Security of supply in the import value chain of low-carbon hydrogen

Security of supply in the import value chain of low-carbon hydrogen

Huijsinga, Martha (TU Delft Technology, Policy and Management)

Correljé, A. (mentor)
Stikkelman, R.M. (mentor)

Delft University of Technology

Complex Systems Engineering and Management (CoSEM)

2022-09-06

The Russian invasion of Ukraine has created a renewed focus on both climate change and security of supply of energy. The European Commission’s Green Deal highlights the importance of the clean energy carrier ’low-carbon hydrogen’ to combat climate change. Simultaneously, in the new REPowerEU package, the European Commission emphasises the potential of low-carbon hydrogen as an alternative to the scarce natural gas. The quantities the European Commission aims for in these proposals are difficult to produce in Europe. Low-carbon hydrogen therefore needs to be imported. The main objective of this research is to develop a framework for all relevant players in both market and government on what mitigation measures to take for different risks for security of supply. It therefore answers the following research question: How can the security of supply of the low-carbon hydrogen import flow be organised, in a dynamically evolving market?

The data has been gathered by qualitative methods and has subsequently been analysed through a newly developed theoretical framework. This theoretical framework consists of the dynamic market theory of de Jong [1985], the transaction cost theory of Williamson [1979] and security of supply framework of [CIEP, 2019].

This research has shown that the newly developed theoretical framework is suitable to analyse both the development and security of supply of the gas market and the low-carbon hydrogen market. It has also helped to shed light on very recent developments since the current gas crisis only started when this research already had begun. The dynamics between the market and the government in the gas-market were shown and it became evident that the current market-focused approach has not worked, given the current crisis. This research has shown that this market approach is two-sided: firstly, the Netherlands was dependent on the spotmarket without having long-term contracts. Secondly, most mitigation measures in case of disruption were also organised by the market. Therefore, this research has combined different risks with suitable mitigation measures and shows which ones should be regulated or taken by the government: in the introduction phase, important mitigation measures that should be focused on are: I) commercial storages II) the ability to switch fuels and carriers and III) foreign and security policy. In the expansion phase the same mitigation measures are important and new ones arise, these are: I) diversification to type of carrier, II) diversification to geographic source, III) resilience in infrastructure and IV) strategic storages.

The development of a low-carbon hydrogen import value chain is crucial to combat
climate change. In order to secure the supply of low-carbon hydrogen, a right balance should be found in the trade-off between the organisation by the market and the government. This thesis presents a newly developed framework that contributes to approaching this balance.

Security of supply
Low-carbon hydrogen
Import value chain
Hydrogen
Transaction cost economics
Dynamic market theory

http://resolver.tudelft.nl/uuid:5bec1691-53a5-41ed-87df-02742fa4ff77

Student theses

master thesis

© 2022 Martha Huijsinga