Making the green hydrogen economy happen – How governments can tax, fund, buy and legislate to make change happen

Last week the Swedish government together with UNEP and others hosted Stockholm+50, a global environment conference recalling the memory of the 1972 UN Conference on the Human Environment in Stockholm, which was arguably the first major global meeting on the environment.  

Opening the conference last week, Swedish Prime Minister Magdalena Andersson said that we had talked the talk, now we needed to walk the walk. She is of course right. Unfortunately, there wasn’t much walking. The conference ended with ten bland recommendations calling for things like “Recognize intergenerational responsibility as a cornerstone of sound policy-making”. It was also widely criticised for having been vague, without a clear agenda or outcome.

The time for big meetings with small agreements are well past their sell-by dates. It doesn’t need to be this way. We know what needs to be done. First, we need to use energy more efficiently. Second, we need to stop subsidising and using fossil fuels. Third, we need to embrace proven technologies that are aligned with net zero.

We also know how to do this. The simplest in theory and hardest in practice are global schemes to price 

carbon and other greenhouse gas emissions. But we cannot afford to have the perfect holding up the good. There are so many things that can be done by governments, acting on their own, together with others, together with the private sector and civil society, to drive the energy transition faster.  

Commercial and technical solutions are largely available to humankind to live sustainably. Governments have to align the incentives and stimulate supply and demand to make sure that these become the preferred solutions.   

To stop using fossil fuels, we need to reduce demand and emissions by embracing cost effective energy efficiency measures. We need to plug everything into an electricity grid supplying renewable energy that can be plugged in. What can’t be plugged in, such cars, should largely be fitted with batteries. And where batteries are not viable, for example in shipping and some long-haul transport solutions, and in industrial process, such as in the making of steel and fertilisers, we need to use hydrogen, produced with renewable energy. As much as a quarter of final energy use is likely to be green hydrogen.

Simply put, government’s can use the following instruments in different ways to make sure that everything in society is geared to zero and lowest possible emission solutions, using the grid, batteries and hydrogen:

  1. Government can use taxes to make sure that sustainable economic activities are promoted and unsustainable activities are phased out. This is increasingly the case, but no where near enough. Many countries still subsidies the production and use of fossil fuels and for example aviation fuel is not taxed whereas many forms of electricity use and trains often are.   
  2. Governments can fund, lend money and provide guarantees to net zero solutions. Governments have a significant influence over pension funds and the investment industry and can stimulate, encourage or even require net zero or lowest possible emission approaches.  
  3. Governments can act as a key buyer of energy ensure that net zero solutions are chosen. Public procurement, regulating everything from when public transport companies buys busses to the military buying jeeps, should be forced to require zero or lowest possible carbon emission solutions.  
  4. And where so-called market-based measures are considered inappropriate, governments can of course legislate and regulate to speed up the energy transition. Fuel standards, for example, could be significantly more stringent in most countries, to make electric or hydrogen solutions more competitive.  

 At big international meetings and elsewhere, we need a focus on concrete solutions, on how governments can tax, fund, buy and legislate to drive the transition faster. The treatment of green hydrogen at the recent Stockholm conference is a good example of what not to do. It was hardly mentioned, as far as we can see. With industry rapidly scaling up its capacity, governments and the international community 

are failing to act. They are  missing the opportunity to demonstrate and agree concrete actions and what it truly looks like to enable the energy transition. 

It is time indeed to walk the walk.