Beyond Techno-Economics: Policy Incentives and Social-Supply Chain Dynamics in Scaling Global Green Hydrogen Production

Abstract

Green hydrogen is crucial for decarbonising sectors that are difficult to abate. However, the existing literature mainly focuses on techno-economic metrics, ignoring the dynamics of policy and social supply chains. This review fills this gap by summarising how policy frameworks and social acceptance influence hydrogen scalability in Europe and the Middle East. Europe\'s fragmented governance, shown by delayed certifications and community opposition, is different from the Middle East\'s centralized models. The paper emphasizes quick deployment but also leads to labour exploitation and water scarcity. Both regions have supply chain vulnerabilities. Europe depends on imported electrolyzers and critical minerals, while the Middle East relies on energy-intensive desalination. The comparative summary shows that policy design, such as the European Union\'s misaligned subsidies or Gulf states\' autocratic control, directly affects equity results. The review recommends reparative strategies, including redirecting carbon border revenues to support projects in the Global South, implementing equitable certification standards, and creating hybrid governance models that combine Europe\'s participatory spirit with the Gulf\'s operational efficiency. By highlighting carbon equity and ethical supply chains, this study redefines hydrogen scalability as a socio-political issue and provides policymakers with practical suggestions to prevent repeating the injustices of the fossil fuel era.

Introduction

Overview:
Green hydrogen, produced via renewable-powered water electrolysis, is crucial for decarbonizing hard-to-electrify sectors like steel, shipping, and aviation. If costs drop below $2/kg and policy aligns globally, it could reduce CO? emissions by 10% by 2050. However, despite its promise, green hydrogen accounted for less than 0.1% of global hydrogen production in 2023, largely overshadowed by fossil-based "grey" hydrogen.

Problem Statement:
Most research on green hydrogen has focused on techno-economic factors (e.g., electrolyzer efficiency, energy costs), neglecting critical socio-political, regulatory, and social equity considerations. A 2023 study found that 78% of literature focused on cost modeling, while less than 5% addressed workforce development or geopolitical risks.

Key Challenges and Understudied Issues:

1. Policy and Regulatory Gaps:

• Europe vs. Middle East:

  • Europe promotes hydrogen via fragmented and slow-moving regulations.

  • The Middle East (e.g., Saudi Arabia, UAE) pursues rapid deployment via centralized governance, often sidelining equity and civil society.

• Global North vs. South Dynamics:

  • The EU’s hydrogen strategy promotes hydrogen imports from Morocco, redirecting up to 60% of its solar energy, increasing domestic energy poverty.

  • Projects like NEOM in Saudi Arabia prioritize state ownership and offer little benefit to local, water-scarce communities.

2. Certification and Standards:

• Global certification regimes often exclude producers from the Global South:

  • CertifHy (EU): Requires hourly renewable matching—unrealistic for nations with unstable grids (e.g., Namibia).

  • GH2 Standard: Excludes nuclear hydrogen (affecting France, South Korea).

  • Japan’s JIS H2: Permits coal-based hydrogen with CCS, allowing high emissions under “clean” labels.

3. Fossil Lock-ins and Labour Issues:

• Continued fossil fuel subsidies ($5.8B redirected from renewables) hinder green hydrogen.

• Policies like the EU CBAM and the U.S. IRA offer incentives without labour protections—women make up only 9% of hydrogen sector jobs.

• Blue hydrogen (fossil-based with CCS) still qualifies for “clean” incentives, emitting up to 4.8 kg CO?/kg H?.

Recommendations:

• Redistributive Mechanisms:

  • Redirect 20% of CBAM/IRA revenues to build electrolyzers in the Global South, ensuring local ownership.

• Equitable Certification:

  • Use monthly averaging instead of hourly matching; introduce a Just Transition Scorecard to evaluate social impact.

• Fossil Phaseout:

  • Ban CCS subsidies for coal-derived hydrogen by 2025.

  • Revoke blue hydrogen's eligibility for incentives by 2030.

Social and Supply Chain Considerations:

1. Social Acceptance:

• Europe: Faces community opposition (e.g., in Germany, Denmark) due to historical distrust and environmental concerns. Also suffers from labour shortages—projected 70,000 technician gap by 2030, and underrepresentation of women in technical roles.

• Middle East: Centralized control masks dissent. NEOM project displaces communities with little compensation. Migrant workers dominate the workforce but face poor conditions, wage theft, and lack of long-term inclusion.

2. Supply Chain Vulnerabilities:

• Middle Eastern countries rely heavily on imports and desalinated water for hydrogen, raising sustainability and ethical concerns.

• Producing 1 kg of hydrogen requires 9 liters of water—costly in arid regions, straining resources needed for human consumption.

Conclusion

This review has underscored that scaling green hydrogen production demands moving beyond techno-economic metrics to address policy ecosystems and social-supply chain dynamics, which are pivotal yet understudied. We analysed Europe and the Middle East and revealed how policy fragmentation, social resistance, and material dependencies shape regional outcomes. Europe’s democratic governance fosters accountability but struggles with delays and workforce gaps, while the Middle East’s centralised models prioritise speed over equity, exacerbating labour and resource inequities. Both regions face supply chain vulnerabilities, Europe’s reliance on imported technologies and the Middle East’s water scarcity, highlighting systemic risks often overlooked in hydrogen discourse. Hydrogen’s success hinges on reconciling efficiency with justice. Policies must evolve from extractive frameworks to reparative models that redistribute benefits, such as redirecting CBAM revenues to fund Global South projects or mandating local ownership. Social acceptance requires inclusive governance, not coercion, while supply chains need diversification to mitigate geopolitical risks. Europe’s bureaucratic inertia, the Middle East’s autocratic resource control, and global dependencies on critical minerals. Overcoming these demands, hybrid strategies blending Europe’s participatory ethos with the Gulf’s operational agility, enforced through ethical certifications such as labour audits, and water-use standards. Future research should focus on decolonial hydrogen partnerships. Let countries in the Global South lead in the value chains. Also, make policies that consider gender, labour, and climate justice together. Innovations like AI-driven supply chain resilience and community-owned electrolysers could help. In the end, green hydrogen should be more than just a technical solution. It should be a way to bring about global equity. But this can only happen if policies put people first, not just profits. What specific steps can be taken to start implementing these changes, and how can different countries work together to make this a reality?These are the questions we need to answer.

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Copyright

Copyright © 2025 Ensah Amara, Qingran Zhang. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.