Designing effective hydrogen Markets: Policy recommendations from electricity and gas market reform

For low-carbon hydrogen to become a viable decarbonization solution, the creation of a robust and effective market is essential. This paper examines the applicability of market reforms from the renewable energy, natural gas, and liquefied natural gas (LNG) sectors, with a focus on pricing mechanisms, business models, and infrastructure access, to facilitate hydrogen market development. Applying the Structure-Conduct-Performance-Regulation (SCP-R) framework and informed by stakeholder insights, we identify critical enablers for advancing the hydrogen market formation. Our analysis highlights the importance of innovative pricing strategies and regulatory measures incentivizing investment and managing risks. Establishing a market reference price for low-carbon hydrogen — akin to benchmarks in the natural gas and LNG sectors—is critical for ensuring transparency, predictability, and regional adaptability in trade. Additionally, customized business models are also needed to mitigate volume risks for producers. Government interventions, such as offtake agreements and the development of hydrogen hubs, are indispensable for fostering competition and driving decarbonization. • Identifies early policy levers via cross-sector lessons and stakeholder input. • Compares fixed, hybrid, index models for adaptability in hydrogen pricing. • Early-stage hydrogen investors benefit from CfDs, take-or-pay structures. • Regulated or negotiated access helps unlock early hydrogen infrastructure use. • Highlights need for tailored rules from EU, China, India regulatory policy review.