Hydrogen economy moves at the speed of its slowest link

Each investment depends on the next

Hydrogen producers need customers willing to commit before a plant is built. Industrial users require sufficient supply at a price they can afford. Infrastructure operators must know where production and demand will develop, while those very projects may depend on the infrastructure being in place. Electrolyser costs, renewable electricity availability, water quality, critical materials and access to biogenic carbon dioxide add further conditions.

Regulation is expected to create demand in sectors where direct electrification is difficult, including aviation and hard-to-abate industries. However, shifting timelines and uncertainty around targets weaken the predictability needed for investments that can run into hundreds of millions or even billions of euros.

This explains why the hydrogen economy cannot be reduced to the question of whether the technology works. In many cases, the challenge lies in creating the conditions under which the technology can be deployed at industrial scale.

Coordination must extend beyond industry

Hydrogen Valleys address this coordination problem at a regional level. Producers, industrial users, infrastructure providers and energy companies can plan around shared resources, demand and side streams. Electricity, hydrogen, heat, oxygen and captured carbon dioxide can be integrated across sectors instead of being considered in isolation. Geographic proximity matters, but so do cooperation, information sharing and timely decision-making.

The same applies beyond the industrial value chain. New renewable electricity generation, grids, pipelines and industrial facilities all have local impacts. If communities are involved only when formal permitting begins, concerns that could have been addressed earlier may turn into delays, legal disputes or opposition. Social acceptance is directly linked to project risk.

The hydrogen economy will take shape through choices about demand, infrastructure, financing, regulation and participation. Progress depends on whether these choices reinforce one another or leave projects waiting for the next missing piece.

The first season of the BalticSeaH2 Hydrogen Valley Podcast examines these connections with researchers and industry experts working across the hydrogen value chain. Listen to all eight episodes on the podcast page!

The podcast has received financial support from the Department of Industrial Engineering and Management at Aalto University.

BalticSeaH2 Hydrogen Valley -project, is co-funded by the European Union through Clean Hydrogen Partnership and its members. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the Clean Hydrogen Partnership. Neither the European Union nor the granting authority can be held responsible for them.