Green hydrogen and the challenges for Thailand
Amidst climate change and the global commitment to limit the rise in temperatures to less than 1.5°C, countries have pledged to accelerate climate policies aimed at reducing greenhouse gas emissions as part of their National Determined Contribution (NDC) targets.
Efforts are underway for energy transition, shifting fossil fuels to renewable, cleaner and lower-carbon fuels in energy sectors. Short-term actions include reducing the operation of coal-fired power plants and phasing out in the future.
Long-term efforts focus on increasing renewable energy capacity and promoting low-carbon fuel production, e.g., sustainable aviation fuel, green hydrogen and methanol adoption to industries. Therefore, green hydrogen has become one of the key green fuels helping reduce emissions in hard-to-abate sectors such as steel, cement, and petrochemicals.
According to Deloitte's Global Hydrogen Outlook 2023, Green hydrogen is the key to achieving global net-zero greenhouse gas emissions by 2050, with production projected to reach 172 million tons/year by 2030 and 598 million tons per year by 2050. This would be equivalent to 85% of the global electricity demand in 2019 (22,850 TWh). Currently, the development of the green hydrogen market faces challenges due to its high cost compared to fossil fuels. The report estimates the levelized cost of green hydrogen (LCOH) at $3.1/kg in 2025 and $1.9/kg in 2050, while the levelized cost of grey hydrogen is $1.7/kg in 2025 and $2.8/kg in 2050. Production costs may vary depending on geography and supported policies, with countries that have an advantage in renewable energy production, such as Vietnam and Taiwan, which have strong wind resources, and regions with climate policies such as carbon tax and emission trading schemes. Australia, the Middle East, and North Africa are expected to be the main hydrogen exporters in 2050 while China, India, and the European Union are expected to be hydrogen-imported countries to support domestic demand.
For Thailand, green hydrogen plays an important role in supporting the energy transition and is projected to be widely used in 2045 as part of the country’s NDC.
In the early stages, there have been policy initiatives and collaborations between the public and private sectors in various forms, such as targeting 5% hydrogen mixed with natural gas for power generation under the national energy plan, a pilot program for hydrogen-powered transportation and refuelling station from U-Tapao Airport to different cities, and green hydrogen production using electrolysis for industrial estates.
Thailand can accelerate green hydrogen adoption by considering key success from developed countries in different market perspectives such as tax credits and grants from the government for green hydrogen project development and investment in infrastructure, long-term offtake commitments and subsidies for technology providers across the value chain.
For example, the US Department of Energy’s policy supporting green steel production to support the automotive industry and the European Union's innovation fund supports carbon contracts for different schemes as part of green hydrogen projects funding for energy transition and transformation.
Although the green hydrogen market is expected to be widely developed along with industrial demand in many countries after 2040, short-term risks remain due to current high production and technology costs, which are not competitive with fossil fuels.
Additionally, the complexity and lack of clarity in government-supported production and financial policies, as well as specific details and durations in execution, are causing many companies to reassess their strategies and delay investments to reduce development risks.
For example, Shell has cancelled investments in hydrogen refuelling stations for small vehicles in California due to unfavourable demand, higher prices, and supply chain disruptions. Therefore, the development of green hydrogen in Thailand needs to carefully consider the preparation of the supply chain and policy readiness to ensure that all sectors can adapt to green fuels, supporting the country’s goal of achieving net-zero greenhouse gas emissions in the future.
Bordin Vongvitayapirom Senior Manager | Sustainability & Climate Centre of Excellence
Deloitte Thailand
