Green finance and the economic feasibility of hydrogen projects

Farhad Taghizadeh-Hesary*, Yanfei Li, Ehsan Rasoulinezhad, Aline Mortha, Yan Long, Yu Lan, Zhehao Zhang, Nan Li, Xunwen Zhao, Yao Wang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This paper studies the economic and financial feasibility analysis of hydrogen energy projects in China to identify appropriate green financing solutions for them. Cost-benefit and sensitivity analysis approaches were carried out for the three hydrogen projects in Guangdong province (two cases) and Jiang Xi province (one case). The hydrogen projects are more sensitive to borrowing interest rates and income tax rates, amongst other financing costs. The main reasons are the capital-intensive nature of green energy projects and the role of tax in the rate of return of green projects in the long term. The optimal weight of bank loans for the studied hydrogen projects in China was calculated at nearly 56%, meaning the weight of green bonds is approximately 44%. In other words, diversifying financing channels instead of just relying on bank loans is recommended to reduce the financing risk and capital cost. As a major policy implication, we recommended various de-risking tools, such as the green credit guarantee corporation, to attract private investments in hydrogen projects.

Original languageEnglish
JournalInternational Journal of Hydrogen Energy
DOIs
Publication statusAccepted/In press - 2022

Keywords

  • Economic feasibility
  • Green finance
  • Hydrogen project
  • Sensitivity analysis
  • de-risking tools

ASJC Scopus subject areas

  • Renewable Energy, Sustainability and the Environment
  • Fuel Technology
  • Condensed Matter Physics
  • Energy Engineering and Power Technology

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