Hydrogen offers opportunities to develop a sustainable energy system and is essential to support the EU’s commitment to reaching carbon neutrality by 2050. Hydrogen is a solution for heavy transport sectors that struggle to reduce emissions by direct electrification, such as the Dutch inland waterway transport (IWT) sector. However, the lack of economic viability is one of the most dominant challenges for hydrogen, which calls for a tailored and sectoral policy approach that considers the dynamics involved in the IWT sector. This study simulates the decision-making process of active ships in the Netherlands based on the economic trade-off between diesel- and hydrogenpowered drivetrains to identify policy measures that would catalyze the sector’s hydrogen transition.

In the simulated base scenario, NOx, PM, and CO2 emission targets are not met. Economic policies must contribute to the realization of these emission targets. Here, quantity-based economic instruments are preferred over price-based economic. Quantity-based economic instruments ensure that emission targets are realized virtually, while the effect of price-based economic instruments is subject to uncertainties related to cost developments, for instance. The introduction of a Renewable Energy (HBE) obligation and the inclusion of the IWT sector in the Emission Trading Scheme (ETS) are effective quantity-based economic instruments. When implementing both these instruments, policymakers must prevent double burdening of the IWT sector.

When introducing an HBE obligation, obligation levels must be set in accordance with the emission goals and a multiplier for hydrogen is recommended to create a level playing field with other renewable fuels. To include the IWT sector in the ETS, the minimum tonnage condition for ships must be removed. In addition to these policies, subsidies must be provided on the large capital investments for hydrogen to compensate for the higher marginal abatement cost in the IWT sector and create a level playing field with other transport modes, countries and fuels. Besides economic policies, the development of relevant regulation and bunkering infrastructure is a prerequisite for the hydrogen transition in the IWT sector.

This research mainly focused on a techno-economic trade-off between hydrogen- and diesel-powered drivetrains. Future research could focus on additional (qualitative) criteria in the decision-making process, such as upcoming legislation, safety, and (bunkering) infrastructure availability.