Green Hudrogen Indutrial Cluster

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GREEN HYDROGEN

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.

External authors: Matteo Michelli (DENA), Mats About UNIDO


Multhaupt, Peter Ruschhaupt, Peter Schniering
and Antoine Koen (Future Clean Architects), Sabina The United Nations Industrial Development Orga-
Kroigaard and Christopher Sorensen (GreenLab), nization (UNIDO) supports member states in their
Nienke Homan (Impact Hydrogen), and Patrick efforts towards inclusive and sustainable indus-
Cnubben, Jochem Durenkamp and Julio Garcia- trial development and is committed to taking the
Navarro (New Energy Coalition). lead in promoting an inclusive energy transition.
With its long-standing experience in renewable
energy projects and the application of clean en-
Reviewers: Rudolf Zauner (Verbund), Frank ergy technologies in industry, UNIDO successfully
Wouters (Woulters LTD), Frank Mischler (GIZ/PTX collaborates with a wide range of partners globally
hub), Alicia Eastman (Intercontinental Energy), supporting industries in their pathway to net-zero
Daniel Erdmann (Verband Deutscher Maschinen emissions.
und Anlagenbau V.D.M.A), Ibrahim Samy (ORASCOM
Construction PLC), Bashir Lebada (OCI Global).

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.

Copyright © 2023 UNIDO


GREEN HYDROGEN INDUSTRIAL CLUSTERS
GUIDELINES
First edition

Vienna, June 2023


Contents

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

2. UNIDO’s Green Hydrogen Industrial Clusters...........................................14


2.1. UNIDO’s green hydrogen industrial clusters model .....................................................................14
2.2. UNIDO’s guidelines for green hydrogen industrial clusters .......................................................16
2.3. Using the guidelines.............................................................................................................................16

3. Characteristics of Green Hydrogen Industrial Clusters.........................18


3.1. Types of green hydrogen industrial clusters...................................................................................18
3.2. Availability of renewable electricity and electricity mix............................................................. 21
3.2.1. Location and access to utilities and auxiliary facilities.....................................................................22
3.2.2. Composition, scale and synergies...........................................................................................................23
3.3. Production of green hydrogen............................................................................................................23
3.4. Overview of uses for green hydrogen in industry.........................................................................23

4. Phases of Green Hydrogen in Industrial Clusters...................................28


4.1. Phases for cluster development – overview...................................................................................28
4.2. Phase 1: Preparation of green hydrogen clusters..........................................................................28
4.2.1. Awareness-raising........................................................................................................................................29
4.2.2. Stakeholder engagement...........................................................................................................................31
4.2.3. Preparation of the objective, strategy and work plan of a green hydrogen cluster...................32
4.2.4. Feasibility studies........................................................................................................................................32
4.2.5. Financial mobilization ...............................................................................................................................34

4 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


4.3. Phase 2: Deployment of technologies..............................................................................................36
4.3.1. Commissioning of pilot project................................................................................................................36
4.3.2. Production, process adaptation and use of green hydrogen...........................................................38
4.3.3. Testing of pilot projects.............................................................................................................................38
4.3.4. Commercial operation................................................................................................................................41
4.4. Phase 3: Upscaling of green hydrogen in industry........................................................................42
4.4.1. Programmes for uptake and challenges ................................................................................................42
4.4.2. Development of green hydrogen networks...........................................................................................43

5. Challenges and Enablers...............................................................................46


5.1. Overview of regulatory challenges and enablers ..........................................................................46
5.1.1. Regulatory challenges..................................................................................................................................46
5.1.2. Regulatory enablers ....................................................................................................................................47
5.2. Technology..............................................................................................................................................49
5.2.1. Technological challenges...........................................................................................................................49
5.2.2. Technological enablers..............................................................................................................................50
5.3. Economics and finance......................................................................................................................... 51
5.3.1. Economic and financial challenges..........................................................................................................51
5.3.2. Economic and financial enablers.............................................................................................................52
5.4. Society and environment ....................................................................................................................54
5.4.1. Social and environmental challenges.....................................................................................................54
5.4.2. Social and environmental enablers .......................................................................................................54

6. Concluding Remarks......................................................................................56

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 5


List of figures
Figure 1-1.  Global Programme for Green Hydrogen in Industry (UNIDO)............................................................................. 12
Figure 2-1.  Schematic overview of a green hydrogen industrial cluster............................................................................. 15
Figure 3-1.  Overview of GreenLab Skive Industrial Cluster..................................................................................................... 20
Figure 3-2.  GreenLab Skive Energy Park SymbiosisNet diagram............................................................................................ 21
Figure 3-3.  Overview of possible uses cases for green hydrogen......................................................................................... 24
Figure 3-4.  Overview of possible uses cases for green hydrogen......................................................................................... 25
Figure 4-1.  Phases of green hydrogen clusters and stages..................................................................................................... 29
Figure 4-2.  Example of regulation at different stages of the production chain................................................................ 36
Figure 4-3.  Visual of the HEAVENN project.................................................................................................................................. 44

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

6 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


List of boxes
Box 1-1.  IHEC demonstration project on commercial hydrogen fuel cell buses: lessons learned from Beijing........ 13
Box 3-1.  Transformation of a brownfield site: lessons learned from the Humber Cluster............................................. 19
Box 3-2.  Industrial cluster site: lessons learned from GreenLab Skive............................................................................... 20
Box 3-3.  Green hydrogen in ammonia production: lessons learned from the Ammonia Energy Association........... 26
Box 3-4.  Green steel projects development: lessons learned from H2 Green Steel (H2GS)........................................... 27
Box 4-1.  Awareness-raising: lessons learned from the HEAVENN project........................................................................... 30
Box 4-2.  Financial mechanisms: lessons learned from the United States.......................................................................... 35
Box 4-3.  Life Cycle Analysis model: lessons learned from GREET......................................................................................... 37
Box 4-4.  Management of industrial clusters: lessons learned from GETEC Park.EMMEN................................................ 42
Box 4-5.  HEAVENN: the first EU hydrogen valley ...................................................................................................................... 44
Box 5-1.  Steps to develop a green hydrogen roadmap: lessons learned from Colombia............................................... 48

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 7


Foreword

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

8 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


Executive Summary

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 INDUTRIAL CLUSTERS GUIDELINES | 9


1. Introduction

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

climate change: industrial


the International Energy Agency (IEA), hydrogen pro-
duction in 2018 was 75 million tonnes (Mt) globally,
decarbonization whereas electrolysis-based hydrogen production in
2022 accounted for only 0.035 Mt of global production.
Hence, production is currently dominated by fossil fu-
Nearly all countries have committed to decarboniz- els.4 This is collectively responsible for CO2 emissions
ing their economies in the coming decades following of around 830 MtCO2 per year.5
the Paris Agreement to limit global warming. Like-
wise, many large corporations have announced plans To accelerate the clean energy transition away from
to cut their carbon footprint to net zero. Currently, fossil fuels, increasing and upscaling green hydrogen
industrial production accounts for a quarter of global production are essential. With significantly decreasing

1
IEA (2022): Industry, URL: <https://www.iea.org/reports/industry>.
2, 3, 4, 5
IEA (2022): Global Hydrogen Review.

10 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


costs for renewable electricity, the introduction of
carbon pricing/standards, and production advance-
1.2. Green hydrogen and
ments and roll-out for electrolysers, green hydrogen sustainable industrial
is expected to expand rapidly and cover up to 14% of
the world’s total final energy consumption by 2050. development
However, here are large uncertainties associated with
the deployment.6 Governments, industry and other stakeholders are
increasingly adapting their industrial development
Table 1-1 summarizes currently discussed types of strategies to new framework conditions to include
hydrogen, a brief description and production levels. green hydrogen. Already, several countries have or
These guidelines focus on the opportunities for green are currently developing green hydrogen roadmaps
hydrogen (last row). and strategies. These strategies aim to decarbonize
industries, secure imports of green hydrogen and de-
velop their own production capacities.
Table 1-1.  Types of hydrogen and current
production The gaining momentum has created new opportuni-
ties for industrial development, particularly for coun-
Term Current tries within Africa, the Middle East, Southern Asia and
Description Latin America, which have significant potential for re-
used production
newable power generation. With appropriate frame-
work conditions, such countries can develop promis-
Grey hydrogen is produced ing new industrial systems based on green hydrogen
from fossil fuels (natural and renewable power and then gradually attract en-
Grey gas or oil) through steam 74 Mt ergy-intensive industrial sectors in addition to those
hydrogen reforming and causes (2018) from manifold downstream industries. The uptake of
process-related CO2 green hydrogen, therefore, presents an opportuni-
emissions. ty for many countries to both augment their future
industrial strategies and increase their shares of re-
Blue hydrogen is based on newable energy sources for electricity generation.7
the same processes as grey
hydrogen, but additional Green hydrogen can contribute to inclusive and sus-
carbon capture and storage tainable industrial development (ISID) in the following
Blue technologies are applied ways besides the reduction of industrial greenhouse
0.75 Mt
hydrogen to permanently store gas emissions: it can support the development of new
the process emissions low-carbon production clusters and process routes.
underground (carbon These can create green jobs and improve local eco-
sequestration) or bind it in nomic opportunities where the new industries locate
a solid product (e.g. bricks). and decrease the risk due to dependence of external
production of certain goods such as fertilizers or steel.
Green hydrogen is The use of green hydrogen stipulates upstream invest-
produced via water ments in renewable electricity generation and infra-
Green
electrolysis using non- 0.035 Mt structure. For providing the large quantities of elec-
hydrogen
emitting (renewable) tricity, additional capacities for renewable electricity
electricity. generation will be required. This can improve energy
access to the local communities where green hydrogen
is produced. In addition, hydrogen can be used as a
Many governments have recognized the strategic im- functional storage to avoid curtailment of renewables
portance of green hydrogen and have started to de- (e.g. at bottlenecks of the electricity grid, or at time of
velop strategies and roadmaps to deploy hydrogen surplus electricity production) and store electricity for
and invest in new production facilities. Their interest which there are no storage technologies in place and for
is shared by the private sector, which has registered longer periods of time. Green hydrogen will also require
a growing number of industry alliances and invest- water. In areas where there is water scarcity or stress,
ments, as well as international energy partnerships water desalination can be used and distributed with
and networks. the communities where hydrogen is being produced.

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>.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 11


Introduction

1.3. UNIDO’s Global The global partnership is a global platform for


member states, industries, private sector, investors,
Programme for research and academic institutions. Through the
partnership, UNIDO regularly liaises with key stake-
Hydrogen in Industry holders by conducting regional and global dialogue
sessions with member states to explore developing
In line with UNIDO’s mandate to promote inclusive countries’ needs and to enable dialogue and informa-
and sustainable industrial development, reflected tion exchange among them. These dialogues provide
in SDG 9, UNIDO launched its Global Programme for substantial material for UNIDO to articulate develop-
Hydrogen in Industry (GPHI) to support developing ing countries’ interests and needs and advocate for
countries overcome the barriers and encourage a them in global fora (e.g. COP, G7, and G20). Moreover,
just hydrogen transition that puts social and envi- based on dialogues’ outcomes, UNIDO joins forces
ronmental aspects in focus. Through its programme, with renowned knowledge partners to address coun-
UNIDO aims to influence and guide the development tries’ needs and to develop training as well as innova-
of market polices, standards, skills, financing instru- tive tools and solutions. These include designing and
ments, innovation and coordination between key promoting policies, regulations, standards, financial
stakeholders that play an essential role in the devel- instruments, and innovation programmes. The ex-
opment of a just and sustainable hydrogen economy. changes with stakeholders also give rise to ideas for
Promoting tangible projects to accelerate the local joint projects development and active engagement of
uptake of green hydrogen in industries of developing women and youth in the hydrogen market.
countries and transition economies is a key element
of the programme. UNIDO’s technical cooperation adapts and applies
knowledge and tools developed globally to coun-
Given the complexity and dynamism of a just hydro- try-specific interventions for green hydrogen in in-
gen transition, UNIDO has built its global programme dustry. This is done in close collaboration with the
around two pillars “LEAD” and “ACT” which draw on and governments and industries of developing countries
feed into each other’s resources, expertise and net- and transition economies. Such technical assistance
works. The GPHI also counts on cooperation with the entails sensitizing stakeholders, sharing best prac-
International Hydrogen Energy Centre (IHEC) in China. tices, as well as assessing local market needs and
devising strategies, tools and instruments. UNIDO
The Programme consists of: The Global Partnership reviews countries’ institutional and technical capac-
for Hydrogen in Industry and the Technical Cooper- ities and conducts capacity development where gaps
ation with country-specific tailored interventions, as have been identified. One key component of technical
summarized in the figure below. cooperation is its green hydrogen industrial cluster

Figure 1-1.  Global Programme for Green Hydrogen in Industry (UNIDO)

Assembling & sensitizing


Liaising with key

L
stakeholders
stakeholders
Assessing & addressing

A
Enabling dialogue &
the needs of the local market

E
exchange

Advocating for Conducting capacity

C
developing countries building activities

Developing & sharing


A Tailoring strategies, tools &

T
knowledge products thematic instruments

D
Developing joint Tailoring pilot projects
projects development & upscaling

GLOBAL PARTNERSHIP TECHNICAL COOPERATION

12 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


model, which is based on a co-location approach to cooperation with international organizations. The box
local green hydrogen production, storage, transport summarizes its activities.
and end-use.
To sum up, green hydrogen could support the re-
In addition, both components are supported by the duction of greenhouse gas emissions while building
IHEC in Beijing, as a valuable knowledge partner. The up new supply chains and creating green jobs. The
centre aims to work together with government and guidelines provide an overview of the current and
industrial entities to scale up hydrogen technologies potential use of hydrogen in industrial clusters and
through promoting capacity-building and knowledge describe the characteristics of green hydrogen indus-
dissemination, as well as strengthening international trial clusters.

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 project achieved the following results:

• 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.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 13


2. UNIDO’s Green Hydrogen
Industrial Clusters

UNIDO defines green hydrogen industrial clusters


(GHIC) as industrial regions or clusters8 that share
2.1. UNIDO’s green hydrogen
green hydrogen (production, transport and use) and industrial clusters model
renewable energy electricity, in addition to other
resources, for different purposes including material
production, heating and cooling, local mobility and As a key element of the programme, UNIDO devel-
industrial feedstock. Such clusters are characterized oped a model for “green hydrogen industrial clus-
by internal linkages enabling cooperation, specialized ters”. This model aims to accelerate the application of
expertise, services, resources, suppliers and skills, locally produced green hydrogen in industrial zones,
and further generate various advantages among the clusters and parks. Its aim is to serve as a replica-
participants, including the distribution of the invest- ble model through which countries can deploy green
ment and mitigation of risks. Green hydrogen indus- hydrogen technologies to achieve their emissions re-
trial clusters can reduce greenhouse gas emissions, ductions and industrial production goals as well as
promote investment, create employment and foster to generate economic and social opportunities. This
economic growth that is environmentally sustainable requires significant amounts of green hydrogen and
and socially responsible. coordination among the stakeholders within the clus-
ters. The model provides guidance for governments
and industries in the preparation, implementation
and upscaling of green hydrogen industrial clusters.

This model was developed by UNIDO and informed by


its extensive experience on industrial cluster models
and projects, including the Eco Industrial Parks,9 In-
tegrated Agro-Industrial Parks,10 and Sustainable In-
dustrial Parks11 projects, as well as resource efficiency
and cleaner production initiatives including the Na-

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>.

14 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


tional Cleaner Production Centres.12 The model is also Table 2-1. Phases of the development of green
based on an exhaustive analysis of 20 different hy- hydrogen industrial clusters (GHIC)
drogen and renewable energy clusters and valleys.13

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

During Phase 1, industrial clusters will be brought • Commissioning of pilot projects


Phase 2:
to a level of readiness wherein pilot green hydrogen • Production, process adaptation
Deployment of
projects can be developed during Phase 2. At this and use of green hydrogen in
technologies
stage, initial pilot projects will be supported as well industrial processes
for green
as the adaptation of the cluster to ensure sector cou- • Testing of pilot projects
hydrogen
pling and the future upscaling. Phase 3 will lead to • Commercial operation
a successful implementation of the green hydrogen
strategies and a 100% provision of green hydrogen to Phase 3:
• Programmes for uptake and
meet the hydrogen demand of the production cluster. Upscaling the
challenges
This will create success studies and examples of good use of green
• Development of green hydrogen
practices for replicability. hydrogen in
networks
industry

Figure 2-1.  Schematic overview of a green hydrogen industrial cluster

GH2 Storage
Company 1
Renewable
energies Water
GH2 Station
Company 2

GH2 Pipeline Company 3

Electrolyzer GH2 Industrial


Battery Energy cluster 1
storage storage GH2 Production

Electricity Company 1 Company 1


generation for GH2
(It can belong to the cluster
or be external) Company 2 Company 2
Combined cooling Electricity Ground heat
heating and power pump
(CCHP)
Company 3 Company 3

End users GH2 Industrial


Water Waste cluster 2
Internal
transportation

Cluster’s utilities

GH2 Industrial cluster

GH2 Cluster network

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 INDUTRIAL CLUSTERS GUIDELINES | 15


UNIDO’s Green Hydrogen Industrial Clusters

their development and dialogues among a variety of


2.2. UNIDO’s guidelines for stakeholders.

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.

• Chapter 3: Presents an overview of the character-


istics of green hydrogen industrial clusters
2.3. Using the guidelines
• Chapter 4: Discusses the challenges and enablers
of green hydrogen industrial clusters
The development of green hydrogen industrial clus-
ters requires multi-stakeholder engagement and • Chapter 5: Gives an overview of the road to
coordination. Governments, the private sector, aca- the application of green hydrogen in industrial
demia and other stakeholders should all be empow- production
ered to participate in the design of the overarching
policy framework and in its implementation. These • Chapter 6: Provides some conclusions
guidelines will provide the information and steps to

16 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


UNIDO defines green hydrogen industrial
clusters as industrial regions or clusters
that share green hydrogen (production,
transport and use) and renewable energy
electricity, in addition to other resources,
for different purposes including materi-
al production, heating and cooling, local
mobility and industrial feedstock.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 17


3. Characteristics of Green
Hydrogen Industrial Clusters
This chapter provides an overview of the characteris- This section provides an overview of types of green
tics of green hydrogen industrial clusters in four sec- hydrogen industrial cluster conversions or develop-
tions. First, the types of GHIC will be introduced. Then, ments. There are two broad categories: greenfield
the generation of green hydrogen using available re- sites, which are new production clusters, and brown-
newable electricity is discussed. The production and field sites, which are transformed using green hy-
provision of hydrogen as well as uses of hydrogen are drogen. Eventually, both can share the same type of
presented in the third and fourth section. The chapter green hydrogen.
describes criteria and requirements that a country or
region and the industrial cluster must have to convert Green hydrogen offers an opportunity to decarbonize
it into a green hydrogen industrial cluster. This will important energy-intensive industrial processes such
help decision-making for the selection of the cluster as steel and ammonia production. These industries
and the different activities that must be carried out to tend to be in industrial clusters. Green hydrogen in-
develop the cluster. dustrial clusters can be developed, either by building
them from scratch (so-called greenfields) or by trans-
forming existing ones while using and adapting their
existing infrastructure (brownfields).
3.1. Types of green hydrogen
industrial clusters
A greenfield industrial cluster would typically evolve
in a rural location that lives up to some of the char-
acteristics addressed further on in this chapter. This
The use of green hydrogen can lead to green growth is often where resources and space are available to
(including in rural areas), new green jobs, local busi- create large-scale industrial clusters and capacities
ness contracts, local investments and income streams, for electricity generation.
business tourism/conferences and new green pro-
files/brands (e.g. for local authorities/hosts). It can Examples of brownfield industrial clusters that are
also drive new renewable energy sources and the suitable for green hydrogen production include clus-
reduction of greenhouse gas emissions in industrial ters with easy access to large-scale renewable ener-
and agricultural production. In other words: accelera- gy (e.g. offshore wind cable to shore points), existing
tion of the green energy transition. industrial parks with energy profiles that are suitable

18 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


as anchor processes for an industrial symbiosis, in-
dustrial ports, and combined heat and power plant
facilities (CHPs) that can be exploited to transition
into low-carbon alternatives. A case example is the
conversion of blast furnace steel production sites to
ones using hydrogen-based direct reduced iron (DRI).
This is one of the options for using green hydrogen in
industrial production processes.

The following box provides a case study of the Hum-


ber Cluster, which is an existing industrial cluster
(brownfield) that will be transformed over the next
few years. The cluster currently uses significant
amounts of fossil-based hydrogen for the chemical
production processes. As part of the Humber strategy,
720 MW blue hydrogen and 100 MW green hydrogen
will be deployed.14 The long-term vision for the clus-
ter is to operate with net-zero emissions by 2050.15

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>.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 19


Characteristics of Green Hydrogen Industrial Clusters

The following case study of GreenLab provides an overview of a new industrial cluster planned (greenfield).

Box 3-2. Industrial cluster site: lessons learned from GreenLab Skive

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.

Figure 3-1. Overview of GreenLab Skive Industrial Cluster

The industrial cluster is composed of:

• 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 municipal waste treatment facility.

• A factory that produces high-density fibreboard without glues or resins from wastepaper and cardboard.

20 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


• Two pioneering green hydrogen and Power-to-X projects will start operating in the coming years with an
electrolyser capacity of 112 MW; potential on-site electrolyser capacity is estimated at 400 MW, with more
projects in the pipeline.

GreenLab establishes and manages the cluster infrastructure and utilities for its customers through the
SymbiosisNet™.

Figure 3-2. GreenLab Skive Energy Park SymbiosisNet diagram

GreenLab Skive Energy Park - SymbiosisNetTM


Green
SymbiosisNetTM Industrial Cluster products
O2 N2
HV Oxygen Nitrogen H2
transformer Hydrogen

Electrolysis
Digital Optimization Platform

Synthesis +N2 NH3


Nitrogen Ammonia
Storage - H2 +CO2
Chemical Hydrogen Carbon dioxide CH3OH
TSO-connection Thermal Methanol Industry
CCU CO2
Carbon dioxide Transport

Process Industry CH4 Agriculture


Heat Methane
Heat- upgrading
Dam
Storage Jet Fuel

CO2 Water Naphtha


Carbon dioxide processing
O2
Oxygen Proteins
H2
Hydrogen

3.2. Availability of renewable and enable documentation of origin. Ideally, renew-


able energy is directly connected to the industrial
electricity and electricity mix cluster and vertically integrated into the cluster to
increase efficiency of delivery and economic feasibil-
ity. For the continuous provision of (green) hydrogen
A green hydrogen industrial cluster requires abun- with intermitting renewable electricity, some form of
dance and affordability of renewable energy. Typical- electricity storage is needed.
ly, a combination of sources, for example hydropower,
wind and solar energy, is ideal to secure stability of If not directly connected to the green hydrogen cluster,
supply. A direct connection between Power-to-X (PtX) it is important to consider the national electricity grid
installations and renewable energy sources is en- infrastructure and its ability to process large amounts
couraged. To promote new installations of renewable of renewable energy. Green hydrogen industrial clus-
energy sources, it is recommended that the energy ters can be an effective means of balancing the grid,
installation comes into operation at the same time or which means using renewable energy sources to the
after the PtX installation. maximum and avoiding time off, such as wind turbines
standing still while the wind blows. In that sense, coun-
Proximity of renewable energy sources to the indus- tries with grid capacity issues have additional incentives
trial cluster is preferable to avoid efficiency losses to consider a green hydrogen industrial cluster model.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 21


Characteristics of Green Hydrogen Industrial Clusters

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>.

22 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


derived from the air. This requires an internal infra-
structure to facilitate these flows between the cluster
3.3. Production of green
entities. To sum up, the basic infrastructure require- hydrogen
ments to link production and end-use are:
The essential ingredients to produce green hydro-
• Internal electricity distribution, including energy gen are non-emitting electricity and purified water.
storage, and transformer station if renewable en- Electrolysis requires water (H2O) as well as electricity.
ergy is directly connected Around 9 litres of water are needed to produce 1 kilo-
gram of hydrogen.17 This can produce 8 kilograms of
• Heat upgrading, distribution and storage at high oxygen as a by-product, which at a smaller scale can
and low temperatures (e.g. in rocks or molten salt, be used in the health care sector (pure oxygen), or at
phase-change materials, or dam storage, respec- a larger scale for industrial purposes as a resource
tively) or even in water sanitation. Applications of oxygen
can support building a successful business model of
• Process water and wastewater treatment and green hydrogen production.
distribution
The basis of the production of green hydrogen is the
• Carbon capture and utilization (CCU): CO2 sourcing/ availability of or access to renewable energy sourc-
piping, upgrading and distribution es, e.g. solar, wind, hydropower and possibly other
upcoming technologies able to use sustainable elec-
• Hydrogen (or gas) distribution, storage and tank tricity. If renewable energy is available and combined
areas with for instance grid power, it should be possible
to create a constant electricity flow enabling a high
• Infrastructure for oxygen storage and transport (if uptime of the system. Regulatory conditions such as
used in other processes or sold to other companies) RED II or RED III have to be taken into account to make
sure that the hydrogen produces counts as “green”.

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>.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 23


Characteristics of Green Hydrogen Industrial Clusters

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.)

Figure 3-3. Overview of possible uses cases for green hydrogen

Electricity Industry
Hydrogen
Other Ammonia

Heating and cooling


(resid. & industry)
Non-emiting electricity Plastics
Heat pump production
Solar Wind Chemical industry
Methanol
Hydroelectric Electrolyser Hydrogen
Other

Steel production Steel (DRI)


Gas turbine,
engins, fuel cell
Cement
Fuel cells,
gas turbine Other industries
Food and
beverage

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>.

24 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


The following sections give an overview of hydrogen including oil refineries (hydrocracking), fuel treat-
use in ammonia production, steel production and oth- ment, ammonia synthesis as well as other chemical
er industrial processes (e.g. for providing process heat). reactions. The IRENA study on hydrogen use in indus-
try provides an overview of use cases for hydrogen in
3.4.2.1. Ammonia and chemicals production industrial production.21 Similarly, hydrogen would be
needed for the all processes for CCU. Hydrogen for
Approximately 40 Mt of hydrogen are used in ammonia refining oil will be needed less in a decarbonized fu-
production every year. Ammonia (NH3) is produced in ture, but represents a key initial market for replacing
chemical reactions with nitrogen and hydrogen. Per grey hydrogen. While this might enable the expansion
kg of ammonia, approximately 0.18 kg of hydrogen of green hydrogen production, further demand mar-
are needed. The hydrogen is currently based on fos- kets must be established. Other chemical processes
sil fuels using steam-methane reforming. The Box 3-3 require pure hydrogen that can be sourced as green
of the Ammonia Association provides an overview of hydrogen without any changes to the processes.
some projects deploying green ammonia.
3.4.2.2. Iron and steel
Global demand for chemicals (including ammonia
fertilizers and plastics) is increasing significantly Primary production of iron could occur via two routes:
globally.20 Current hydrogen production is approxi- Blast furnace (BF) (1291 Mt) and direct reduced iron (DRI)
mately 94 Mt and used in various chemical processes, (1.8 Mt). In both cases, iron ore is chemically reduced.

Figure 3-4. Overview of possible uses cases for green hydrogen22

Maturity of hydrogen solutions


HYDROGEN
(compared with other decarbonization solutions)

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

Distributed applications Centralized applications

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.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 25


Characteristics of Green Hydrogen Industrial Clusters

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>.

26 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


seems that hydrogen will need to be mixed with To sum up, there are several use cases for hydrogen
other alternative fuels. For example, Heidelberg in industrial production. This chapter provided an
Cement’s “Hanson Cement”, which is still in the de- overview of possible applications and a brief descrip-
velopment stage, uses a fuel mix with around 40% tion of current and potential uses. The next chapter
hydrogen.25 The future role of hydrogen in supply- will describe challenges and enablers for scaling up
ing heat for cement-making is therefore still an the supply of green hydrogen in industrial clusters.
open question. Similarly, hydrogen could be used
in the processes in aluminium production that
are currently using natural gas as an energy carri-
er or for treatment of bauxite and other feedstock.

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:

• A price for greenhouse gas emissions needs to be introduced worldwide.

• 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>.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 27


4. Phases of Green Hydrogen
in Industrial Clusters

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

28 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


4.2.1. Awareness-raising the cluster and its potential to become a green hy-
drogen industrial cluster, such as types of offtakers,
To develop green hydrogen industrial clusters, it is proximity to renewable energy and water, and the in-
important that the stakeholders of the clusters and terest of the main stakeholders.
local communities are aware of the benefits of green
hydrogen and the opportunities that this might 4.2.1.1. Developing an awareness-raising
bring. Green hydrogen and its potential industrial strategy
application remain a relatively new topic and not all
stakeholders are aware of the possibilities and how The strategy for awareness-raising and capaci-
they, their community, or their businesses can bene- ty-building activities should cover at least four ob-
fit from green hydrogen. It is, therefore, important to jectives: empowering stakeholders with guidance and
address the awareness-raising aspect by providing providing information; motivating stakeholders and
objective information in every project about hydro- beneficiaries; supporting stakeholders through tai-
gen itself, the technical possibilities, the objective lored activities and knowledge products; and being
and the work plan of a project. Awareness-raising in synergy with other awareness-raising and capac-
enables stakeholders to make informed decisions ity-building activities of associations, governments
and to choose whether to participate in the devel- and other stakeholders.
opment of the cluster.
The table 4-1 provides an example of what could be
Awareness-raising activities can be accompanied with considered when formulating the strategy for aware-
exploratory assessments that could provide relevant ness-raising and capacity-building activities.
information to the stakeholders on the conditions of

Figure 4-1. Phases of green hydrogen clusters and stages

Industrial Pilot Green


cluster, projects hydrogen,
Milestones prepared operated scaled-up

Phase 1 Phase 2 Phase 3


Preparation of green Deployment of technologies Upscaling of the use of green
hydrogen clusters for green hydrogen hydrogen in industry

Awareness raising and Commissioning of Programmes for uptake


capacity building pilot projects and challenges

Stakeholders Production, process Development of


engagement adaptation and use of green
green hydrogen networks
hydrogen in industrial processes

Preparation of the
objective, strategy and workplan Testing of pilot projects
of a green hydrogen cluster

Feasibility studies Commercial operation

Financial mobilisation

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 29


Phases of Green Hydrogen in Industrial Clusters

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.

Table 4-1. Elements to be considered during the awareness-raising activities

Questions Reasoning Examples


Cluster stakeholders, regional and
Once the assessment of the cluster
national governments, associations,
Who are the stakeholders and their engagement is
regional and national banks, and
stakeholders receiving carried out (part of the feasibility studies),
financial institutions. In case a new
the awareness-raising? a better understanding of the stakeholders
cluster is initiated, it would be desirable
will be available.
to consider SMEs as well.
What skills/ It is recommended that once the
The skills and competences to be
competences need to assessment of cluster stakeholders and
addressed will vary depending on
be addressed in the their engagement has been conducted,
the location and knowledge of the
awareness-raising the knowledge gaps of stakeholders will
stakeholders.
activities? be identified.
Awareness-raising can be done through
Each type of awareness-raising should be
What type of documents (reports and studies), events
chosen upon the previous knowledge gap
awareness-raising (webinars, seminars, and workshops)
identified and knowledge materials will
would be useful? and informative visits to the production
be tailored accordingly.
site, among others.

Box 4-1.  Awareness-raising: lessons learned from the HEAVENN project

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>.

30 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


4.2.2. Stakeholder engagement Step 2: Exploratory assessments

Working together at the level of an industrial cluster


has the advantage that it can lead to innovations and At this stage, it is useful to first perform exploratory
the associated (qualitative) employment. This new assessments, including assessment of the location of
way of cooperating in both the hydrogen production the cluster, proximity to renewable energy and water,
chain and consumption streams require intensive challenges and unique requirements of the entire val-
stakeholder engagement. ue chain that the stakeholders will face, and identifi-
cation of the offtakers and industrial processes where
hydrogen can be applied. These assessments will de-
Step 1: Stakeholder identification termine how much additional energy, hydrogen, or
and engagement activities water can be made available to support economic de-
velopment, social and environmental benefits for the
area. It is important to be aware, when deciding on
Stakeholder engagement should be done at the same the type of studies, that they will have an impact on
time as awareness-raising as both are dependent decision-making on the development of the cluster.
on each other. The stakeholder identification step The exploratory assessments will ensure a better-in-
should identify the stakeholders and their interests, formed decision-making process; however, in depth
and examine the possible structure of the industrial feasibility assessments are required and are further
cluster. After that assessment, it should be clear who explained in Section 5.2.4.
are the relevant stakeholders involved (internal and
external to the cluster), their interest and role, as well It is recommended to gather and involve in the for-
as the importance of the different stakeholders in the mulation of the assessments a broad group of stake-
industry cluster. holders representing hydrogen production, transport
and use in both industry and SMEs. These should be
To successfully develop a green hydrogen industrial complemented by the government, project execution
cluster, the minimum required types of stakeholders organization, knowledge institutions, CSOs and NGOs.
to be involved in the process are representatives of
business from the production, transport, storage and
(industrial) use of hydrogen, including small and me- Step 3: Developing a communication
dium-sized enterprises (SMEs) and representatives of plan and mechanism
government, research institutions, civil society organ-
izations (CSOs) and non-governmental organizations
(NGOs). Once the internal and external stakeholders The third and last step is to develop an active com-
have been mapped out, it is possible to identify those munication plan and mechanism, targeting the broad
that are missing and approach them. spectrum of private and public stakeholders: the lev-
el of the stakeholder’s involvement is kept at a high
In parallel, engagement activities should be organized level through active communication through meet-
(e.g., meetings, workshops) and non-legally binding ings, events, site visits and social media, but also by
agreements could be signed (e.g. Memorandum of answering questions from stakeholders outside the
Understanding). For these, an engagement plan could cluster and CSOs.
be developed. This plan should explain the role of
each stakeholder and what the engagement activities Often, different industry clusters might have many
are. The following questions could provide guidance: similarities, which means that they can learn from
each other. Not only can knowledge be shared, but
• Can the cluster function without the stakeholders also how to finance themselves and what insurance,
identified? permits and policies are needed. It is important that
not only companies and governments, but also fi-
• What value do the stakeholders add for example, nancial institutions, environmental organizations
in the organizational and financial investment re- and other stakeholders share information with each
quirements? other on actions taken, success stories and areas for
improvement. Industrial associations (e.g. producers’
• How relevant are the stakeholders to the achieve- associations) and international organizations could
ment of the cluster’s objectives? facilitate this transfer of knowledge and best practice.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 31


Phases of Green Hydrogen in Industrial Clusters

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.

The objective describes what is to be achieved with-


in the cluster. For example, decarbonizing ammonia, 4.2.4. Feasibility studies
steel production, the cluster’s internal transport sys-
tem with hydrogen vehicles, etc. Feasibility studies depend on the context in which the
cluster is to be developed, assessing the existing and
future conditions, and possible scenarios at an early
Step 2: Developing the strategy stage, gives time to respond to emerging challeng-
es and to apply additional measures that increase
the cluster’s chances of success. Feasibility studies
Once the objective has been set and agreed upon should be conducted once the goal is set. It is import-
by all stakeholders, the strategy can be defined. The ant to consider that these studies are expensive and
development of the strategy should be done by the stakeholders might need to request financing. The

32 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


strategy specifies who will be responsible for the de- gen clusters. The table is composed of three columns.
velopment of the studies and who will oversee them “Type of study” indicates the type of assessment; “Con-
all. These feasibility studies should be conducted be- tent” indicates in more detail what the assessment
fore starting Phase 2. should cover; and “Impact areas” indicate what areas
in the value chain are analysed. It should be noted
Table 4-2 summarizes in further detail the basic recom- that these studies do not exclude others and should
mended studies for the development of green hydro- be adapted to the particularities of the cluster site.

Table 4-2.  Recommended assessments for the development of green hydrogen industrial clusters

Type of study Content Impact areas


Assessment of Mapping of available capacity of renewable energies and Potential production of
renewable Energy assessment of the potential capacity of new developments. green hydrogen
Energy storage Mapping of the available capacity of energy storage and Stable production of green
assessment assessment of the potential capacity of new developments. hydrogen
Assessment of land needed for the development of
renewable energy (for hydrogen production), electrolyser Potential production of
Land assessment
and cluster; the use of this land should not affect nearby green hydrogen
communities, or other land uses that have more priority.
Assessment of available groundwater and whether it is
Water availability environmentally feasible to use this water for hydrogen Potential production of
assessment production. If it is not feasible to use groundwater, a green hydrogen
feasibility study on the use of desalination is recommended.
Infrastructure Assessment of the electrical, control, water, gas and waste Production and usage of
assessment infrastructure in place. hydrogen
Assessment of potential green hydrogen production
Potential
capacity. To carry out this assessment, it is necessary at Potential production of
production of
least to have completed the renewable energy and water green hydrogen
green hydrogen
capacity assessments, as well as back-up capacity.
Assessment of the
Assessment of the potential demand within the cluster and Potential demand of green
potential demand
nearby clusters and/or other applications. hydrogen
of green hydrogen
Assessment of the Evaluation of the benefits and the drawbacks that could
social-economic generate the development of a green hydrogen industrial Usage of green hydrogen
impact cluster at regional, national and international level.
Environmental Evaluation of how the production of hydrogen, and
Production and usage of
impact the industrial processes within the cluster, affect the
green hydrogen
assessment environment.
Identify the potential risks of the hydrogen value chain and
Security and risk Production and usage of
the different industrial processes, and the security measures
assessment green hydrogen
needed to be followed.
Feasibility of cluster,
Regulatory and Identify the regulation and policies in place, the permitting
demand of green hydrogen
policy assessment process and the gaps.
and green products
Financial Feasibility of the cluster,
Identify the existing financial mechanism with the country/
mechanism demand of green hydrogen,
region and other clusters.
assessment demand of green products
Sustainable
Identify the SDGs affected by the development of the
Development Impact of the cluster to the
industrial cluster and map their indicators to the cluster’s
Goals impact SDGs
KPIs.
assessment

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 33


Phases of Green Hydrogen in Industrial Clusters

It is also recommended to connect and consult with


4.2.5. Financial mobilization other green hydrogen industrial clusters on their fi-
nancing scheme, thus gaining a better insight into
Industry clusters are seen as a strategy to foster in- business and financial models to support green hy-
novative production and R&D activities, while also drogen scale-up.
promoting sustainable energy transition, local devel-
opment and employment. For this reason, the crea-
tion of clusters has been and can be financed by the Step 2: Identification of financial mechanisms
private or public sector, or a combination of both. The
financing of the creation of green hydrogen industri-
al clusters or the transformation of existing ones can Given that the green hydrogen value chain is highly
follow the same approach as the financing of normal complex, it is also useful to use some tools to help
industrial clusters. identify which financial mechanism is most useful in
each part of the value chain. Some available tools are:

Step 1: Developing a financial plan • Challenges faced by stakeholders in a green hydro-


gen industrial cluster value chain.

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

  Accenture (2022), Investing in Industrial Clusters:  URL: <https://www.accenture.com/content/dam/accenture/final/industry/utilities/


27

document/Accenture-Financing-US-Industrial-Clusters-POV.pdf>.

34 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


working together with different stakeholders and, For developing and emerging economies, these in-
for example, by contributing to local sustainabili- struments may not yet be in place. In this case, the
ty through the provision of sustainable energy and international community, through international or-
water for SMEs and local communities, or by making ganizations and associations, and experienced ex-
fresh water available for nature, agriculture, or de- perts can provide valuable assistance.
forestation, they can meet the increasingly demand-
ing requirements set by the capital market to contrib- The following box provides an overview of the finan-
ute to the SDGs with their investments. cial regulations and mechanisms in place in the US.

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:

Part of the Labour and


Demand Developer Equipment supplier Financer
value chain community
• Contract for
• Soft loan/equity loan • Grant/part
• Tax credit/reduction • Grants to difference after
sharing to encourage subsidy to
in fuel use to provide initial power
private lenders to develop the
compensate for high training purchase agreement
offset the risk of the ecosystem to
cost of transition funding and (PPA) contract term
new technology increase supply/
• Subsidy to fully upskill local ends with offtaker
• Subsidy or partial demand from
Example of depreciate and workforces to reduce long-term
subsidy to subsidise partners
financial replace existing • Grants for risk and enable
the cost of the • Concessional
mechanisms equipment the creation short-term PPAs
electrolyser and loan for
in the US • PTC/ITC to reduce of hydrogen • Concessionary
improve project supply chain
the capital costs of industrial loan within larger
economics development
new fuel equipment clusters, capital stack to
• Contract for difference to mature the
• Price/tariff support which remove incentive private
to attract more capital supply chain and
to guarantee initial funding lenders to offset
and improve project improve unit
demand barriers new technology and
economics economics
credit risk

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>.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 35


Phases of Green Hydrogen in Industrial Clusters

• Financing (e.g. permit process is affected by the


4.3. Phase 2: Deployment of participation in different support programmes for

technologies
the deployment of green hydrogen).

• Environment (e.g. it could be affected by the envi-


Phase 2 of the cluster model aims to operationalize ronmental impact requested by the local authori-
the technology to ensure the production of green ties; this is normally a common procedure, but for
hydrogen. This phase addresses the deployment of green hydrogen it could have new limitations).
green hydrogen technologies in industrial clusters,
the utilization of green hydrogen in the processes, • Industry (it could be affected by the communica-
and the monitoring and evaluation of the progress of tion among industries and with the local author-
the cluster. ities).

• Energy (e.g. synergies with permit process for re-


4.3.1. Commissioning newable energy supply) and local government (e.g.
of pilot project urban land conditions).

The project must also comply with local regulations


The commissioning or the project implementation at each stage of the value chain. Four stages of the
could be defined as the process of ensuring that all value chain can be identified, which may be repeated
systems and components of a particular industrial or placed in different order depending on the proj-
site are designed, deployed, tested, operated and ect. The following figure is an example of the type of
maintained according to the operational require- regulation that could be in place in each part of the
ments of the owner, local authorities, or end-user. value chain.
The goal of the project is to develop and operate a
green hydrogen industrial cluster. Some challenges that the cluster developer could
face are:
4.3.1.1. Complying with local regulations
• How local authorities consider the production of
To be able to implement the project, the cluster de- green hydrogen could complicate permitting pro-
veloper must apply for the project deployment per- cedures and deadlines for urban planning and en-
mits through the local, regional and national author- vironmental aspects.
ities. The main aspects that could be involved in the
project permit procedure will vary depending on the • How green hydrogen is considered in the permit-
structure of the country’s public administration. As- ting process (e.g. as a fuel, as an industrial feed-
pects to consider are: stock and/or as an electrolyte in a fuel cell).

Figure 4-2.  Example of regulation at different stages of the production chain

36 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


• Complex and time-consuming environmental and case a specific environmental impact is required, this
grid management permitting processes. should be developed according to local regulations.
Local authorities require the environmental impact
• New types of installations or products do not fit at the permitting stage (Section 5.3.3) of the project,
well into current regulations. as without the permission of the local authorities the
project cannot start its development.
• In terms of energy planning and management, if
there are continuous changes in energy regula- One useful methodology for calculating environmen-
tions, this could influence the type of installations tal impacts is Life Cycle Assessment (LCA), which is
in which investors are interested; this could lead to used to assess the environmental impacts associated
shifts in investment choices that affect the entire with all stages of the life of a product, process, or ser-
value chain. vice, thereby evaluating the potential cumulative en-
vironmental impacts. LCA involves a comprehensive
• National, regional and local jurisdictional frame- inventory of the energy and materials required along
works may interact with each other; legislation the value chain of the product, process, or service in-
and regulation need to be addressed in close dustry, and calculates the corresponding emissions
dialogue between the different administrative to the environment.
levels together with the experts and compa-
nies involved in the development of the cluster. In the case of a green hydrogen industrial cluster, the
value chain is highly complex. It is recommended to
split the LCA along the value chain.
In the feasibility studies step, the environmental im-
pact assessment could have been already conducted. The following box from GREET gives an overview of
In case no further environmental impact is required the model they created to perform the Hydrogen Life
by the local authorities, this could be sufficient. In Cycle Analysis.

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>.

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Phases of Green Hydrogen in Industrial Clusters

4.3.1.2. Taining of operators Adapting industrial processes infrastructure to make


the transition from fossil hydrogen to green hydrogen
One of the most important points to be addressed is not complex. Once green hydrogen is available, it
is the training of the operators that will operate and could be introduced into industrial processes already
maintain the pilot project. This training should be using “grey” hydrogen infrastructure. The challenge is
done in parallel with the design phase, feasibility to produce the huge volumes of green hydrogen re-
studies and permitting process. quired via electrolysers. Once grey hydrogen has been
replaced by green hydrogen, there is an enormous
Green hydrogen may be new, but the skills needed to potential for reducing CO2 emissions. Where there is
operate and maintain the projects are not. The instal- already a strong industrial base in place, available
lations for the production, storage, supply and use gas infrastructures can be evaluated and reused for
of hydrogen require specific skills in hydrogen gas, transporting green hydrogen.
working pressures, effects on materials, etc., which
require specific training that should complement the If the gas or hydrogen infrastructure does not exist, it
skills of gas installers. The operators must comply is necessary to analyse which part of the industry can
with training for the operation and maintenance of be transformed to use green hydrogen and which part
gas receiving installations, systems in which gas is can be decarbonized through direct electrification.
stored or conducted. They should have theoretical
and practical knowledge of gas industry technology The transition to decarbonize the transport sector is
and regulations and meet the requirements to per- complex for it requires the adaptation of the vehicles
form and supervise the operations involved. with fuel cells or adapted internal combustion engine
(ICE) systems, and it requires the availability of the fu-
Their knowledge can be extended to cover: els hydrogen or hydrogen derivatives like methanol,
ammonia or SAF. It also requires the deployment of
• Hydrogen installation regulations fit-for-purpose fuelling systems infrastructure for the
various fuels and considering the specific require-
• Hydrogen production, hydrogen production system ments per (sub)sector.
and installations

• Hydrogen combustion, flame temperatures and 4.3.3. Testing of pilot projects


pressures
A pilot project is an initial small-scale deployment
• Materials suitable for hydrogen flame temperatures used to test the feasibility of a project idea. To test
it, a series of test cases are designed and executed;
• Welding qualifications and welding on materials once the results have been evaluated, the project can
operating at cryogenic temperatures be operationalized and scaled up.

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).

Some important aspects to consider when designing


The uptake of green hydrogen requires changes to the the test case include checking the electrolyser sys-
infrastructure of the industrial clusters – capacities tem and its equipment around it for leaks, faults, or
for renewable electricity; electrolysers for producing other deficiencies that need to be addressed, check-
hydrogen and transport infrastructure (pipelines); ing all emergency and safety procedures, automatic
and process adaptation (smaller process configura- shutdown modes and safety devices, and checking all
tion for ammonia production, but major changes for documentation, such as operating manuals.
steel production due to different key process tech-
nologies). The processes, as well as the technologies The execution of test cases can vary depending on
involved, are outlined in detail in Chapter 3. the complexity of the project, its size, the problems
encountered and the time to fix the problems. One of
This section covers the adaptation of infrastructure the objectives of the test cases is to quantify key per-
and industrial processes needed for the application formance indicators (KPIs)33 during continuous oper-
of green hydrogen. ation of the facility.
33
Investopedia: URL: <https://www.investopedia.com/terms/k/kpi.asp>.

38 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


The progress of industrial hydrogen clusters devel- • Viable economic business cases of using green
opment (in the initial stages) and its performance (in hydrogen in industrial processes
the operational phase) can be measured through a
• Creation of green jobs
variety of KPIs.
These can lead to six KPIs categories: technical; eco-
KPIs are a set of metrics that are used to monitor nomic; health, safety and environmental; social; clus-
the progress of a development (technology, project, ter management; and specific projects and processes.
organization, employees, etc.), compare its perfor- Furthermore, it is necessary to distinguish between
mance with that of other developments that deliver general cluster performance indicators and those
similar outputs, and can be used to achieve a strategy that are project or industry specific. For the latter, ad-
or objectives. ditional performance indicators need to be designed.

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

Table 4-3. Categories of performance indicators for green hydrogen industrial clusters

Category Type of key performance indicators (KPIs)34


• Energy KPIs (e.g. electricity consumption for hydrogen production, power usage of the auxiliary equipment at
nominal capacity)
• Water KPIs (e.g. water consumption, water purity)
Technical
• Technology KPIs (e.g. start-up time, transient response, maximum overload operation, hot idle ramp time, cold
start ramp time, degradation)
• Infrastructure KPIs (e.g. compressor lifetime, energy consumption of the pipeline, transmission pressure)
Financial KPIs (e.g. CapEx electrolyser, electrolyser price, CapEx electrical grid, OpEx electrolyser, cost of electricity,
Economic
end of life replacement, hydrogen generation cost per kg, storage cost per kg).
Health, safety Health, safety, or environmental KPIs (e.g. fraction of renewable energy input in the total electricity consumption,
and environ- number of incidents, carbon footprint of produced hydrogen, number of emergency stops, amount of Pt recycled from
mental FC/electrolysers at end-of-life, amount of ionomer recycled from FC/electrolysers at end-of-life, solid waste disposal)
• Labour market KPIs (e.g. number of jobs created)
Social • Education KPIs (e.g. number of universities/institutes offering courses on hydrogen, number of trained
professionals; qualified workers, technicians and engineers)
• Administrative and general data KPIs (e.g. deployment date, electrolyser manufacturer, type of electrolyser)
• Value chain KPIs (e.g. number of global and local companies involved, number of new companies created, number of
local SMEs involved, number of enabling stakeholders engaged)
Cluster
• Production KPIs (e.g. average hydrogen rate production, electrolyser operating pressure, electrolyser operating
management
temperature, stack nominal power, electrolyser maximum overload capacity, hydrogen purity, power usage,
rated stack electrical efficiency, hours of operation, days of operation, quantity of hydrogen produced, electricity
consumed)
Specific
Specific projects and industrial processes (e.g. steel, ammonia, etc.) KPIs (e.g. production volume, cost per unit,
projects and
load smoothing factor in the steel making process)
processes

34
H2 Future: URL: <https://www.h2future-project.eu/images/Publications/H2F_WP2_D28_v12_final_2020-02-21.pdf>.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 39


Phases of Green Hydrogen in Industrial Clusters

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

Table 4-4.  Sustainable Development Goals and indicators

SDG Description of impact Description of indicators


• Renewable energy share in the total of
SDG7:
Investing in renewable energies, improving energy consumption.
Affordable and
energy productivity and energy security. • Energy intensity measured in terms of
clean energy
primary energy and GDP.
Investment in infrastructure and innovation,
SDG9: Industry,
promoting sustainable industries and investing New employment, number of research, CO2
innovation, and
in research and innovation to find solutions to emissions per value added.
infrastructure
economic and environmental challenges.
SDG12:
Efficient management of natural resources and
Responsible Hazardous waste generated, material
disposal of toxic and polluting waste, recycling
consumption footprint.
and waste reduction.
and production
Investments made in low-carbon
Address the needs of developing countries to
SDG13: Climate technologies and/or development,
both adapt to climate change and invest in low-
action CO2 savings when using low-carbon
carbon development.
technologies in industrial processes.
Reducing the loss of natural habitats and
No habitats and biodiversity are lost, water
SDG15: Life on biodiversity and supporting global food and
usage for local communities is not used to
land water security, climate change mitigation and
produce green hydrogen.
adaptation, and peace and security.
Improving access to technology and knowledge Number of partnerships, policies, new
SDG17:
to enable the sharing of ideas and foster investments, approved funding for
Partnerships
innovation, coordinating policies, as well as developing countries to promote the
for the goals
promoting investment. development of industrial clusters.

35
SDG Compass: URL: <https://sdgcompass.org/business-indicators>.

40 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


measure the targets at national level. Additional KPIs, made. KPIs targets are set for the entire green hydro-
based on the national level indicators, should be de- gen value chain within the cluster, based on best prac-
signed to measure the effect that industrial clusters tice references or pilot projects already implemented.
have on the SDGs.
The cluster monitoring and evaluation can be done
and shared through reports, which should contain
4.3.4. Commercial operation the previously defined KPIs targets, what has been
achieved, what is missing to achieve the targets,
The commercial operation phase starts the date after identification of what went wrong and what needs
all testing and commissioning has been completed. At to be done to overcome the challenges encountered.
this phase, the green hydrogen industrial cluster can The purpose of evaluations is to interpret the pro-
apply for a green hydrogen certification, monitor and gress towards the objectives to inform strategic de-
evaluate its continuous operations. cision-making.

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>.

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Phases of Green Hydrogen in Industrial Clusters

transport and storage of green hydrogen and the re-


4.4. Phase 3: Upscaling of configuration of industrial processes to use green hy-

green hydrogen in industry


drogen instead of natural gas or other fuels.

In Phase 3 of the production clusters, there might be


This section provides an overview of the upscaling of other challenges which are described below. These in-
green hydrogen in industry. The first section summa- clude challenges associated with the transformation
rizes some of the challenges companies and policy- of production sites, achieving full provision of green
makers might face when upscaling production and hydrogen and cost-competitiveness. The advantages
use of green hydrogen in an industrial cluster. The of the transformation include sector coupling, energy
second section addresses the different activities for security and emissions reductions, embeddedness in
the development of green hydrogen networks, includ- a cluster of green hydrogen production, and support-
ing the network of green hydrogen industrial clusters. ing inclusive and sustainable development.

Currently, no industrial cluster exists that uses only


4.4.1. Programmes for uptake and green hydrogen at scale since the technology is at an
challenges early stage. Over the past five years, however, there
have been significant innovations and cost reduc-
tions for electrolysers as well as policy programmes
To support green industrial clusters on their transi- to support and accelerate the uptake of green hydro-
tion to the full use of green hydrogen in new indus- gen in industry.
trial clusters aligned with net-zero emissions, several
challenges must be addressed which were outlined In Phase 3, full provision with green hydrogen is envi-
in the previous chapters. The key challenges are a sioned. For this, enough renewable electricity needs
provision of sufficient amounts of renewable electric- to be provided. Alternatively, green hydrogen could
ity, the building of new infrastructure for production, be provided via hydrogen imports. For that, the in-

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>.

42 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


frastructure to import and transport hydrogen needs The demand for green hydrogen is expected to in-
to be in place. To avoid potential shortages and bot- crease significantly over the next decades. New pro-
tleneck of the provision, long-term production con- duction clusters and existing ones can use green hy-
tracts (e.g. power purchase agreements or hydrogen drogen as a fuel and chemical feedstock to replace
purchase agreements) need to be in place. If more fossil fuels. For achieving net-zero emissions in in-
hydrogen is produced than needed in the cluster, the dustrial production by 2050, the use of hydrogen is
cluster could also be an exporter or net producer of essential. There are, however, technical, economic
green hydrogen. The key challenge of Phase 3 is to and political challenges associated with the uptake,
achieve cost competitiveness with a production clus- but adequate policies can address them and thereby
ter that does not yet use green hydrogen, but rather reduce uncertainty in the deployment.
grey hydrogen. However, there are large uncertain-
ties associated with the uptake of green hydrogen
and overall supply might be smaller than demand it. 4.4.2. Development of green
The economic competitiveness of the cluster should,
therefore, be analysed as a key component of the fea-
hydrogen networks
sibility study in Phase 1.
The scalability of green hydrogen industrial clusters
A green hydrogen cluster has three main advantag- has an important role to play in the global hydrogen
es over a fossil-based production cluster. First, it has economy. Industrial clusters have different profiles
significantly lower GHG emissions due to the use of depending on their companies, their location, and
hydrogen. This reduces climate risks and risks related consequent energy availability and the amount of
to increasing costs for emissions certificates. Second, energy and feedstock they need. However, they also
the production cluster has also high energy securi- have many similarities, which means that they can
ty and is aligned with the Paris Agreement and SDGs. share their expertise and exchange infrastructure.
This helps to attract additional funding from inves-
tors, banks and governments. Third, the cluster gen- The idea of a green hydrogen network goes beyond
erates green growth and provides green jobs. This is green hydrogen industrial clusters, but follows the
essential for sustainable development. same principle. A green hydrogen clusters network
is also an association of green hydrogen industrial
In Phase 3, exchange of best practice and shared ser- clusters, and/or independent companies (hydrogen
vices is a key to achieve cost competitiveness. In Eu- applications) that produce, store, distribute and con-
rope, there is the initiative for hydrogen valleys (see sume green hydrogen, and that are integrated.
box below) to facilitate an exchange of knowledge,
technical skills and best practices. To address this, These networks share green hydrogen resources, and
the cluster organizes regular meetings, publishes re- therefore their distribution infrastructure, making it
ports and other forms of knowledge dissemination. possible for other members of the network to easily
purchase and obtain green hydrogen when there is
The Box 4-5 from HEAVENN gives an overview of the surplus green hydrogen at one location in the net-
first hydrogen valley structure in Europe. work, as well as exchange of knowledge, best practic-
es and replication of successful projects.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 43


Phases of Green Hydrogen in Industrial Clusters

Box 4-5.  HEAVENN: the first EU hydrogen valley

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.

Figure 4-3. Visual of the HEAVENN project

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

Total Mun. Emmen EBN Enexis/


Rendo/
Cluster IV QBuzz
Alliander/
Shell Gasunie Stedin/
DSO's
Total
Getec

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.

44 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 45
5. Challenges and Enablers

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.

Reliable regional and national governance and regu-


5.1. Overview of regulatory lation enforcement systems are required and, there-

challenges and enablers


fore, essential to implement green hydrogen indus-
trial policies and regulations, thereby allowing green
products to be quantified, certified and monetized.
Green hydrogen and green hydrogen industrial clus-
ters present new development opportunities, but Missing or inadequate permitting procedures and a
also regulatory challenges to governments around lack of capacity in permitting authorities can delay pro-
the world. This section addresses the details of reg- ject implementation for years. Given the novelty of the
ulatory environment for green hydrogen projects to green hydrogen market, permitting processes for green
thrive in. hydrogen production and application may be lacking.

The skillset of the locally available workforce can


5.1.1. Regulatory challenges also become a bottleneck. As such, priority should be
training and upgrading labour skills in line with the
A lack of green hydrogen strategies, industrial goals expected green hydrogen industrial deployments to
and policies create uncertainty for stakeholders avoid shortages of needed occupational profiles.

46 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


products as a solution for market actors, segments
5.1.2. Regulatory enablers and/or sectors across the whole green hydrogen val-
ue chain. This could include production goals, blend-
Hydrogen strategies and roadmaps can be useful in- ing mandates and offtake mandates.
struments to create enabling environments for the
development of green hydrogen industrial clusters. In As the development of the entire green hydrogen
different and diverse regions, they have increased the supply chain is of interest to green hydrogen industri-
visibility of policies and funding programmes, there- al clusters, standardizing technological requirements
by helping to guide investment decisions, and further early on can aid developing industrial development
supported public engagement. synergies. Policymakers can support the develop-
ment through dedicated policies, regulations, pub-
The Box 5-1 provides an overview of the steps followed lic-private cooperation initiatives and roundtables,
to develop Colombia’s green hydrogen roadmap. working groups, bodies, or other support mecha-
nisms. The aim is to comply with/adopt existing inter-
Binding goals for market actors across the entire national standards and certifications to allow access
green hydrogen value chain (production, transmis- to a broader, potentially international market both
sion, offtake) can create a tangible starting point for imports and exports on green hydrogen and green
for green hydrogen industrial policy and regulation products, but also of the technological components
efforts. Policymakers can set decarbonization goals along the supply chain required for the development
that explicitly refer to green hydrogen and green of green hydrogen industrial clusters.

Table 5-1.  Overview of main challenges and enablers

Challenges Enablers

• Strategies and roadmaps


• Lack of regulatory certainty
• Certifications
• No uniform compliance for entire value
• Enhance permitting, monitoring and public
Regulatory chain
awareness
• Slow permitting procedures
• Comply with international standards and
• Lack of international alignment
certifications

• Limited electrolyser and renewable energy • Repurposing and optimization


capacity • Binding international agreements on
Technology • Transport not energy efficient technology and value chain
• Risk of stranded assets • Public R&D
• Supply chain bottlenecks • Exploit cluster synergy potential

• 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

• Water use can worsen scarcity • Water and energy standards


Social and
• Land use for infrastructure • Environmental compliance
environ-
• Carbon leakage • Local content requirements
mental
• Energy justice • Transparency and inclusiveness

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 47


Challenges and Enablers

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.

48 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


Rapid project-permitting procedures alongside suf- Table 5-2. Technology readiness level (TRL) of
ficient permitting authorities’ workforce can short- electrolyser technologies
en project implementation times significantly. It can
be addressed by streamlining permitting procedures
Level Description
and permitting authorities’ capacities.
TRL 1 Basic principles observed and reported
Capacity-building activities can foster the skills re-
Technology concept and/or application
quired for the uptake of green hydrogen in indus- TRL 2
formulated
try. A specialized workforce is likely to be missing in
most regions. Therefore, policymakers can establish Analytical and experimental critical
TRL 3
regional and/or national training curricula and insti- function and/or proof of concept
tutions to address this point. Component validated in laboratory
TRL 4
environment
Public awareness and acceptance raising campaigns
can highlight co-benefits and facilitate the develop- Component validated in relevant
TRL 5
ment of green hydrogen industrial clusters. Through environment
dedicated policy actions, policymakers can leverage System or sub-system demonstrated in
co-benefits for local populations like job creation and TRL 6
relevant environment
economic growth.
System prototype demonstration in an
TRL 7
operational environment
System complete and qualified through test
5.2. Technology TRL 8
and demonstration
Actual system proven through successful
TRL 9
This section explores the prevalent technical chal- operations
lenges and enablers associated with green industri-
al hydrogen clusters, from electrolysis, storage and
distribution, safety and stranded assets, to end-use The TRL concept is employed to outline the readiness
applications. and challenges for the provision of renewable elec-
tricity, the infrastructure requirements and the issue
of stranded assets.
5.2.1. Technological challenges
The large amounts of renewable electricity required
There are manifold technical barriers to the develop- for industrial green hydrogen clusters will present
ment of large-scale green hydrogen projects and clus- challenges in terms of availability and grid capaci-
ters. On the production level, these include but are ties. Given the variability and geographical variation,
not limited to limited technological readiness, high as well as the distributed nature of renewable energy
technological complexity, risk of stranded assets, and generation, significant electricity transmission capac-
lack of dedicated (transport) infrastructure as well as ity is needed to supply the cluster. Insufficient grid
a shortage of required technical skills, expertise and capacity could, therefore, limit the size and produc-
maintenance capacity. There are additional techno- tivity of a green hydrogen cluster, especially consider-
logical challenges for the application of green hydro- ing the long lead times associated with grid upgrades.
gen in the processes of the end-use sectors (e.g. steel, Renewable energy generation will have to be expand-
chemicals, and cement). ed significantly to be able to supply green hydrogen
clusters on top of the existing and growing energy de-
The technology readiness level (TRL) is a method to mands in most places. This includes the necessity of
estimate the maturity of a technology during its ac- scaling up energy storage capacities to compensate
quisition phase. It enables a consistent discussion for the intermittent and variable nature of this energy
of technical maturity across different types of tech- source. Overall, these various types of storage capac-
nology, applications and sectors. TRLs are based on a ities could pose a bottleneck since large amounts of
scale from 1 to 9, with 9 being the most mature stage electricity storage need to be available to account for
with proven successful operations (compare Table the temporal and seasonal intermittency of solar and
5-2). For an example, refer to the EU guidance princi- wind energy.
ples for renewable energy technologies.39
39
European Commission (2017). Technology readiness level - Guidance principles for renewable energy technologies: <https://op.europa.eu/
en/publication-detail/-/publication/d5d8e9c8-e6d3-11e7-9749-01aa75ed71a1>

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 49


Challenges and Enablers

For new industrial clusters, infrastructure for trans- 5.2.2. Technological enablers


porting hydrogen to the cluster is needed. New pipe-
lines are capital-intensive projects with decade-long While green hydrogen itself and its clusters face signif-
lead times, but repurposing can be difficult. Distances icant technical challenges, there are several enablers
of several thousand kilometres can be bridged with that can, where appropriate, speed up development
pipelines, similar to existing pipelines for natural gas. and decarbonization. These could include, but are
Repurposing existing natural gas pipelines is often not limited to, multilateral agreements, supporting
considered as an alternative to expensive and slow R&D and developing markets for green hydrogen and
new construction.40 While this would certainly ad- by-products including oxygen.
dress issues such as rights of way, whether pipelines
can be repurposed or not depends on the specific Legally binding definitions of hydrogen value chain
material they are made of. Significant retrofitting is components provide guidance to players of the new
necessary in any case due to key differences between green hydrogen market. By setting legally binding
hydrogen and natural gas: the lower volumetric en- definitions for components such as hydrogen pipe-
ergy density of hydrogen leads to a commensurately lines and producers, policymakers can allow stake-
lower energy flow in the pipe and higher compressor holders within the entire hydrogen value chain to
work. Therefore, the development and deployment define their roles and responsibilities, and ultimately
of new compressors, as well as three times higher guide them towards creating a green hydrogen mar-
power usage, is required.41 The presence of hydrogen ket, including hydrogen clusters.
is also known to have a negative effect (embrittle-
ment, higher fatigue crack growth) on the mechani- Multilateral agreements help avoid bottlenecks in ac-
cal properties of certain types of steel in pipelines. cessing crucial technological equipment for the devel-
opment of the green hydrogen supply chain. Building
Many fossil-based facilities in hydrogen produc- green hydrogen clusters, and in general green hydro-
tion and hard-to abate sectors are set to become gen supply chains, requires highly specialized tech-
stranded assets. Repurposing natural gas pipe- nologies such as electrolysers, high-pressure storage
lines for hydrogen is often proposed because these tanks and pipelines. Depending on the region im-
would otherwise become stranded assets in the de- plementing a hydrogen cluster, global supply chains
cades to come as the world phases out all fossil fu- might be needed. As green hydrogen markets are being
els. While this may be possible for some pipelines developed globally, and to avoid competition issues
(though not all), this is not the case for the rest of for said technological components, governments can
the core infrastructure for natural gas. In particular, establish multilateral agreements with other govern-
liquid hydrogen will require entirely new tanks and ments and technology providers, for example through
liquefaction facilities because of the significantly chambers of commerce, or energy partnerships.
lower temperatures (-253°C) and lower volumetric
energy density. Some parts of the infrastructure of Public R&D creates rapidly diffusible knowledge that
LNG terminals (jetty, foundations, power connec- private projects can build on. Emerging economies
tion) can be re-used and thus shorten lead times, must achieve growth and adequate living standards.
but they are minor contributors to the system cost. If this is to be done without significant carbon emis-
sions, the technological gaps existing for global scale
The same can be said for gas-fired plants for power use of green hydrogen and other cleantech must be
generation. Facilities for producing black or grey hy- closed. Therefore, innovation in developed econo-
drogen will become stranded assets. Blast furnaces mies must be accelerated and, crucially, knowledge
for steelmaking face the same fate, as they will likely transfer must be part of all R&D efforts. Furthermore,
be replaced by green hydrogen-based DRI plants with technological research is costly, and results are not
electric arc furnaces. Natural gas-based DRI plants can guaranteed, so public R&D can mitigate the risk such
likely be retrofitted relatively easily, meaning they are efforts carry for private actors. Materials worthwhile
not at risk of becoming a stranded asset. Similarly, of further research include:
there could be stranded assets of local electrolysers
if imports become available to a cluster. • Cheaper, abundant and more active electrochemi-
cal catalysts

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>.

50 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


• Stabler and inexpensive bipolar plates carrying the 5.3.1. Economic and financial
active electrochemical materials
challenges
• Better porous transport layers that facilitate the
transport of charges and chemicals between the This section will present the main challenges that the
bipolar plates to the catalysts development of green hydrogen industrial clusters
currently faces in the realms of economics and fi-
• High conductivity solid electrolytes for PEM, AEM nance. The overarching themes are lagging supply and
and SOE technologies demand for green products and green hydrogen mar-
ket, along with low investment security and high fi-
Pure oxygen is a by-product of electrolysis which is nancing needs for green hydrogen industrial clusters.
valuable. It has many uses, including potentially with-
in the cluster: it can go into oxyfuel combustion for 5.3.1.1. Economic and market challenges
high-temperature processes (for example in a cement
plant), which makes it much easier to then capture the Cost competitiveness is key in this regard; green
CO2 emissions since the stream is pure. Nhuchhen et products must be cost competitive. This translates
al.42 calculate that the cost of this by-product oxygen into the cost of producing green hydrogen, which can
would be 73% cheaper than a dedicated air separa- be achieve by reducing the input and energy costs of
tion unit,43 and that with oxy-combustion, the abate- production as well as carbon pricing or demand-stim-
ment cost would reach $39-53/tCO2. Another possi- ulating policies.
bility is using the oxygen for wastewater treatment.44
More broadly, the market for pure oxygen45 was worth The current production of hydrogen happens main-
around $50 billion in 2020 and is growing at almost ly on site or as a by-product of industrial process-
8% annually, with the largest consumers being indus- es and is consumed within the facility, as it would
try. Assuming a price of $3/kg,46 this equates to 16 Mt happen in the case of a green hydrogen industrial
of oxygen; if all of that came from electrolysis, then cluster. The lack of a functioning market is, there-
based on molecular masses, the associated hydrogen fore, stopping companies from making large-scale in-
production would be around 130 MtH2, i.e. more than vestments in the required infrastructure to produce,
the current 94 MtH2 produced annually from all sourc- transport, store and use green hydrogen in industrial
es, including fossil-based.47 processes. However, there is increasing momentum
as companies and countries are making decarboniza-
In sum, there is significant potential for the value of tion commitments – net-zero pledges cover > 70% of
oxygen as a by-product to be utilized and therefore global GDP – that rely on the fact that sufficient green
bring down the cost of green hydrogen (with the add- hydrogen is available to decarbonize certain indus-
ed benefit of saving the energy that would have been tries and processes.48 This is an important first step to
used for oxygen separation otherwise). minimize the risk of green hydrogen-related projects,
encourage investment, and establish efficient green
products and green hydrogen markets.

5.3. Economics and finance Green hydrogen needs low-cost, renewably generated


electricity to be cost competitive. In the case of green
hydrogen industrial clusters, there is a vertical integra-
A supportive economic and financial ecosystem is a tion between the electricity produced and the green
vital precondition for the development of green hy- hydrogen and its use within the cluster, and it is there-
drogen industrial clusters. There is currently no mar- fore independent of variations in electricity costs.
ket without production and little willingness to invest
into production without a proven market record. For 5.3.1.2. Financing and investment challenges
this to be possible, direct government support is es-
sential, particularly in the early stages and for first Due to the high CapEx involved in green hydrogen
movers, through both supply- and demand-side poli- industrial clusters due to production of hydrogen
cies (e.g. offtake agreements). and modification of industrial processes, private
42
Nhuchhen et al, 2022, Decarbonization of cement production in a hydrogen economy. <https://doi.org/10.1016/j.apenergy.2022.119180>.
43
For a distance of 20 km; this cost increases with distance, hence the importance of clusters.
44
Woods et al., 2022, The hydrogen economy – Where is the water? <https://doi.org/10.1016/j.nexus.2022.100123>.
45
Facts & Factors 2020, <https://www.fnfresearch.com/oxygen-market>.
46
Woods, Phil et al. “The hydrogen economy - Where is the water?” Energy Nexus (2022): n. pag.
47
IEA (2022), Global Hydrogen Review 2022, IEA, Paris <https://www.iea.org/reports/global-hydrogen-review-2022>, License: CC BY 4.0
48
IEA (2021), Net Zero by 2050, IEA, Paris. URL: <https://www.iea.org/reports/net-zero-by-2050>, License: CC BY 4.0

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 51


Challenges and Enablers

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>.

52 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


Subsidies for green hydrogen producers can help de- The cost premium can be redistributed across the
velop economies of scale. Complementary to carbon supply chain, or the value chain of green hydrogen
pricing, enabling green products to be cheaper is an industrial clusters, with international organizations
effective tool to allow for economies of scale to de- playing possibly enabling roles as donors covering
velop. Compared to a higher carbon price, temporary said premium.
subsidies for green products are likely to meet less
resistance from incumbent industries, as it does not Direct public funding schemes and indirect incentives
directly impact their margins. are fundamental to support the creation of green hy-
drogen industrial clusters.
Commercial deployment can be scaled up using de-
mand-side policies that “pull” investment throughout Public CapEx funding schemes constitute an efficient
the value chain, making projects bankable.54 This can option to guarantee access to funding. In the early
take the form of fiscal policies to stimulate demand stage of technological development, funding for R&D,
for green hydrogen in the industrial and mobility piloting and demonstration is essential. CapEx-spe-
sectors, including direct support schemes mediating cific public funding can enable the realization of a
the hydrogen market price by establishing direct pro- technology, or concept for smaller projects where the
curement systems (as an end-user) or mediating mar- relative bulk of the total project cost are capital costs.
ket access to producers via tendering or auctioning
schemes (where price, performance, environmental OpEx-specific public funding can provide access to
and volume capacity can be requirements for partic- funding for a specific set of larger projects where op-
ipation).55 erational costs constitute the bulk of green hydrogen
production costs56,57. This requires larger funding vol-
Introducing quotas for potential end-user markets of umes, dedicated financial instruments and longer du-
green products (e.g. green ammonia, green steel) or ration of financial support potentially over the whole
markets further down the value chain (e.g. car manu- project lifetime.
facturers) will guarantee a certain demand for green
hydrogen. Establishing a quota further down the val- Given governments’ ability to take on more risk, they
ue chain has the positive effect that the entire val- can engage in public-private partnerships that aim
ue-chain will be incentivized. to develop and deploy capital-intensive green hy-
drogen industrial cluster projects. Carbon contracts
5.3.2.2. Financing and investment enablers for difference (CCfD) are useful in this regard, where
a private actor is guaranteed a certain return on in-
At the very core of the green hydrogen paradigm, there vestment by governments making up the difference
is its cost premium (green premium), which must be between actual return and the guaranteed return,
compensated. It is important that green products are while if the project is more successful, the excess re-
remunerated as a valuable premium through: turns flow back to the government for the benefit of
the public. This mechanism provides companies with
• Private (market) driven: voluntary/market driven some downward protection limiting financial risks
willingness to pay and thereby unlocks investments.

• 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>.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 53


Challenges and Enablers

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>.

54 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES


can substitute fossil fuels, thereby decreasing fossil the carbon footprint of green hydrogen production is
consumption while increasing air, soil, and water qual- as low as possible. Such criteria could be based on
ity at the local level. Second, green hydrogen projects the European renewable energy directive and include
can provide additional renewable electricity to the lo- three main pillars: additionality of the electricity
cal grid. Third, clusters can either provide additional source, temporal correlation between the moment of
potable water for human consumption or productive electricity generation and consumption (or alterna-
uses or reduce wastewater streams. Last and perhaps tively direct connection between the green hydrogen
most importantly, green hydrogen can be a means to plant and the renewable power plant), and a geo-
transform local resources into local green jobs, ena- graphical correlation criterion.
bling inclusive growth in rural settings. Local commu-
nication efforts could be developed in cooperation Environmental compliance for green hydrogen pro-
with the stakeholders involved in green hydrogen jects can generate co-benefits and thereby enhance
projects and be described within the SDG framework. acceptance in the local community. For example, a
requirement for surplus renewable power genera-
Policy can require green hydrogen production plants tion capacity could be introduced, meaning that the
to provide surplus drinking water in water-scarce excess electricity would be fed into the local elec-
areas. With a purification cost of about 1€/1000l if tricity grid. Even before construction commences,
extracted from seawater through desalination,62 de- integrated socio-environmental impact assessments
salinated water only comprises about 0.1€cent/kgH2 can safeguard community resilience and ecosystems
of the total cost of hydrogen.63 Doubling the instal- by shedding light on the true costs and feasibility of
lation of water desalination plants at suitable green green hydrogen-related infrastructure projects.
hydrogen clusters would increase the production cost
of hydrogen by a negligible amount, while generat- Pricing or regulatory interventions to internalize en-
ing significant amounts of drinking-grade water. This vironmental externalities on a broad scale can miti-
could then be made available to the neighbouring gate harmful impacts. They could even enhance the
communities, with the key condition that any regula- competitiveness of green hydrogen if applied widely,
tion of such vital water resources needs to ensure a as the cost gap to fossil-based hydrogen production
just and fair distribution. methods would be reduced. This is particularly true
for carbon pricing schemes which may significantly
Sustainability criteria, including strict conditions for penalize fossil-based and thus carbon-intense hydro-
the use of renewable electricity, can help ensure that gen production.

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.

GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 55


6. Concluding Remarks

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.

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GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 57
58 | GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES
GREEN HYDROGEN INDUTRIAL CLUSTERS GUIDELINES | 59
United Nations Industrial Development
Organisation (UNIDO)
Vienna International Centre
Wagramer Str. 5, P.O. Box 300,
A-1400 Vienna, Austria
+43 1 26026-0

www.unido.org/hydrogen

[email protected]

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