Given the current landscape of airports and the environment in which they operate, a number of future developments could impact hydrogen pathways at airports. 1. Subsidies could be relevant by reducing key financial barriers and encouraging broad industry participation.9 Policy levers such as direct financial support, tax incentives and grants can reduce early-stage barriers associated with clean hydrogen development and implementation. By reducing key early-stage barriers, subsidies increase the financial feasibility of hydrogen deployment by derisking company investment in hydrogen infrastructure, fuel production and the development of hydrogen- powered aircraft. Subsidies (e.g., US hydrogen hubs investments) can also derisk critical early-stage R&D by reducing upfront costs and guaranteeing returns. Subsidies, for example, can fund pilot projects, demonstration plants and technology incubators, accelerating the refinement and scaling of hydrogen technologies. Furthermore, policies that provide tax breaks, reduced land costs or financial incentives for building hydrogen production and refuelling facilities can stimulate investment and market competition. However, subsidies are typically timebound or designed to decrease as time progresses and technologies scale and develop. At these critical points, technologies must be able to stand on their own financially. Without continued support, technologies can stall if cost reductions and market demand have not reached sustainable levels. Further, institutional investors and private companies may hesitate to continue expanding hydrogen development and infrastructure if it becomes economically unviable without government subsidies and aid. 2. Regional airports could provide an environment to implement hydrogen technologies because of their relatively high short-range flight density, less complex infrastructure and smaller scale of operations. 10 Regional airports primarily serve shorter origin and destination routes, which are well-suited to the range and performance of emerging hydrogen aircraft models. Additionally, the smaller scale of operations at regional airports requires less significant investment in infrastructure changes needed to support hydrogen, such as hydrogen production, storage, and refuelling facilities. Regional airports can serve as early adopters and pilot grounds for hydrogen technology, regulation and standards, demonstrating its feasibility and unlocking pathways for broader adoption in the aviation industry. However, regional airports typically have fewer resources and less influence than larger hubs, making collaboration with airlines, energy providers and government agencies essential11. Partnerships with broader stakeholders can provide the technical expertise, financial investment and policy support to overcome key early challenges such as high initial costs and regulatory and safety compliance. By working together with industry stakeholders, regional airports can create a more robust and scalable hydrogen network, ensuring long-term success. 3. It may be difficult to adopt hydrogen solutions at large intercontinental hubs due to the complexity of their operations and infrastructure, unless they can leverage strong existing infrastructure. Implementing hydrogen in the near term at large-scale airports presents significant logistical and financial challenges, slowing the pace of development. However, in certain cases, intercontinental hubs may be more likely to have the enabling infrastructure in place due to their relatively larger footprint near significant locations (e.g., with strong industry concentration, port location). This could propel hydrogen development forward in the near term, as airports can capitalize on currently viable use cases High traffic volumes, high number of airlines and a wide range of operations require substantial modifications to accommodate hydrogen fuel. Developing a reliable hydrogen supply chain at such a scale may involve large investments in production, storage and distribution facilities, as well as extensive safety measures. Intercontinental hubs could face considerable pressure from stakeholders and customers to develop hydrogen infrastructure. Passengers and clients may prefer airlines and airports that demonstrate a strong commitment to reducing carbon emissions, putting pressure on large hubs to develop the required enabling environment for hydrogen deployment. Although long-haul flights are unable to be supported by novel propulsion in the short term, a growing sentiment for sustainable solutions could push major hubs to take initial steps towards building a hydrogen-supportive infrastructure sooner rather than later. 4. A strong net-zero policy and growing demand for hydrogen in non-aviation sectors can accelerate hydrogen adoption in the near term. 12 Strict carbon reduction targets and supportive regulation can create the enabling environment required for disruptive technologies to scale and commercialize (e.g., funding renewable hydrogen production methods, aligning regulations to promote cleaner alternatives). Growing demand for hydrogen in non-aviation sectors such as transport and power can drive rapid hydrogen development. As sectors such as trucking and power adopt hydrogen solutions more broadly, economies of scale can lower costs and promote infrastructure expansion in other sectors such as aviation. The shift of non-airport ground fleets to hydrogen also encourages the development of airport hydrogen infrastructure, making it easier to ultimately adopt hydrogen-powered aircraft. However, as hydrogen demand grows in other sectors, the aviation sector may need to be diligent to quantify and Ingredients for testing and scaling hydrogen

AoT Pathways for Airports to Develop into Energy Hubs April 2024