Abstract

This article examines whether the risk mitigation tools developed for cross-border natural gas projects can be applied to hydrogen energy investments. Both sectors depend on pipeline transport, and it is from this shared dependence that their principal risks arise: security risks, economic risks, and the price and volume risks that follow from the latter. On this basis, the article argues that hydrogen need not build its risk management framework from scratch. Security risks stem from third-party access and the security of supply, yet both remain governable through the regulatory structures already established for natural gas, once these are adapted to hydrogen's dependence on intermittent renewables. Economic risks require a different response. Their mitigation is centered on tools that carry the burden that the market alone cannot, namely project finance and special purpose vehicles. The same commercial pressures surface again in price and volume risks, which the natural gas trade has long managed through a familiar contractual pairing: take-or-pay clauses place the volume risk on the buyer, while price-review clauses restore the balance by realigning the contract price with prevailing market conditions at set intervals. What emerges across all three categories is a single conclusion. The natural gas experience offers a sound and well-tested foundation on which hydrogen investments can draw, rather than a framework that must be reinvented.

This paper will be part of the OGEL Special Issue on "Clean Energy Projects and Risk Mitigation". More information here www.ogel.org/news.asp?key=841