Summary

PSI researchers have conducted a comprehensive study comparing the production costs of 21 technologies for manufacturing climate-friendly fuels worldwide. The analysis shows: there is no global winner – instead, location-specific factors such as resource availability and financing conditions determine economic viability. Green hydrogen becomes competitive in countries with abundant renewable resources, while blue and turquoise hydrogen are currently more cost-effective in gas-rich regions. A European pipeline infrastructure could significantly improve the economic viability of domestic production.

People

Topics

  • Climate-friendly fuels
  • Energy system analysis
  • Hydrogen production
  • Regional economic viability
  • Decarbonization

Clarus Lead

A new study by the Paul Scherrer Institute PSI shows that the competitiveness of climate-friendly fuels is largely dependent on geographic and economic location factors. For decision-makers, this means: investments in production facilities must be differentiated regionally – there is no universal solution. The researchers systematically analyze 21 technologies across countries and time periods for the first time, thus providing a basis for targeted support strategies through 2050.

Detailed Summary

Under the leadership of Zipeng Liu, the PSI Laboratory for Energy System Analysis compared the lifecycle costs of various production pathways for climate-friendly fuels. The analysis took into account investment costs, operating costs, country-specific labor costs, and especially capital costs – which depend on both country risk and technological maturity. The central finding: geographic factors play a decisive role.

The study documents regional specializations: blue hydrogen (from natural gas with CO₂ capture) and turquoise hydrogen (via methane pyrolysis) are currently economically attractive in gas-rich regions such as the USA, the Middle East, and Central Asia. Green hydrogen from renewable electricity will become increasingly competitive by 2050 in countries with high potential – Canada, Spain, Australia. Biofuels benefit from sufficient available sustainable biomass. However, Liu emphasizes that within large countries such as China or the USA, significant regional differences exist that require more detailed analysis.

For Europe, the analysis shows great potential: a European pipeline system would significantly improve the economic viability of fuels from Spain (high solar resources) or the North Sea region (wind energy). North Africa could also be connected via pipeline, thus gaining cost advantages over more distant producers such as Australia or Chile. The study was conducted as part of the research projects "SHELTERED" and the reFuel.ch consortium, both funded by the Federal Office of Energy.

Key Messages

  • No universal technology: Economic viability depends on local resources, energy prices, and financing conditions
  • Regional specialization: Gas-rich countries benefit in the short term from blue/turquoise hydrogen; countries with renewable resources benefit from green hydrogen
  • Infrastructure is decisive: European pipeline infrastructure could significantly strengthen the competitiveness of domestic production
  • Long-term trends: Green hydrogen is becoming increasingly cost-effective due to falling renewable energy costs
  • Political relevance: Decision-makers must consider local conditions when making investment decisions

Critical Questions

  1. Data quality and scenarios: On what assumptions are the capital costs for different countries based, and how sensitive are the results to changes in these parameters?

  2. Technological maturity: The study accounts for different maturity levels – how realistic are the cost projections for 2050 when technologies are still in early development phases?

  3. Excluded factors: Market dynamics, tariffs, and detailed environmental impacts were not examined – how much could these change the economic viability rankings?

  4. Transport costs and infrastructure: The pipeline scenarios for Europe are hypothetical – what investment costs and implementation risks are associated with building this infrastructure?

  5. Financing conditions: How are different funding programs and political support measures accounted for in the analysis, which can significantly reduce capital costs?

  6. Regional granularity: National averages obscure local differences – how reliable are the recommendations for countries with large internal variability?

Source Directory

Primary source: Global cost drivers and regional trade-offs for low-carbon fuels: a prospective techno-economic assessment – Paul Scherrer Institute PSI, March 9, 2026

Original publication: Zipeng Liu et al.: Energy and Environmental Science, DOI: 10.1039/D5EE05591A (published March 6, 2026)

Verification status: ✓ March 9, 2026

This text was created with the support of an AI model. Editorial responsibility: clarus.news | Fact-checking: March 9, 2026