{ "docId": "019dd923-5de0-76bd-a169-e26f84504e8e", "docSlug": "94fd4c3d34778b64", "documentTitle": "Roland Berger views on H2 market development", "authorId": "RolandBerger", "authorName": "Roland Berger", "documentKindSlug": "consulting-deck", "documentKindLabel": "Consulting deck", "sourceTypeSlug": "strategy_consulting", "sourceTypeLabel": "Strategy consulting", "presentationDate": null, "orientation": "portrait", "aspectRatio": 0.755, "pageNumber": 10, "pageCount": 13, "prevPage": 9, "nextPage": 11, "slideType": "recommendation", "function": "recommend", "density": "overcrowded", "nDataPoints": 0, "notes": "The slide uses the 'chicken and egg' metaphor to describe the market failure.", "elementsJson": [ "headline_text", "paragraph", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-5de0-76bd-a169-e26f84504e8e/10", "deckHref": "/decks/019dd923-5de0-76bd-a169-e26f84504e8e", "deckJsonHref": "/decks/019dd923-5de0-76bd-a169-e26f84504e8e.json", "deckAnchorHref": "/decks/019dd923-5de0-76bd-a169-e26f84504e8e#slide-10", "components": [ { "bbox": null, "kind": "callout", "text": "The government must break the chicken and egg deadlock between production and consumption.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-3beb-760d-a9f3-192d3f8967f8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.41, "x": 0.51, "y": 0.49 }, "kind": "paragraph", "text": "Now, because it is on both sides of the auction and has no profit motive, it can match supply and demand at optimal cost. Any deviations would not end up in the pockets of either producers or consumers, but remain with the government and thus lower the overall cost to society.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2df780a9-6c87-426b-b61a-fbe46cc6bba7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.41, "x": 0.07, "y": 0.55 }, "kind": "paragraph", "text": "Both options are currently being considered by the Ministry of Economic Affairs and Climate Policy10. When organizing auctions as market maker - in a way similar to the German H2Global initiative - the government would both buy and sell renewable or low-carbon hydrogen.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2e84b9d5-c1f2-4c1f-aa65-97f7a1126a14", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.41, "x": 0.51, "y": 0.31 }, "kind": "paragraph", "text": "It would also allow the government to prioritize specific sectors based on the impact (ecological and economic) of greening their operations and the ambition and feasibility of their plans.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5d0eb81d-7e4d-408c-85ef-d8b64aafe2ed", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.41, "x": 0.07, "y": 0.31 }, "kind": "paragraph", "text": "Facilitation by the government is especially needed in the start-up of the hydrogen market until the market has matured, after which the government can step back into a more regulatory role similar to its role in the natural gas market. To do so, different options are outlined in figure D.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8cc5298f-b9ba-44d5-8e55-e3209d81b6df", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.41, "x": 0.07, "y": 0.68 }, "kind": "paragraph", "text": "By doing so, it could both guarantee the long-term offtake contracts hydrogen producers need to invest in production capacity, and guarantee the supply hydrogen consumers need to invest in decarbonizing their processes.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9642f08c-8413-47ee-ac38-c86529110fe0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.41, "x": 0.51, "y": 0.41 }, "kind": "paragraph", "text": "The government will absorb the difference between producer cost and industrial consumer price, but it would likely do that in any support mechanism for either producers or consumers.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a3d3ee16-21ee-49df-8e6e-976e5c295f17", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.41, "x": 0.07, "y": 0.45 }, "kind": "paragraph", "text": "The government can start up the hydrogen market in the short term (without relying on the market) by acting as a market maker or instituting a feed-in tariff (options 1 and 2 in figure D). -> D1/D2", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c0e79779-c1b5-474c-bfb8-87fa35abbae2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.86, "x": 0.07, "y": 0.18 }, "kind": "paragraph", "text": "Market parties are unlikely to take up the gauntlet, as buying renewable or low-carbon hydrogen at current costs and selling that to industrial consumers at prices they are able to pay will be loss-making for some time (and no one can say for how long). The government must break the chicken and egg deadlock between production and consumption.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e7934bd3-bbb3-48e9-b432-bab6e1948cc0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.41, "x": 0.51, "y": 0.61 }, "kind": "paragraph", "text": "Next to organizing auctions, the government might opt to introduce a feed-in tariff. In that case, the government obliges the market to buy the hydrogen from the producers at a feed-in tariff. By doing so, hydrogen producers are ensured of long-term offtake by industrial consumers at a given price. Also, there is no necessity for the government to first have a subsidy mechanism (and budget) in place. Subsidy directly to selected consumer sectors is, however, still an option.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ef0c2df4-582e-4a91-b1f9-3cc97b0a1646", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.5, "x": 0.07, "y": 0.92 }, "kind": "source-note", "text": "10 https://www.rijksoverheid.nl/documenten/publicaties/2022/06/02/antwerp-beleidsprogramma-klimaat", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "14ed9139-0a81-48ec-b577-3c8d50f38b8c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.8, "x": 0.07, "y": 0.1 }, "kind": "title", "text": "4/ The government should step up to facilitate the start-up of the market", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a912aeb5-b247-48a5-9c25-9251f18019b6", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 12, "from": 9, "beatId": "26f15c16-bb82-46ca-bee5-2a68e420bcd1", "arcName": "The Consultant's Gambit", "arcSlug": "consultants-gambit", "beatName": "Solution & Approach", "beatSlug": "consultants-gambit-solution-approach", "evidence": "The deck provides recommendations for government action to facilitate the market start-up.", "position": 2, "confidence": 0.8, "parentBeatName": "Turn", "parentBeatSlug": "turn" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }