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

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.