Certification of low-carbon hydrogen in the transport market

Abstract : This paper develops a theoretical framework to study the deployment of free-of-emissions green hydrogen in the transport sector. We consider a vertically related market with hydrogen producers upstream and fuel stations downstream. Production technologies differ in cost efficiency and carbon emissions. We show that when consumers have limited information about the hydrogen origin, no new green producers are able to enter the market. A label for green hydrogen allows multiple production technologies to co-exist, but society is better off when producers use vertical restraints to increase consumers' information.