Building a Hydrogen Economy: Does France have the Industrial Capacity for a Low-carbon Transition?

The energy transition towards low-carbon hydrogen (H2) in France is expected to require deep industrial planning to develop electrolysis and H2 production infrastructure. This study employs an input–output method to simulate a new sector of electrolysis-produced hydrogen (e-H2) that supplies two-hydrogen intensive sectors, petroleum refining and ammonia. We construct two input–output models, a demand-driven model for e-H2 sector development (the investment phase) and a mixed model for e-H2 production (the operation phase). The results demonstrate that the e-H2 sector depends on industries such as machinery, electrical equipment, construction and metal products manufacturing in the investment phase, with strong backward linkages to the power sector in the exploitation phase. The results reveal that the energy shock (350 kt of e-H2 per year) generates significant growth (€1.3 Bn of gross domestic product) and jobs (3600), but strongly depends on industries’ capability to expand and recruit. Recommendations advise public policy development to address the need to reinforce key industries to support e-H2 production due to inter-industry dependence and the need for more attractive skilled and technician jobs in sectors that are already experiencing recruitment tensions. At much higher e-H2 shocks in the steel sector (700 kt e-H2) and other industries (415 kt e-H2), even greater amounts of domestic resources would be required. Therefore, de-carbonising the entire H2 sector require ambitious policy planning to support industrial empowerment, research programmes and labour training so that H2 becomes an enabling technology of the energy transition.