# Hydrogen for NetZero: Carbon markets and climate finance for renewable hydrogen and PtX

Published by Perspectives Climate Group. Canonical page: https://perspectives.cc/initiatives/hydrogen-for-netzero/

Through the Hydrogen for Net-Zero Initiative (H2NZ), we bring together technology innovators, investors, project developers and policymakers to work through how PtX and carbon markets are developing and how they interact.

- Active since: 2019
- Field: Mitigation & Adaptation Strategies
- Participants: Governments, market participants and researchers
- Supported by: H2NZ partner consortium

## Overview

Perspectives supports companies and policy makers to use carbon markets and climate finance for accelerating investments in renewable hydrogen and Power-to-X (PtX) projects and to get them built. Renewable PtX projects sit at the edge of economic feasibility. Credits under Article 6 of the Paris Agreement or high-quality voluntary standards such as Gold Standard, as well as compliance incentives such as the EU's CBAM, CORSIA and the IMO Net-Zero Framework, can close part of that gap and help carry a project to a final investment decision (FID).

Our work covers carbon credit methodology development, techno-economic and carbon-revenue modelling, analysis of carbon intensity requirements and standards, and policy advice and country support. Our clients include project developers, investors, and public institutions such as GIZ and H2Global.

## Aims

- Understand the emerging market: We develop scenarios for global and regional hydrogen markets up to 2050, including their geopolitical and energy-security implications. We analyse export markets for green PtX products and the support schemes that shape them, such as H2Global and the European Hydrogen Bank. We also carry out techno-economic assessments, for example of green H2, green ammonia as well as methanol for maritime bunkering via e-methanol and bio-methanol routes.
- Policy that closes the cost gap: We work on instruments at UNFCCC and national level to promote green hydrogen, including the Article 6.4 and Article 6.2 mechanisms of the Paris Agreement. We analyse how carbon credits interact with and complement compliance regimes such as CBAM, the EU's RED III and RFNBO rules, CORSIA and the IMO Net-Zero Framework. We also look at how carbon finance can be stacked with grants, concessional finance and offtake support.
- Position economies early: We help governments assess how their economies can position themselves in emerging hydrogen markets. In potential PtX-exporting countries such as India, Egypt and Kenya, we support policy makers and PtX producers in analysing PtX project pipelines, evaluating business opportunities under consideration of carbon market and climate finance revenues, and convening multi-stakeholder roundtables.

## Developing high-quality methodologies

Our international team of methodology experts develops conservative carbon methodologies for key PtX project types. These methodologies cover GHG emissions and reductions along the whole PtX value chain. Under GIZ's H2Uppp programme, we are developing an Article 6.4 methodology for fertilisers produced with green instead of grey ammonia. It has been submitted as PMM006 to the Article 6.4 Supervisory Body and is currently in the approval process.

## Carbon opportunities for PtX projects

Besides carbon market mechanisms, several national or regional incentive and compliance schemes are evolving that are highly relevant for PtX. For GIZ's International PtX Hub, we compared how the major regimes calculate GHG intensity and built a PtX carbon intensity calculation tool. The regimes covered were the EU's RFNBO, CBAM and low-carbon fuels rules, CORSIA, IMO, India's GHCI, South Korea's CHCS, ISO/TS 19870 and Article 6.4.

In addition, we operate a PtX carbon-credit model that quantifies carbon credit volume and revenue potential for green hydrogen, ammonia and methanol.

## Goal & vision

We bring industry, technology innovators, investors, NGOs and policymakers together so they can use carbon markets to make renewable hydrogen and PtX investments economically feasible. Our experience is consistent: carbon finance rarely makes a PtX project bankable on its own. It can, however, turn a nearly viable, concessionally financed project into a viable one. We help clients design finance structures that combine carbon revenues with other instruments.

## Team

- [Sonja Butzengeiger](https://perspectives.cc/people/sonja-butzengeiger/)

Cite this page as: Perspectives Climate Group. Hydrogen for NetZero: Carbon markets and climate finance for renewable hydrogen and PtX. Available at: https://perspectives.cc/initiatives/hydrogen-for-netzero/