By Sheldeen Joy Talavera, Reporter

Green hydrogen could strengthen the Philippines' energy security over the medium to long term, but high costs continue to pose a major obstacle to its development, according to analysts. The stakes are significant for a country that remains heavily dependent on imported coal, oil, and gas for much of its energy supply, leaving it exposed to global price swings and supply disruptions.

"Based on recent developments on the policy and investment framework in the Philippines, green hydrogen at this point can be viewed as a medium- to long-term strategic option," Adoracion M. Navarro, a senior research fellow at the Philippine Institute for Development Studies, told BusinessWorld.

According to Ms. Navarro, the technology could support long-duration energy storage, produce clean fuels, balance renewable power supply across seasons, and reduce emissions from industries. She cautioned, however, that high costs and the need to build substantial infrastructure stand in the way of large-scale deployment.

"Technological cost reductions still need to happen, and supporting infrastructure needs to be developed to enable large-scale deployment," she said.

Globally, producing hydrogen from renewable electricity through electrolysis remains considerably more expensive than producing it from fossil fuels, which is one reason most hydrogen consumed worldwide today is still derived from natural gas and other conventional feedstocks — a cost gap that underpins the analysts' caution.

Beyond energy applications, green hydrogen could also serve sectors that are difficult to electrify, including fertilizer production, shipping, and industrial heat, according to Joey D. Ocon, co-convenor of think tank Center for Energy Research and Policy.

Mr. Ocon noted that hydrogen remains a costly option across most use cases in the Philippines and should therefore be concentrated on applications where direct electrification is difficult.

"Hydrogen should be used where direct electrification is difficult (quite limited given the country's lack of industrial capacity), not where batteries, pumped storage, and renewable electricity can already do the job more efficiently," he said in an interview.

Jun Hao Ng, assistant economist for Asia Macro at Oxford Economics, said battery energy storage and smart grids have immediate roles to play in stabilizing the grid, while hydrogen adoption may have to wait until the country's physical infrastructure is mature enough to support it.

"Green hydrogen is likely to play a longer-term role, given the higher costs and infrastructure requirements involved," he said.

The Department of Energy (DoE) recently updated its framework for hydrogen in the energy sector, positioning hydrogen utilization as a key measure toward decarbonization. The guidelines also formally integrated hydrogen into the nation's climate and security planning.

"In recognition of its role in the energy transition, the manufacture of hydrogen and hydrogen derivatives from RE (renewable energy) resources or dedicated RE facilities (green hydrogen and green hydrogen derivatives) shall be preferred," the DoE said.

While green hydrogen requires renewable electricity and water for its production, naturally occurring hydrogen can be extracted directly from underground geological formations. The Philippines is exploring both types of hydrogen as potential sources of lower-carbon energy, while also working to reduce its dependence on imported fuels and develop indigenous resources.

The government has so far awarded three hydrogen service contracts, all of them to US-based Koloma, Inc., allowing the company to explore for naturally occurring hydrogen in Central Luzon. Koloma has begun a 2D seismic survey to map the subsurface and identify prospective areas for exploration of potential native hydrogen resources in Pangasinan.

According to the DoE, geological studies have identified the Philippines as among the world's most promising areas for naturally occurring hydrogen. Exploration is still at an early stage, and whether commercial production can begin will depend on the results of surveys such as Koloma's.

"We are very hopeful that things will proceed as planned, and we hope that we will be lucky enough and be the first country in the world to produce from contract naturally occurring hydrogen," Energy Undersecretary Alessandro O. Sales said.