De-Risking the Hydrogen-CCS Value Chain Through Law

Abstract

The integration of hydrogen (H2) and carbon capture and storage (CCS) technologies within common value chains can contribute to the effective decarbonization of the energy system and hard-toabate sectors where electrification may not be possible or cost-effective. The H2-CCS chain is taken as an example of strategic value chains in the process towards a low carbon and increasingly integrated energy system. The successful realization of H2-CCS integrated chains requires the mobilization of vast quantities of domestic and international private capital. This article looks at how legislation and contracts, separately and in combination, can be used to manage and mitigate risks and incentivise private sector investment along the H2-CCS value chain in Europe. First, it discusses the role of national governments and the EU in developing legislative measures such as climate change targets, market design, liability regimes and how those could remove some of the risks preventing private sector investments. Second, it considers how the design and standardization of contracts can mitigate risks faced by the private sector by allocating, transferring and sharing risks between private and public parties. The article concludes that the law has an important role in de-risking investments and that further policy steps are necessary to refine the legislative and contractual regimes needed for the successful deployment of such strategic value chains. CCS, climate change, hydrogen, de-risking, legislation, contract, risk mitigation, risk allocation, risk transfer, public-private partnerships.