Hydrogen is experiencing an unprecedented political momentum in Europe. As part of the EU comprehensive ambition to achieve Climate Neutrality by 2050, the number of initiatives promoting renewable based hydrogen are increasing. The recently published Hydrogen Strategy outlines a blueprint for the deployment of a hydrogen economy in Europe and highlights Europe’s conviction that it is a key energy player for the future.
WHY HYDROGEN? WHY NOW?
Despite the advances in green electricity production, there are still many challenges to be overcome to enable Europe to become climate neutral in the upcoming decades, and hydrogen technologies are expected to contribute to providing viable solutions to several of the critical issues. As hydrogen storage can be long term and with minimal loss, it can add to flexibility in the energy system and help to solve the problem of structural imbalances in electricity grids resulting from the intermittent provision from renewable sources such as wind and solar.
Additionally, as H2 can generate about 39.4 kWh/kg when combusted – approximately three times more than from fossil fuels – with the advantage of releasing only water in the combustion process, it will reduce greenhouse gas emissions in a wide range of sectors especially in those finding it difficult to cut emissions. These include the energy intensive industries such as in steel, cement and chemical production, as well as in heavy-duty transport, shipping and aviation.
Currently about 120 million tonnes of hydrogen are produced per year, of which 95% derives from fossil fuels, with greenhouse emissions as an output. Despite the fact that there is expressive clean hydrogen production – achieved through carbon capture and storage (CCS) (blue H2) technologies or a renewable-based production (green H2) – technology to produce hydrogen with no further greenhouse gas emissions is available. Water electrolysis presently appears to be the most promising here to produce high purity green hydrogen.
Even if the technology already exists, producing clean hydrogen competitively is still a major challenge. Fossil-based hydrogen at around €1.5 /kg in EU, highly dependent on natural gas prices, renewable-based hydrogen ranging from €2.5 – € 5.5/kg and the electrolyser capital expenditure, the levelised cost of electricity (LCOE) and the number of operating hours (load factor) are the main price drivers.
THE HYDROGEN STRATEGY
Despite the growing investments in the field, hydrogen must be scaled up to meet its potential, and to achieve this, the European Commission has set a gradual trajectory.
From 2020 to 2024, the Commission’s objective is to install at least 6 GW of renewable hydrogen electrolysers in the EU and produce up to 1 million tonnes of renewable hydrogen. At this phase, the focus would be on scaling-up the manufacture of electrolysers, the development of hydrogen fueling stations and drawing up a regulatory framework. The European Clean Hydrogen Alliance, announced in the Commission’s New Industrial Strategy, should help in building up a robust pipeline of investments.
From 2025 to 2030, the target is to install at least 40 Gw of renewable hydrogen electrolysers and to achieve the production of up to 10 million tonnes of renewable hydrogen in the EU, so that hydrogen will become an intrinsic part of Europe’s integrated energy system. Renewable hydrogen is expected to gradually become cost-competitive.
From 2030 to 2050, the aim is for renewable hydrogen technologies to reach maturity and be deployed on a large scale across all hard-to-decarbonise sectors.
However, the deployment of a hydrogen economy requires a strong coordination across the value chain. Hence, the Hydrogen Strategy approach is to deal with the production of hydrogen from renewable sources to the creation of market demand, passing through the development of infrastructure to supply hydrogen to the end-consumers and the creation of a regulatory framework and standards. Despite the European Commission aiming for renewable-based hydrogen produced though water electrolysis, it also foresees the production of low-carbon hydrogen based on fossil fuels with carbon capture in a transition period.
The strategy also involves an international perspective promoting cooperation with Southern and Eastern Neighbourhood partners and with the African Union under the Africa-Europe Green Energy Initiative. Cooperation between the EU and the Ukraine and the North African countries had already been foreseen in the 2X40 GW Green Hydrogen Initiative of Hydrogen Europe, which estimated that a 40 GW electrolyser capacity for Europe in 2030 would produce 4.4 million tonnes of green hydrogen, 25% of the total EU hydrogen market forecasted for that year. This would create exporting opportunities for the MENA countries, which have abundant renewable energy resources and a low levelised cost of energy, being, therefore, capable of producing low-cost hydrogen.
Consequently, clean hydrogen is a promising alternative for energy storage and the decarbonisation of heavy-duty transport and energy intensive industries, and developing countries are expected to play a key role. Hydrogen can enable renewables to provide an even greater contribution to the energy transition, stimulating innovation, employment and growth, key factors in COVID-19 recovery, and, as well, create opportunities for developing countries.
