CC BY 4.0
21
IRENA (2022), Green Hydrogen for Industry: URL: <https://www.irena.org/publications/2022/Mar/Green-Hydrogen-for-Industry>.
22
Figure from IRENA report: URL: <https://www.irena.org/publications/2022/Mar/Green-Hydrogen-for-Industry>. Taken from IRENA (2022). On
the x-axis the end uses are placed according to the estimated average daily hydrogen demand for industry, refuelling stations and combustion
devices, with a power relationship. On the y-axis the end uses are placed according to the differences between the technological readiness
levels of hydrogen-based versus electricity-based solutions.
This means removing the oxygen as CO2 or water, leav- very limited so far, as fossil fuels are cheaper for such
ing the metal. Great quantities of energy are required purposes and technologies for hydrogen combustion
for this, but more importantly a chemical energy car- have yet to be scaled up. While renewable electricity
rier is needed to react with the oxygen. The BF route can in theory be converted to high-temperature heat
uses treated coal (coke) stacked together with the at almost perfect efficiency, significant technical dif-
ore in the furnace. Therefore, it can only use limited ficulties remain in practice, leading to considerations
quantities of added hydrogen (10-20%), as the coal of green hydrogen as a method of achieving high tem-
fulfils a structural purpose as well. This means that peratures indirectly, i.e. by first converting the elec-
the BF route cannot be fully decarbonized with green tricity into green hydrogen, despite the significant
hydrogen. The DRI route uses a reducing gas (e.g. nat- additional effort of electrolysis this would require.
ural gas derived carbon monoxide and hydrogen to
reduce iron ore lumps). Green hydrogen can replace For the cement industry, zero-emission heating al-
these fossil reducing gases relatively easily. ternatives are important but not enough to fully
decarbonize. This is because combustion is only re-
The Box 3-4 of H2 Green Steel (H2GS) provides an sponsible for around 30% of the overall emissions of
overview of the challenges of deploying green steel. the production process. In practice, hydrogen is not
a convenient fuel here: hydrogen flames exhibit low
3.4.2.3. High temperature industrial heat rates of radiative heat transfer23 compared to fossil
fuels, such that the temperature profile is very differ-
Hydrogen can be burned to generate high tempera- ent. Consequently, this requires burner redesigns and
tures of >1000C. However, its application has been additives for hydrogen use in kilns,24 and even then, it
Box 3-3. Green hydrogen in ammonia production projects: lessons learned from the
Ammonia Energy Association
In the coming decades, hundreds of millions of tonnes of low-carbon ammonia will be required annually to
decarbonize current markets and meet demand for future applications, such as zero-carbon fuel. Currently,
only a few commercial projects have been realized. One of these is the partial decarbonization of Ferti-
beria’s fertilizer facility in Puertollano, Spain, which has a total ammonia production capacity of 200,000
tonnes per year. The new solar to hydrogen facility will produce about 3,000 tonnes of renewable hydrogen
per year (or 17,000 tonnes of renewable ammonia) from 100 MW solar PV, a 20 MWh battery, 20 MW electroly-
sis capacity and 11 pressurized hydrogen storage tanks. The first drops of renewable ammonia have recently
been produced. Fertiberia plans to fully decarbonize the site in the coming years.
Another interesting example at a larger scale is the ammonia plant being carried out by first-movers at
Ammonia Energy – NEOM, Yara and Fertiberia – in Saudi Arabia scheduled to start production in 2026. It will
be powered by 4 GW of wind and solar, with battery storage, using 120 electrolyser units (each 40m long) to
produce the hydrogen for 1.2 Mt of renewable ammonia per year.
Many large-scale projects are expected to permanently sequester the CO2 emissions from existing ammo-
nia plants. Technologies and operational strategies have been developed for the management of variable
power inputs and, while economies of scale still matter, technologies are coming to market for renewable
ammonia plants ranging from 4 tonnes per day to 10,000 tonnes per day. These projects are a fraction of
what needs to come. According to the Ammonia Sector Transition Strategy, near-zero emission ammonia
plants need to produce at least 50 Mt per year by 2030, and at least 560 million tonnes per year by 2050.
Certification will be crucial. The real challenge is not the project scale, but the speed at which is needed to
deploy all these new plants at a cost-competitive level.
23
Hoenig, 2008, Carbon dioxide control technologies for the cement industry: <https://gcep.stanford.edu/pdfs/2RK4ZjKBF2f71uM4uriP9g/Volker_
Hoenig_Stanford_2008_upload.pdf>.
24
El-Emam et al., 2021, Synergizing hydrogen and cement industries for Canada’s climate plan – case study: <https://doi.org/10.1080/1556703
6.2021.1936699>.
Box 3-4. Green steel projects development: lessons learned from H2 Green Steel (H2GS)
During the summer of 2022, H2GS initiated land-preparation for its first project in Boden, Sweden, where
it intends to build a large-scale green hydrogen production to support an integrated green steel plant.
Production is scheduled to start in 2025. By 2030, H2GS aims to reach a production capacity of five million
tonnes of high-quality steel.
H2GS’s green hydrogen use focus will be to reduce iron ore to direct-reduced iron (DRI). Using green hydro-
gen instead of coking coal reduces CO2 emissions from the reduction process by more than 90% compared to
the traditional iron-making process. In the traditional steelmaking process, the reduction of iron ore occurs
in a blast furnace by combining it with coking coal at high temperatures. This triggers a chemical reaction
that separates the oxygen from the iron, forming and emitting large amounts of CO2. In H2GS’s production
process, green hydrogen is used as the reducing agent, thereby resulting in emissions of water vapour in-
stead of CO2.
The DRI is then fed into the Electric Arc Furnace (EAF), where renewable electricity heats a combination of
DRI and steel scrap. During the continuous casting and rolling process, the liquid steel is converted into
solid products. The plant is fully integrated with hot charging at every step of the production chain, limiting
the amount of energy used, storage and material handling.
One of the most crucial challenges for decarbonizing hard-to-abate industries is access to renewable elec-
tricity and related infrastructure. The most electricity-intensive parts of green steel production are the
hydrogen production and the DRI reactor. Therefore, the most electricity-intensive part of the green steel
industry can be advantageously located in regions with high levels of renewable electricity production, or
with potential to further develop low-cost renewable energy assets.
Another challenge is the cost and price difference between traditional and green steel production. Many
customers in the automotive, construction and other sectors are willing to pay a premium for a green prod-
uct. To accelerate and increase the demand for green steel, there are some policy issues that should be
considered globally, among them:
• Markets with higher prices for GHG emissions can support their market by introducing border adjustment
mechanisms.
• Early movers can act as facilitators and play an important role in the introduction of an ambitious har-
monised standard for net-zero steel and its premium.
25
Heidelberg materials: URL: <https://www.heidelbergmaterials.com/en/pr-01-10-2021>.
Chapter 4 presents three phases of UNIDO’s model of an overview of the different activities to be consid-
green hydrogen industrial clusters and describes the ered during the development of the pilot project and
steps for their development. to start the production and application of green hy-
drogen. The third and final phase will prepare the in-
dustry cluster for expansion by expanding green hy-
4.1. Phases for cluster drogen production within the cluster, covering other
development – overview
industries that were not targeted in the pilot phase,
and connecting it to other industrial clusters.
The use of green hydrogen in industrial clusters sup- The figure below illustrates this journey for an exist-
ports the reduction of GHG emissions and a cleaner ing cluster to be transformed into a green hydrogen
production. This section presents a general overview industrial cluster.
before the following sections describe the phases in
detail.
4.2. Phase 1: Preparation of
green hydrogen clusters
The road towards the application of green hydrogen
in industrial clusters can be divided into three phas-
es. These phases are intended as a step-by-step plan
that will allow various stakeholders to jointly develop Phase 1 of the cluster model seeks to prepare the
an industrial cluster that will produce and use green cluster for the production and application of green
hydrogen. hydrogen. This phase comprises the awareness-rais-
ing, successful engagement of the different stake-
The first phase, prepares the environment where the holders involved in the process, the identification of
cluster will be developed, thus mitigating the risks, the green hydrogen cluster objectives, the elabora-
by engaging the different stakeholders in the devel- tion of a strategy and roadmap to successfully de-
opment process, raising awareness about green hy- velop and operationalize the cluster and, finally, the
drogen, its uses and industrial clusters, the joint for- elaboration of exploratory assessments and feasibil-
mulation and definition of the objective, strategy and ity studies and how to mobilize the necessary funds
roadmap of the green hydrogen industrial cluster, and for its implementation.
the financial mobilization. The second phase provides
Preparation of the
objective, strategy and workplan Testing of pilot projects
of a green hydrogen cluster
Financial mobilisation
The start of operations of the awareness-raising The following box provides an overview of aware-
strategy would also be preparing the path for the ness-raising carried out by the HEAVENN project as
stakeholder engagement step, which will be further an example of a successful hydrogen project.
elaborated in Section 5.2.2.
The EU-funded HEAVENN project introduces a sizeable demonstration project aimed at the development of a
methodology for and design of a fully integrated and functioning “hydrogen valley”. By bringing together the
central elements of hydrogen production, distribution, storage and local-end use, the goal is to demonstrate
how this hydrogen valley could – through the use of green hydrogen across the value chain – reduce carbon
emissions as well as potentially benefit businesses along its value chain.
When it comes to awareness-raising for the project, the dissemination of information is the responsibility
of the project execution organization in order to ensure that information and communications are easily
accessible and appropriate for different target groups. It is most effective if the distribution of information
starts at an early stage and is made available over a longer period, and the best way to do this would be
through the project organization. Involving knowledge institutions and authorities, as well as businesses, in
the dissemination of accurate and consistent information also contributes to awareness-raising.
The elaboration of a roadmap and timeframe to achieve the common objective allows estimating the tech-
nical competences needed during the different phases of the green hydrogen cluster development. For
each company, business park or region, it is possible to outline, in cooperation with knowledge institutions,
the competences currently available, the ones that will be needed in the future, and the training and edu-
cation pathways that will be needed. In this way, insights can be given to any specific target groups.26
26
HEAVENN: URL: <https://heavenn.org/heaven-projects>.
By having an active communication mechanism, the companies in the cluster and the public sector. The
government will be able to understand current and strategy is the plan of action that defines the direc-
future challenges and propose supportive policies, tion that will be taken to achieve the objective of the
and the industry will be able to communicate its cur- cluster. For it to be a successful strategy, it must iden-
rent needs. tify the objectives to be achieved, establish a guide
for achieving these objectives and propose a coher-
Policies are an essential element in the development ent set of actions to implement that guide. It is rec-
of an industrial cluster and should be acknowledged. ommended that it contains the following elements:
Governments should consider green hydrogen indus-
trial clusters in their industrial decarbonization and • Objectives to be achieved in terms of green hydro-
industrial development strategies; not only as simply gen and cluster activities.
projects to apply green hydrogen. These strategies re-
quire continuous collaboration with industry to put • Regional and national green hydrogen status quo,
in place an industrial emissions reduction roadmap fields of action and markets; it should include in-
and corresponding government support programmes formation regarding the production, transport and
to develop the clusters. infrastructure, trade and market creation, capaci-
ty-building, funding mechanisms and cooperation.
4.2.3. Preparation of the objective, • Steps and actions required for success of the strategy.
strategy and work plan of a green • Governance structure – who oversees implement-
hydrogen cluster ing and monitoring the strategy; it is recommend-
ed to have a centralized entity responsible for the
Different stakeholders play different roles in support- strategy and the progress of the development of
ing the decarbonization of industrial clusters and the the cluster.
uptake of green hydrogen. Having a long-term objec-
tive outlined in co-creation facilitates the integration
of the different options and their alignment. A com- Step 3: Developing the work plan for the cluster
mon objective, strategy and work plan will strengthen
the willingness of stakeholders to work together and
solve problems. They also make it possible to iden- After the strategy is defined, the work plan can be de-
tify the existing gaps earlier and find more suitable veloped. The development of the work plan should
partners. be done jointly by the stakeholders, companies in the
cluster and public sector, and management entity of
the cluster.
Step 1: Setting the objective
The work plan is a tool for strategic planning that de-
fines a goal (or set of goals) and includes the mile-
Setting the objective must involve the different stake- stones needed to reach it. It shows what is wanted to
holders that will be necessary for the development of be achieved, and how and when it will be achieved.
an industrial cluster. In this case, the key stakehold- To develop a work plan that can address the indus-
ers are clusters of businesses, energy providers and trial transformation needed for hydrogen use, it must
distributors, consumers, public local and regional au- have SMART (specific, measurable, achievable, realis-
thorities, including the community representative. tic and timely) goals.
Table 4-2. Recommended assessments for the development of green hydrogen industrial clusters
The first step would be for the cluster stakeholders • A financing mechanism along the green hydrogen
to jointly develop a financing plan to support their industrial cluster value chain.
objective and strategy. A financial plan is a document
containing information about the current financial A 2022 report by Accenture, Investing in industrial
situation and identifying financial goals, as well as clusters: A U.S. perspective on financing industrial de-
strategies (business plan) to achieve those goals. It carbonization, outlined three key steps to consider
will determine whether the green hydrogen indus- when determining which financing mechanisms will
trial cluster is financially feasible. The financial plan have the greatest impact on accelerating industrial
should at least consider the following aspects: decarbonization:27
• Investment budget: it should include all the in- • Adopt a whole system approach (whole green hy-
vestments needed to start a cluster and those at a drogen value chain in an industrial cluster) to un-
later stage. This will give insight into the minimum derstand the challenges and unique requirements
amount of money required to start the cluster. of the entire value chain. It requires identifying the
different stakeholder and perspectives across the
• Financial budget: it should detail how the invest- value chain and understanding the key barriers
ment budget of the cluster is intended to be fi- each of them are facing to participate in the mar-
nanced. ket. Users of hydrogen are dependent on the struc-
tural supply of hydrogen on a large scale and the
• Operating budget: it should determine whether the purchase of their products. Therefore, a long-term
cluster is profitable. It will estimate the turnover contract for hydrogen supply and purchase at fixed
and analyse the costs of the cluster. prices are important for feasible financing.
• Cash flow budget: it should include all income and • Identify and evaluate existing or potential funding
expenditure during a given period. mechanisms (this is the reason why it is important
to have an open communication channel with the
The financial plan should leverage existing public funds government) to address specific challenges, reduce
(if available) and financing mechanisms, while also market risk and unlock additional capital.
identifying new mechanisms to strengthen their busi-
ness models. The investment must be made in devel- • Leverage these mechanisms to decarbonize all in-
oping and strengthening the business cases. In the case dustries within the cluster.
of developing and emerging economies that are inter-
ested in being exporters of green hydrogen, the devel- In all cases, transparency in financing is an important
opment of green hydrogen industrial clusters could be concern. Transparency also allows businesses and in-
part of the business case. Hence, part of the revenue vestors to demonstrate that they are contributing to
or hydrogen produced is invested in the development the SDGS by investing in the development of green
of the production cluster in the exporting country. hydrogen and green hydrogen industrial clusters. By
document/Accenture-Financing-US-Industrial-Clusters-POV.pdf>.
Box 4-2. Financial mechanisms: lessons learned from the United States (US)
In the United States, the Infrastructure Investment and Jobs Act (IIJA),28 also known as the Bipartisan Infra-
structure Law (BIL), provides an opportunity to leverage funds toward industrial decarbonization through
the development of industrial clusters. The IIJA allocates up to $164 billion of potential investment for in-
dustrial clusters, including $8 billion to establish at least four clean hydrogen clusters, $1 billion for green
hydrogen and $500 million for R&D. Moreover, the Energy Act 202029 allocates $500 million to decarbonize
hard-to-abate industries.
The Inflation Reduction Act (IRA)30 provides additional funding opportunities to target industrial emissions,
including through the $5.8 billion Advanced Industrial Facilities Deployment Program,31 which provides indus-
trial facilities with finance to switch to clean fuels, carbon capture and electrification. In addition, the IRA lev-
erages the federal government’s purchasing power by financing the purchase of clean goods, thereby creating
and expanding new clean markets. Within this act a relevant tax credit is the clean hydrogen tax credit, which
establishes a maximum of $3/kg of hydrogen produced over 10 years for qualified clean hydrogen.
The Advanced Research Projects Agency-Energy (ARPA-E) programme allocates $2.9 billion to scale new
energy technologies, and the Office of Energy Efficiency and Renewable Energy (EERE) allocates $72 million
for hydrogen projects under the H2@Scale Programme. Based on this regulation and depending on the part
of the hydrogen value chain, the US has some financial mechanisms in place to develop a clean hydrogen
economy and to accelerate the uptake of clean hydrogen:
28
117th Congress (2021-2022), Infrastructure Investment and Jobs Act (P.L. 117-58). URL: <https://www.congress.gov/117/bills/hr3684/BILLS-117hr3684enr.pdf>.
29
116th Congress (2019-2020), Consolidated Appropriations Act (P.L. 116-260). URL: <https://www.congress.gov/116/bills/hr133/BILLS-116hr133enr.pdf>.
30
117th Congress (2021-2022), H.R.5376 - Inflation Reduction Act of 2022. URL: <https://www.congress.gov/bill/117th-congress/house-bill/5376/text>.
31
117th Congress (2021-2022), S.3112 - Hydrogen for Industry Act of 2021. URL: <https://www.congress.gov/bill/117th-congress/senate-bill/3112/text>.
technologies
the deployment of green hydrogen).
Box 4-3. Life Cycle Analysis model: lessons learned from GREET
The Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET)32 model is a one-
of-a-kind analytical tool that simulates the energy use and emissions output of various vehicle and
fuel combinations. The tool, developed by Argonne National Laboratory and is sponsored by the US
Department of Energy, provides a complete picture of the energy and environmental impacts of a wide
range of technologies from well to wheel.
The hydrogen production pathway included in the model provides several options for computing
greenhouse gas and criteria pollutant emissions. At a high level, the calculation estimates direct and
indirect emissions associated with hydrogen production resulting in grams per MMBtu of the following
pollutants: CO2, N2O, CO, NOx, PM10, PM2.5, SOx, BC, OC, CH4 (combustion and leakage) and VOC. These
values are provided both for hydrogen used as a process feedstock as well as for hydrogen used as a
transportation fuel, where the latter includes emissions associated with hydrogen transmission, dis-
tribution and compression/liquefaction.
In more detail, options for hydrogen production at a centralized plant include natural gas, solar, nucle-
ar (water cracking), electrolysis (HTGR), coal, coke oven gas, biomass, integrated fermentation and high
temperature electrolysis with SOFC. Decentralized hydrogen production includes options for natural
gas, electrolysis and ethanol steam reforming at refuelling stations. Electrolysis would use the mix on
the grid, or any combination of solar PV, wind, hydro, or nuclear. Where applicable, carbon capture and
sequestration as well as credits for electricity displaced by steam, whether sold on the market or used
at the facility, are included in the calculation.
32
GREET: URL: <https://greet.es.anl.gov/greet_hydrogen>.
In addition, some new requirements may emerge dur- A test case is a set of actions performed by a sys-
ing the development of the green hydrogen economy, tem that produces an observable result that validates
which also would need to be met. a specific aspect of the system. Test cases must in-
clude all functional requirements of a given system or
4.3.2. Production, process adaptation process and part of its non-functional requirements
and use of green hydrogen (performance, security, or interoperability).
KPIs should be designed according to the objectives When designing KPIs it is recommended to keep in mind
that the green hydrogen cluster aims to achieve. that there are descriptive and operational indicators.
Therefore, KPIs will depend on the specific circum- Descriptive KPIs are those that do not change over time;
stances of the cluster’s development. Nevertheless, operational KPIs are the result of the performance of
they should provide insight into the conditions, im- the cluster and will therefore vary from year to year.
provements and failures of the cluster. These should
be designed in cooperation with the relevant stake- In addition, it is recommended to consider four levels
holders involved in the development of the cluster of analysis. The electrolyser stack KPIs comprise the
and the industries that will use hydrogen. stack, where the electrolysis takes place. The electro-
lyser system KPIs comprise the stack and the pow-
Green hydrogen industrial clusters can have an im- er conversion before entering the electrolyser (AC to
pact on the following: DC). The plant KPIs comprise the electrolyser system
and the auxiliary systems such as power supply, con-
• Decrease environmental footprint of industries trol system and automation, system cooling, water
pumps, water demineralisation, etc. The industrial
• Technological learning impact cluster KPIs comprise all the utilities and industries
within the cluster.34
34
H2 Future: URL: <https://www.h2future-project.eu/images/Publications/H2F_WP2_D28_v12_final_2020-02-21.pdf>.
Once the categories are defined, detailed KPIs can opment. The SDGs include 17 Goals and 169 associ-
be designed according to the SMART acronym; they ated targets, which are a universal call to action to
should be specific, measurable, achievable, realis- end poverty, protect the planet and ensure that by
tic and time-bound metrics. Therefore, it is recom- 2030 all people enjoy peace and prosperity. These are
mended to focus on the information that is available integrated, which means that action in one area will
and that meets the SMART acronym requirements. affect the outcomes in others, and that development
The most appropriate KPIs will then be applied. must balance social, economic and environmental
To achieve the objectives proposed in the cluster sustainability.
roadmap, the following step would be to set specific
targets for the KPIs. In Phase 1 of the green hydrogen industrial cluster
model, an assessment of the impact of the cluster to
In addition, the cluster can also consider using the the SDGs should be undertaken to assesses which are
SDGs as KPIs to measure its sustainability. Combin- the most critical SDGs that will be affected by the de-
ing the principles of the SDGs to create sustainable velopment of the industrial clusters and which SDGs
green hydrogen industrial clusters ensures that de- are most at risk of being negatively and positively af-
veloping and emerging economies benefit from their fected by the green hydrogen industrial cluster de-
development, thereby improving regional economies, velopment. Once the relevant SDGs targets have been
resulting in higher living standards and reduced de- identified, the targets can be mapped into KPIs of the
pendence on foreign energy imports. green hydrogen industrial cluster.35
The Sustainable Development Goals (SDGs) were The following table summarizes the relevant SDGs,
adopted by United Nations Member States in 2015 the targets affected by the green hydrogen industri-
as part of the 2030 Agenda for Sustainable Devel- al cluster and a description of indicators that could
35
SDG Compass: URL: <https://sdgcompass.org/business-indicators>.
4.3.4.1. Green hydrogen certification Finally, the entity responsible for the management
of the industrial cluster should oversee monitoring
The deployment and uptake of green hydrogen will the performance of the cluster, assessing the results
depend on the establishment and acceptance of the achieved and reporting on the operations of the clus-
certification systems. A certification system is a sys- ter to the stakeholders involved in the value change
tem, which has its own operational and management of green hydrogen and to other stakeholders of the
rules, to provide written assurance that a product, cluster who might not be directly involved.
process, or service complies with a specified stand-
ard or other specified requirements, and which is At this point, it might be worth considering the digiti-
managed by an entity independent of both the party zation of the cluster’s industrial processes to collect
requesting the certification assurance and the party data regarding emissions, electricity and green hy-
providing the product, process, or service.36 drogen produced, as well as the different information
needed to achieve the previously established KPIs. In
These tools are needed to document the attributes this way, this data could be more easily analysed, fa-
of green hydrogen along the entire value chain and cilitating the optimization of large-scale production
create transparency. This strengthens customer con- of green hydrogen, enabling its cost-effective produc-
fidence and ensures an advantage over other com- tion, progress monitoring and thus the subsequent
petitors. obtaining of a green hydrogen certificate.
There are different publications that provide an over- The following box of GETEC Park.EMMEN provides an
view of the technical considerations for green hydro- overview of the management of an industrial cluster.
gen tracking systems and the challenges that need to
be addressed for the creation of such instruments. Communications about the cluster’s internal and ex-
One example is the IRENA Coalition for Action brief ternal operations In Section 4.2.2, it was recommend-
“Decarbonising End-use Sectors: Green Hydrogen Cer- ed to have a communication mechanism and strategy
tification”. The report makes key recommendations in place, which not only enables the communication
to policymakers for the successful establishment of of operations within the cluster and between cluster
green hydrogen monitoring systems based on inter- stakeholders, but also outside the cluster. The strat-
nationally accepted standards.37 egy for communicating the cluster’s operations can
also be designed at that phase.
4.3.4.2. Monitoring and evaluation
In terms of communication in Phase 2, the monitoring
The KPIs previously used in the test phase (Section and evaluation reports of the green hydrogen indus-
5.3.4) introduced the monitoring and evaluation try cluster should be accessible (digitally) to all stake-
(M&E) system. On this basis, the environmental, tech- holders of the cluster, including employees and rep-
nical and economic performance indicators previous- resentatives of regional communities, such as local
ly used could be used or modified to track progress governments, education and training institutes and
over time and identify areas for improvement. CSOs. In addition, management decisions of the com-
panies involved in the green hydrogen value chain,
Monitoring progress on green hydrogen industry the cluster consortium board (if applicable) and their
cluster targets and milestones is an ongoing pro- impact should also be available on their websites for
cess through which continuous improvements can be those outside the cluster.
36
Law insider: URL: <https://www.lawinsider.com/dictionary/certification-system>.
IRENA (2022), Decarbonising End-use Sectors: Green Hydrogen Certification: URL: <https://www.irena.org/publications/2022/Mar/The-Green-
37
Hydrogen-Certification-Brief>.
Box 4-4. Management of industrial clusters: lessons learned from GETEC Park.EMMEN
GETEC Park.EMMEN, located in Emmen in the north-east part of the Netherlands, aims to become a CO2 neu-
tral industrial park. The strategy is to increase the energy efficiency and reduce the CO2 footprint of the park
while attracting more companies to set up business there.
Companies in the park that have higher margins can decarbonize more easily and can switch directly to
green hydrogen. At the same time, the site is preparing the infrastructure to be used with green hydrogen,
so that when the time is right, and green hydrogen becomes cheaper, the transition will be smooth.
To increase efficiency, the park is continuously increasing the current conversion efficiency. For example, by
recovering residual heat and using it again at the park, or, on the fuel side, by using green gas. In the park,
hydrogen will flow through the pipelines instead of gas.
GETEC Park.EMMEN manages, maintains and operates the industrial park. It oversees the facilities and the
delivery of utilities (heat, electricity, maintenance, water treatment, etc.) through an integrated utility infra-
structure. With several laboratories on site and nearby, it also assists companies develop a product idea,
through the pilot plant phase, to full production scale.
GETEC Park.EMMEN works in close cooperation with several education and research institutes (Stenden PRE,
Green PAC, University of Groningen, Wageningen), and university students are trained in company-focused
research facilities (StendenLab - Real World Learning).38
38
GETEC Park.EMMEN: URL: <https://www.getec-energyservices.nl/en>.
HEAVENN is a large-scale programme of demonstration projects that brings together the key compo-
nents of the green hydrogen value chain in a fully integrated and functioning “hydrogen valley’’ (H2V).
The objective is to use green hydrogen across the entire value chain, while developing replicable
business models for wide-scale commercial deployment of hydrogen across the entire regional energy
system.
The project is situated in the north of the Netherlands and funded by the European Commission. It
has been recognized by the EU and supported by the Clean Hydrogen partnership as the first hydro-
gen valley in Europe. The approach is based on the deployment and integration of industrial clusters
of existing and planned projects in six locations. There are 20+ connected projects to create a green
hydrogen ecosystem where the projects are interrelated to each other.
NorNed/CoBra
Tennet/TSO
H2Tec
Studies
& Replication North Sea Renewable
fuel production
Lenten/NPRC
Cluster I Engie/cs Nobian Cluster II
Mun. Hoogeveen
RUG, Enercy, GSP
Hinicio, Aragon H2Tec
Foundation, EMEC,
EWE, Hydrogen Gasunie
Valley DK, Ireland Bytesnet
HTS
HA, ERIG Mun. Groningen
UVO Vervoer HyStock/
Green Planet Total Gasunie
Cluster III
Mun. Groningen Shell
The development of hydrogen valleys and/or hydrogen clusters is gaining momentum, triggering the
acceleration of hydrogen development, including in developing countries. Hydrogen valleys provide
a stepping stone to promote the development of hydrogen ecosystems from individual and isolated
projects that enable the deep penetration of hydrogen into society.
Although HEAVENN has a defined time scope and budget, the systemic approach is raising awareness
and acting as a model for growth. The next step is to establish more hydrogen valleys and connect
them to each other, which will enable the creation of a green hydrogen market.
This chapter highlights the challenges and enablers aiming at investing in green hydrogen industrial clus-
that may affect the development of green hydrogen ters and in the green hydrogen supply chain in gen-
industrial clusters. It will help the green hydrogen in- eral. The weak presence and visibility of green indus-
dustrial cluster developers to identify potential bar- trial policies and funding programmes, as well as an
riers early on and provide an overview of what meas- unclear long-term vision, can hinder investments.
ures can be employed to overcome them. In Table 5-1,
these challenges and enablers are presented in four Allowing access to an emerging market, while foster-
thematic sub-sections: regulatory, technology, eco- ing industrial development synergies, requires proof
nomics and finance, and society and environment. that the hydrogen used and the green products pro-
duced fulfils a defined sustainable criteria.
Challenges Enablers
• No mature markets
• Green product prices no competitive enough
• Demand creation through offtake
• High CapEx of green hydrogen industrial
Economic and agreements or subsidies
clusters
financial • Carbon pricing schemes
• Low perceived investment security and
• Public funding to spur private investment
bankability
• Missing long-term contracts
Box 5-1. Steps to develop a green hydrogen roadmap: lessons learned from Colombia
Colombia’s hydrogen roadmap has five key objec- timates, regulatory factors, and guidelines for the
tives: development of pilot projects. The second step,
to ensure the success of the development of the
• National strategy: To be developed with the roadmap, is to address the following challenges:
participation of several ministries and nation-
al entities, as well as universities and private • Analyse international cases to learn from best
companies that have experience in developing practices and avoid replicating mistakes.
projects or using hydrogen in their industrial
processes. • As hydrogen impacts on various sectors of the
economy, the development of the roadmap
• Tool to decarbonize the economy: Since hydro- must be inclusive and involve the participation
gen can be used in several energy-intensive in- of different ministries, academia and private
dustries and currently use fossil fuels. companies.
• Tool for the promotion of economic growth: Hy- • Lack of knowledge about hydrogen in terms of
drogen is seen as a possibility for the stimula- its uses and benefits, for which it is important
tion of economic activity post-COVID-19. to implement communication and public con-
sultation strategies.
• Enable a just transition for some regional econ-
omies: There are some regions in Colombia that Finally, as hydrogen is a new market, different
are economically highly dependent on fossil types of financial instruments are needed to im-
fuels and need options to transition to cleaner plement the roadmap:
sources of income.
• Technology funds to promote research, devel-
• Social enabler for the development of local opment and innovation in new technologies.
communities in different parts of the country:
The development of hydrogen projects will • Direct financing, such as technical assistance
bring investment and job creation to commu- funds, investment capital and preferential rate
nities. funds to develop projects.
In addition, a clear scope of action was defined, in- • Venture capital funds, angel investors and pub-
cluding four main areas to be analysed: hydrogen lic and private financing to promote new types
production opportunities and prices, demand es- of business.
40
European Union Agency for the Cooperation of Energy Regulators, 2021, Transporting pure hydrogen by repurposing existing gas infrastructure:
URL: <https://www.acer.europa.eu/news-and-events/news/repurposing-existing-gas-infrastructure-pure-hydrogen-acer-finds-divergent-
visions-future>.
41
Topolski, Kevin, Evan P. Reznicek, Burcin Cakir Erdener, Chris W. San Marchi, Joseph A. Ronevich, Lisa Fring, Kevin Simmons, Omar Jose Guerra
Fernandez, Bri-Mathias Hodge, and Mark Chung. 2022. Hydrogen Blending into Natural Gas Pipeline Infrastructure: Review of the State of Tech-
nology. Golden, CO: National Renewable Energy Laboratory. NREL/TP-5400-81704. <https://www.nrel.gov/docs/fy23osti/81704.pdf>.
investment will be crucial for the development of A lack of public funding dedicated to green hydrogen
green hydrogen industrial clusters. However, it faces projects slows down adoption. Public funding is es-
several challenges on a project financing level, par- sential for the market ramp up of green hydrogen as
ticularly in the early stages due a perceived lack of in- willingness to pay for green hydrogen’s green premi-
vestment security. Without investment, it is challeng- um does not cover the cost gap to fossil fuels on the
ing to formulate cost benefit analyses and business free market in most cases.53 Governmental funding
models, which may in turn hamper the preparation schemes are crucial to achieve economic viability and
of public policies. This gridlock between investors, enable early-stage green hydrogen projects. Thus, in-
developers, policymakers and offtakers must be re- novative financial measures and instruments must be
solved to kick-start initial developments. adopted to leverage the available funding to the fur-
thest extent possible, thereby de-risking and crowd-
Since CapEx makes up 30% of the levelized cost of ing in private investment (e.g. via blended public, pri-
hydrogen, it needs to be considered when setting vate financing schemes, sovereign guarantees, etc.).
up clusters. Private institutions have a limited will-
ingness to finance projects when facing regulatory
uncertainty. If regulations, policies and goals fail to 5.3.2. Economic and financial
specify, and fail to guarantee where green hydrogen is
to be employed long-term, the subsequent increased
enablers
risk of stranded assets can strongly limit access to
private investments.49 This section presents potential measures to over-
come the market challenges and financing barriers of
Project financing in developing and emerging econ- green hydrogen industrial clusters.
omies can be expensive due to risk factors such as
security of offtake agreements and political stability. 5.3.2.1. Economic and market enablers
This translates to a relatively high weighted average
cost of capital (WACC) compared to industrialized Enablers such as partnerships or regulations have the
economies, which increases the overall project costs potential to accelerate the use of green hydrogen in
and costs for green hydrogen production. industry. Considering the strong need for innovation,
it is vital that decision makers follow the best scien-
A high likelihood of funding required by different ac- tific advice on stimulating technological progress.
tors along the entire value chain poses risk for fund-
ing institutions50,51. Green hydrogen industrial clus- Long-term offtake agreements within the value chain
ter projects require parallel investments across the can improve supply and demand security. It therefore
whole value chain, for example, in production, pro- makes sense for two companies to reach an offtake
cesses and offtake of green products. These kinds of agreement before they start their respective invest-
projects can be developed by different stakeholders ments. Industrial clusters are especially helpful to fa-
and financed by different entities. This causes high cilitate such agreements as the players might already
co-dependencies. work together on other topics and have a common
basis of trust.
A lack of established long-term green hydrogen
offtake schemes hampers investment. As both green Putting a price on CO2 emissions incentivizes the re-
hydrogen markets and local green hydrogen value placement of fossil fuels. Carbon prices internalizes
chains (e.g. within industrial clusters) are a recent the externalities of CO2 emissions. In other words,
and emerging phenomenon, there are little to no they put a price on the climate damage resulting from
precedents to offtake schemes for green hydrogen the use of fossil fuels, thus reducing, or even elimi-
projects that have proven to be bankable. This bears nating, the green premium that must be paid for more
difficult to quantify project risks and hinders inves- sustainable alternatives such as green hydrogen.
tors towards final financing decisions.52
49
S&P Global (2021) Hydrogen projects face funding gap in Europe: URL: <https://www.spglobal.com/commodity-insights/en/market-insights/
latest-news/electric-power/112521-hydrogen-projects-face-funding-gap-in-europe-banks>.
50
Norton Fulbright (2021) Financing hydrogen projects brings unique challenges: <https://www.nortonrosefulbright.com/en/knowledge/
publications/cd725de6/financing-hydrogen-projects-brings-unique-challenges>.
51
Dena (2021) Public funding for powerfuels: <https://www.powerfuels.org/fileadmin/powerfuels.org/Dokumente/Public_Funding_for_
Powerfuels_Projects/Public_Funding_for_Powerfuels_Projects_01.pdf>.
52
IEA (2021), Global Hydrogen Review 2021. <https://iea.blob.core.windows.net/assets/e57fd1ee-aac7-494d-a351-f2a4024909b4/
GlobalHydrogenReview2021.pdf>.
53
Dena (2022) Public funding for powerfuels projects: <https://www.powerfuels.org/fileadmin/powerfuels.org/Dokumente/Public_Funding_
for_Powerfuels_Projects/Public_Funding_for_Powerfuels_Projects_01.pdf>.
• Public (government) driven: compensation for the Publicly managed digital matchmaking platforms can
premium through public funding for the local gov- facilitate the connection of relevant project stakehold-
ernment to comply with renewable energy, GHG ers and funding. Accessible to green hydrogen project
reduction, or other green hydrogen industrial clus- developers, such platforms would enable the iden-
ters-related targets tification of suitable stakeholders and public fund-
ing options for green hydrogen project development.
• Public-private driven: e.g. in line with efforts on in-
ternational organizations to enhance inclusive and Any matchmaking platform should be managed or su-
sustainable industrial development (ISID) pervised publicly to enhance transparency. Transpar-
ency of ongoing projects along the green hydrogen
54
European Investment Bank, Gilles, F., Brzezicka, P. (2022). Unlocking the hydrogen economy: stimulating investment across the hydrogen
value chain: investor perspectives on risks, challenges and the role of the public sector, European Investment Bank. <https://data.europa.eu/
doi/10.2867/847677>.
55
Griffiths, S., et al, (2021). Industrial decarbonization via hydrogen: A critical and systematic review of developments, socio-technical systems
and policy options. Energy Research & Social Science, Volume 80, October 2021, 102208.
56
Dena (2021): Abschlussbericht Leitstudie Aufbruch Klimaneutralität: <https://www.dena.de/fileadmin/dena/Publikationen/PDFs/2021/
Abschlussbericht_dena-Leitstudie_Aufbruch_Klimaneutralitaet.pdf>.
57
NOW (2020): <https://www.now-gmbh.de/wp-content/uploads/2020/09/indwede-studie_v04.1.pdf>.
value chain may foster additional synergies and lev- lar energy potential. Seawater desalination requires
erage more funding. An existing matchmaking plat- substantial energy inputs. It can also result in signif-
form for producers, funding and offtakers is the H2 icant amounts of waste brine, which once disposed,
Global platform.58 may lead to local contamination or loss of local eco-
systems, both on land and at sea, and therefore dis-
Long-term government strategies (e.g. national hy- ruption of food security and food safety.60
drogen roadmaps) or targets contribute to creating
investment security. This provides all stakeholders Land requirements for green hydrogen projects can
with more confidence that there will be a future mar- cause competition with other land uses and decrease
ketplace for green hydrogen and related technologies. local project acceptance. The significant amount of
renewable power infrastructure required for green
hydrogen production does itself require significant
amounts of land. Sufficient amounts of production
5.4. Society and environment facilities for renewable electricity will be required,
however, to ensure the uptake of green hydrogen pro-
duction to avoid an overall increase in GHG emissions
At every industrial project, green hydrogen indus- (if fossil electricity is used). Sometimes, the installa-
trial clusters will affect their surroundings through tion of additional renewable power plants could meet
the construction, infrastructure, energy and material opposition from local communities. This can in turn
inputs as well as the work involved in making them potentially lead to project delays or halts.
function. This section provides a brief overview of
some of the challenges and enablers. The socio-en- The chemical attributes of hydrogen make it a safety
vironmental aspiration of any green hydrogen cluster and environmental hazard. Due to its small molecu-
should be to minimize its negative externalities while lar size, hydrogen is highly permeable through many
providing benefits to the people around it. materials and leaks more easily than other gases.
Fugitive emissions could be a problem for the envi-
ronment. Leakage also presents a safety risk because
5.4.1. Social and environmental hydrogen’s wide range of flammability.61 These en-
challenges vironmental risks need to be addressed as well, for
example, by complying with relevant standards and
norms for safe transport and storage of hydrogen.
The development of green hydrogen clusters carries
several implications for energy, water and food sup-
ply security, and its potential impacts on land use, 5.4.2. Social and environmental
ecosystems and biodiversity cannot be ignored, ei-
ther. Similarly, the social component of community
enablers
involvement in decisions and profits through stake-
holder engagement and local content in operations Both the environmental impact and the livelihoods
is important (e.g. access to clean energy, water and of local communities must be considered when plan-
employment). ning green hydrogen production rollouts. The busi-
ness case and climate benefits of producing green
The water consumption of green hydrogen produc- hydrogen should not come at the expense of energy,
tion can significantly affect local water availability, in- water, or food security. The key is inclusiveness: the
crease water stress and cause water levels to decline. involvement of local communities in the formulation
Water requirements for green hydrogen projects can of strategies to ensure that all stakeholders’ voices
compete with domestic needs and can cause further are heard and their concerns considered.
environmental sustainability concerns.59 This is par-
ticularly the case in already water-scarce areas, where By highlighting co-benefits for local communities,
many favourable green hydrogen project locations support for such projects could increase. Campaigns
are situated due to their ample endowment with so- can focus on four main points. First, green hydrogen
58
H2 Global: URL: <https://www.h2-global.de>.
59
Dena, 2021. <https://www.powerfuels.org/fileadmin/powerfuels.org/Dokumente/Water_Consumption_of_Powerfuels/20211025_GAP_Discus-
sion_Paper_Water_consumption_final.pdf>.
60
National Geographic (2019) Desalination plants produce more waste brine than thought. <https://www.nationalgeographic.com/environment/
article/desalination-plants-produce-twice-as-much-waste-brine-as-thought>.
61
Abohamzeh et al., 2021, Review of hydrogen safety during storage, transmission, and applications processes <https://doi.org/10.1016/j.
jlp.2021.104569>.
62
Food and Agriculture Organization of the United Nations (2006): Water desalination for agricultural applications. Proceedings of the FAO
Expert Consultation on Water Desalination for Agricultural Applications, checked on 7/12/2021. URL: <https://agris.fao.org/agris-search/search.
do?recordID=XF2006427423>.
63
Dena, 2021.
These guidelines introduced the concept of green hydrogen industrial clusters, which are production clusters that
use only green hydrogen to support sustainable development. Current use of green hydrogen in industry is lim-
ited, but there are already several initiatives that support a rapid uptake of green hydrogen in industry to create
green jobs and mitigate emissions. UNIDO aims to support and accelerate this deployment and help governments
and companies develop policies and projects related to green hydrogen in industry.
Green hydrogen currently faces several challenges that can be overcome by cooperation and collaboration among
stakeholders as well as further research and development. Currently, green hydrogen is not cost competitive with
grey hydrogen. This leads to a situation where material production with green hydrogen is not yet competitive
with alternatives based on fossil fuels. Recent developments, however, indicate that hydrogen production with
renewable electricity could be cost competitive over the next decade and relevant at scale. To support this, gov-
ernments have introduced several R&D programmes and demand-based support instruments. These activities are
key to support the uptake of green hydrogen.
The previous chapters described use cases for hydrogen, characteristics of production with hydrogen and chal-
lenges, as well as policies to address those challenges. It also proposed UNIDO’s green hydrogen industrial cluster
model, which consist of three phases. The model will be further developed and updated in the coming years to
support governments and industrial stakeholders to develop production clusters.
UNIDO supports the development of green hydrogen industrial clusters through project development, stakehold-
er engagement and dialogue, and by providing best practices and guidelines. These guidelines are a first step
towards compiling relevant information and documents for the early phases of the cluster development.
www.unido.org/hydrogen