IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2503.16009.html
   My bibliography  Save this paper

The Striking Impact of Natural Hazard Risk on Global Green Hydrogen Cost

Author

Listed:
  • Maximilian Stargardt
  • Justus Hugenberg
  • Christoph Winkler
  • Heidi Heinrichs
  • Jochen Lin{ss}en
  • Detlef Stolten

Abstract

Due to climate change, natural hazards that affect energy infrastructure will become more frequent in the future. However, to incorporate natural hazard risk into infrastructure investment decisions, we develop an approach to translate this risk into discount rates. Thus, our newly developed discount rate approach incorporates both economic risk and natural hazard risk. To illustrate the impact of including the risk of natural hazards, we apply country-specific discount rates for hydrogen production costs. The country-specific relative difference in hydrogen generation cost ranges from a 96% surplus in the Philippines to a -63% cost reduction in Kyrgyzstan compared to a discount rate that only consists of economic risks. The inclusion of natural hazard risk changes the cost ranking of technologies as outcome of energy system models and thus policy recommendations. The derived discount rates for 254 countries worldwide are published in this publication for further use.

Suggested Citation

  • Maximilian Stargardt & Justus Hugenberg & Christoph Winkler & Heidi Heinrichs & Jochen Lin{ss}en & Detlef Stolten, 2025. "The Striking Impact of Natural Hazard Risk on Global Green Hydrogen Cost," Papers 2503.16009, arXiv.org.
    • Handle: RePEc:arx:papers:2503.16009
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2503.16009
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Florian Egli & Bjarne Steffen & Tobias S. Schmidt, 2019. "Bias in energy system models with uniform cost of capital assumption," Nature Communications, Nature, vol. 10(1), pages 1-3, December.
    2. Friedemann Polzin & Mark Sanders & Bjarne Steffen & Florian Egli & Tobias S. Schmidt & Panagiotis Karkatsoulis & Panagiotis Fragkos & Leonidas Paroussos, 2021. "The effect of differentiating costs of capital by country and technology on the European energy transition," Climatic Change, Springer, vol. 167(1), pages 1-21, July.
    3. Bhandari, Ramchandra, 2022. "Green hydrogen production potential in West Africa – Case of Niger," Renewable Energy, Elsevier, vol. 196(C), pages 800-811.
    4. Nadia Ameli & Olivier Dessens & Matthew Winning & Jennifer Cronin & Hugues Chenet & Paul Drummond & Alvaro Calzadilla & Gabrial Anandarajah & Michael Grubb, 2021. "Higher cost of finance exacerbates a climate investment trap in developing economies," Nature Communications, Nature, vol. 12(1), pages 1-12, December.
    5. David Franzmann & Heidi Heinrichs & Felix Lippkau & Thushara Addanki & Christoph Winkler & Patrick Buchenberg & Thomas Hamacher & Markus Blesl & Jochen Lin{ss}en & Detlef Stolten, 2023. "Green Hydrogen Cost-Potentials for Global Trade," Papers 2303.00314, arXiv.org, revised May 2023.
    6. Shitab Ishmam & Heidi Heinrichs & Christoph Winkler & Bagher Bayat & Amin Lahnaoui & Solomon Agbo & Edgar Ubaldo Pena Sanchez & David Franzmann & Nathan Ojieabu & Celine Koerner & Youpele Micheal & Ba, 2024. "Mapping Local Green Hydrogen Cost-Potentials by a Multidisciplinary Approach," Papers 2407.07573, arXiv.org.
    7. Rezaei, Mostafa & Akimov, Alexandr & Gray, Evan Mac A., 2024. "Levelised cost of dynamic green hydrogen production: A case study for Australia's hydrogen hubs," Applied Energy, Elsevier, vol. 370(C).
    8. Qusay Hassan & Sameer Algburi & Aws Zuhair Sameen & Marek Jaszczur & Hayder M. Salman, 2024. "Hydrogen as an energy carrier: properties, storage methods, challenges, and future implications," Environment Systems and Decisions, Springer, vol. 44(2), pages 327-350, June.
    9. C. Winkler & H. Heinrichs & S. Ishmam & B. Bayat & A. Lahnaoui & S. Agbo & E. U. Pe~na Sanchez & D. Franzmann & N. Oijeabou & C. Koerner & Y. Michael & B. Oloruntoba & C. Montzka & H. Vereecken & H. H, 2024. "Participatory Mapping of Local Green Hydrogen Cost-Potentials in Sub-Saharan Africa," Papers 2408.10184, arXiv.org.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fabian Neumann & Johannes Hampp & Tom Brown, 2025. "Green energy and steel imports reduce Europe’s net-zero infrastructure needs," Nature Communications, Nature, vol. 16(1), pages 1-19, December.
    2. Briera, Thibault & Lefèvre, Julien, 2024. "Reducing the cost of capital through international climate finance to accelerate the renewable energy transition in developing countries," Energy Policy, Elsevier, vol. 188(C).
    3. M. Calcaterra & L. Aleluia Reis & P. Fragkos & T. Briera & H. S. Boer & F. Egli & J. Emmerling & G. Iyer & S. Mittal & F. H. J. Polzin & M. W. J. L. Sanders & T. S. Schmidt & A. Serebriakova & B. Stef, 2024. "Reducing the cost of capital to finance the energy transition in developing countries," Nature Energy, Nature, vol. 9(10), pages 1241-1251, October.
    4. Egli, Florian & Orgland, Nikolai & Taylor, Michael & Schmidt, Tobias S. & Steffen, Bjarne, 2023. "Estimating the cost of capital for solar PV projects using auction results," Energy Policy, Elsevier, vol. 183(C).
    5. Campiglio, Emanuele & Spiganti, Alessandro & Wiskich, Anthony, 2024. "Clean innovation, heterogeneous financing costs, and the optimal climate policy mix," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    6. Kan, Xiaoming & Hedenus, Fredrik & Reichenberg, Lina, 2025. "Chasing the eternal sun: Does a global super grid favor the deployment of solar power?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 211(C).
    7. ElSayed, Mai & Aghahosseini, Arman & Breyer, Christian, 2023. "High cost of slow energy transitions for emerging countries: On the case of Egypt's pathway options," Renewable Energy, Elsevier, vol. 210(C), pages 107-126.
    8. Florian Egli & Flurina Schneider & Alycia Leonard & Claire Halloran & Nicolas Salmon & Tobias Schmidt & Stephanie Hirmer, 2025. "Mapping the cost competitiveness of African green hydrogen imports to Europe," Nature Energy, Nature, vol. 10(6), pages 750-761, June.
    9. Tian, Xiaoxi & Kang, Jia-Ning & Dai, Min & Li, Xiaoyu & Ji, Yi-Zhuo & Liu, Lan-Cui & Wei, Yi-Ming, 2025. "Unleashing tomorrow's potential: A comprehensive exploration of risks in carbon capture and storage," Renewable and Sustainable Energy Reviews, Elsevier, vol. 210(C).
    10. Eugeniusz Mokrzycki & Lidia Gawlik, 2024. "The Development of a Green Hydrogen Economy: Review," Energies, MDPI, vol. 17(13), pages 1-29, June.
    11. Uchendu Eugene Chigbu & Chigozie Nweke-Eze, 2023. "Green Hydrogen Production and Its Land Tenure Consequences in Africa: An Interpretive Review," Land, MDPI, vol. 12(9), pages 1-20, September.
    12. Sadik-Zada, Elkhan Richard & Gatto, Andrea & Schäfer, Nils, 2025. "African green hydrogen uptake from the lens of African development and European energy security: A blessing or curse?," Technological Forecasting and Social Change, Elsevier, vol. 215(C).
    13. C. Winkler & H. Heinrichs & S. Ishmam & B. Bayat & A. Lahnaoui & S. Agbo & E. U. Pe~na Sanchez & D. Franzmann & N. Oijeabou & C. Koerner & Y. Michael & B. Oloruntoba & C. Montzka & H. Vereecken & H. H, 2024. "Participatory Mapping of Local Green Hydrogen Cost-Potentials in Sub-Saharan Africa," Papers 2408.10184, arXiv.org.
    14. Donnelly, David & Fricaudet, Marie & Ameli, Nadia, 2023. "“Accelerating institutional funding of low-carbon investment: The potential for an investment emissions intensity tax”," Ecological Economics, Elsevier, vol. 207(C).
    15. Skare, Marinko & Gavurova, Beata & Sinkovic, Dean, 2023. "Regional aspects of financial development and renewable energy: A cross-sectional study in 214 countries," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1142-1157.
    16. Jorge M. Uribe, 2023. ""Fiscal crises and climate change"," IREA Working Papers 202303, University of Barcelona, Research Institute of Applied Economics, revised Feb 2023.
    17. Oei, Pao-Yu & Burandt, Thorsten & Hainsch, Karlo & Löffler, Konstantin & Kemfert, Claudia, 2020. "Lessons from Modeling 100% Renewable Scenarios Using GENeSYS-MOD," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 9(1), pages 103-120.
    18. Kim, Hyeonjun & Song, Gayoung & Ha, Yoonhee, 2025. "Green hydrogen export potential in each Southeast Asian country based on exportable volumes and levelized cost of hydrogen," Applied Energy, Elsevier, vol. 383(C).
    19. Polzin, Friedemann & Sanders, Mark & Serebriakova, Alexandra, 2021. "Finance in global transition scenarios: Mapping investments by technology into finance needs by source," Energy Economics, Elsevier, vol. 99(C).
    20. Rezaei, Mostafa & Akimov, Alexandr & Gray, Evan MacA., 2024. "Techno-economics of renewable hydrogen export: A case study for Australia-Japan," Applied Energy, Elsevier, vol. 374(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2503.16009. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.