Optimization of emission-based sliding-premium incentive policy for clean energy market: A case study of clean hydrogen producers and importers

Woojae Shin, Yeim Lee, Yejin Yu and Han Ho Song

Applied Energy, 2025, vol. 390, issue C, No S0306261925004404

Abstract: Hydrogen is increasingly recognized as a sustainable secondary energy source in the global initiatives toward net-zero emissions. While clean hydrogen is broadly defined by its life cycle greenhouse gas (GHG) emissions, diverse national interpretations have led to varying legislative frameworks and incentive structures for production and importation. These variations, particularly in GHG assessment scope and incentive systems, lack comprehensive analytical research foundation regarding their stakeholder impacts. This study presents the first systematic methodology to derive optimal clean energy market incentive schemes based on GHG emission assessment scope and incentive structures. For optimization, the mixed integer nonlinear programming (MINLP) method was used to reflect the policy-level application, and variables to completely define the incentive structure were set as decision variables. The objective function aimed to maximize the market equality by minimizing the weighted standard deviation of the net levelized cost of hydrogen (LCOH) of potential market competitors, including given incentives. Constraints were set as government expenditures to enable the comparison of different optimal schemes within the same spending. The research findings revealed distinct optimal frameworks for different market contexts: for the energy-importing countries like Japan and South Korea, Well-to-Port-based GHG assessment scope exhibited superior market equalization, achieving equivalent market equality with 34 % reduced government expenditure compared to Well-to-Gate and Gate-to-Gate frameworks, while for domestically focused markets like the United States, the Well-to-Gate approach outperformed than other scopes. Across both market contexts, step-shaped incentive design consistently outperformed linear and reciprocal shapes. Lastly, the study describes the implications of various policy details, including assessment of existing frameworks, offering valuable insights for policymakers and industry stakeholders alike.

Keywords: Clean hydrogen; 45V credit; Policy optimization; Energy policy; Life cycle analysis (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.apenergy.2025.125710

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