Extended Data Fig. 7: Required subsidies for green hydrogen and electrofuels compared with historical and projected support for solar PV and wind.

The green and purple line show our central estimate, while the corresponding shaded areas depict the range spanned by the progressive and conservative scenario. Until 2030, the build-out of green hydrogen and electrofuels follows the project announcements, while after 2030 it follows the median of the institutional and corporate 1.5 °C scenarios (Supplementary Figure 11). Similarly, until 2030, end uses are obtained from the project announcements (Extended Data Figure 1), while after 2030 end use shares follow the shares of the IEA NZE 1.5 °C scenario⁴⁰ (Supplementary Figure 13b). Data for historical and projected support for solar PV and wind is obtained from the IEA Renewables 2023 report, estimated via the cost difference between solar PV/wind and fossil fuel power plants⁶⁸. The values correspond to the LCOE approach, not the value-adjusted LCOE approach. a-b, Total annual support without carbon pricing (a) and with ambitious carbon pricing (b) in line with reaching EU climate targets⁴¹ (149 $/tCO₂ in 2030, 246 $/tCO₂ in 2040, 407 $/tCO₂ in 2050, see Extended Data Table 3). Without carbon pricing, required annual support in a 1.5 °C scenario quickly exceeds historically observed support for solar PV and wind power (a). With carbon pricing, total annual support could be limited to the same order of magnitude, although large uncertainties prevail (b). Note that the historical and projected support for wind power turns negative in 2022 as it is estimated from the difference between the generation costs of wind and from fossil fuels⁶⁸. In 2022, the energy crisis led to an unprecedented surge of natural gas prices, particularly in Europe, leading to a negative estimate of policy support. c-d, Relative support (per MWh) without carbon pricing (c) and with carbon pricing (d). When calculating relative support for green hydrogen and electrofuels, we exclude production that is backed by demand-side policies and therefore does not require subsidies. Without carbon pricing, green hydrogen and electrofuels require support until at least 2050, and potentially indefinitely (c). Due to additional conversion losses, electrofuels require higher specific support. Overall, relative support is in the same order of magnitude as historically observed for solar PV and wind. With carbon pricing, the specific subsidy requirements of green hydrogen and electrofuels steadily decrease towards 2050, reaching zero for green hydrogen in our central estimate (d). Figure adapted from ref. ⁶⁸ under a Creative Commons license CC BY 4.0.