Make hydrogen whilst the sun shines: How to turn the current momentum into a well- functioning hydrogen market?

Abstract

The energy transition calls for greater interdependency between different energy infrastructures and energy carriers to ensure an effective integration of renewable energy into the energy system. The energy sector’s legislative framework and legal safeguards, however, are still largely based on the traditional market model, designed for centrally managed, fossil fuel-based, and large-scale production units for the supply of energy. Regulation is also fundamentally based on the idea that energy markets are separate. The role of hydrogen as a flexible energy vector - allowing for interaction between different energy markets - is not yet accounted for. Regulation and integration of newer energy carriers into the energy system, like the hydrogen market, is a challenge. This is all the more so in light of the uncertainties on how the hydrogen market will develop. This contribution assesses how good regulation of the hydrogen market can be attained. For this assessment, the principles of good regulation provide a foundation for developing a normative framework to identify ‘good regulation’ and good regulatory strategies. It is suggested that considering uncertain market developments, the use of a regulatory sandbox can offer a practical solution to assess what good regulation for the hydrogen market could entail.