Potential market failures inhibiting the development of a green hydrogen export industry

This chapter provides an overview of market failures that could inhibit the efficient development of a green hydrogen fuel export industry. Market failures are defined by the situation where a free market is unable to distribute goods and services efficiently in absence of intervention by governments and regulators. For a green hydrogen export industry, market failures could arise due to externalities, asymmetric information, credit constraints, underinvestment in knowledge from research and development as a public good, coordination failures, network externalities, and hold-up problems. This chapter describes the potential for each of these market failures in the context of emerging hydrogen technologies and markets, and discusses emerging and best-practice green industrial policies to address these market failures.