Full Title: Assessment of Carbon-Abatement Pricing to Maximize the Value of Electrolytic Hydrogen in Emissions-Intensive Power Sectors
Author(s): Ayodeji Okunlola, Matthew Davis, and Amit Kumar
Publisher(s): Nature
Publication Date: August 28, 2025
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Description (excerpt):
Electrolytic hydrogen can support the decarbonization of the power sector. Achieving cost-effective power-to-gas-to-power (PGP) integration through targeted emissions pricing can accelerate the adoption of electrolytic hydrogen in greenhouse gas-intensive power sectors. This study develops a framework for assessing the economic viability of electrolytic hydrogen-based PGP systems in fossil fuel-dependent grids, while considering the competing objectives of the electricity system operator, a risk-averse investor, and the government. Here we show that, given the risk-averse investor’s inherent pursuit of profit maximization, a break-even carbon abatement cost of at least 57 Canadian Dollars per tonne of CO₂ by 2030 from the government, with a shift in electricity market dispatch rules from sole system marginal price-reduction to system-wide emissions reduction, is essential to stimulate price discovery for low-cost hydrogen production and contingency reserve provision by the PGP system. This work can help policymakers capture and incentivize the role of electrolytic hydrogen in low-carbon power sector planning.