Macroeconomic analysis of a new green hydrogen industry using Input-Output analysis: The case of Switzerland

Abstract

Hydrogen is receiving increasing attention to decarbonize hard-to-abate sectors, such as carbon intensive industries and long-distance transport, with the ultimate goal of reducing greenhouse gas (GHG) emissions to net-zero. However, limited knowledge exists so far on the socio-economic and environmental impacts for countries moving towards green hydrogen. Here, we analyse the macroeconomic impacts, both direct and indirect, in terms of GDP growth, employment generation and GHG emissions, of green hydrogen production in Switzerland. The results are first presented in gross terms for the construction and operation of a new green hydrogen industry considering that all the produced hydrogen is allocated to passenger cars (final demand). We find that, for each kg of green hydrogen produced, the operational phase creates 6.0, 5.9 and 9.5 times more GDP, employment and GHG emissions respectively compared to the construction phase (all values in gross terms). Additionally, the net impacts are calculated by assuming replacement of diesel by green hydrogen as fuel for passenger cars. We find that green hydrogen contributes to a higher GDP and employment compared to diesel, while reducing GHG emissions. For instance, in all the three cases, namely, ‘Equal Cost’, ‘Equal Energy’ and ‘Equal Service’, we find that a green hydrogen industry generates around 106%, 28% and 45% higher GDP, respectively; 163%, 43% and 65% more full-time equivalent jobs, respectively; and finally 45%, 18% and 29% lower GHG emissions, respectively, compared to diesel and other industries. Finally, the methodology developed in this study can be extended to other countries using country-specific data.