High interest rates risks low-carbon hydrogen build out, says Wood Mackenzie

High interest rates put low-carbon hydrogen, carbon capture utilisation, and storage (CCUS) and direct air capture (DAC) projects at risk, according to Wood Mackenzie.

The energy consultancy in its Conflicts of interest: the cost of investing in the energy transition in a high interest-rate era report warned the higher cost of borrowing negatively impacts renewables and nascent technologies more than established oil and gas, and metals and mining sectors.

In particular, Wood Mackenzie warned the lack of economic incentives to capture carbon and the lack of a hydrogen market are the “most significant obstacles to investment,” but said for the projects that do progress, higher rates of interest “hurt the economics.”

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