Developing an ambitious European hydrogen strategy

Hydrogen is a multifaceted tool and energy carrier, recognized by many countries as a valuable technology to de-carbonize their economies, in particular in hard to abate sectors such as heavy industry and transport.

In Chile, there is great potential for hydrogen development, supported by the country’s ambition to produce the world’s cheapest green hydrogen by 2030 and to become a leading global net exporter. The AES Corporation in Chile is working with an international hydrogen producer on a novel large green hydrogen-based ammonia project, which will produce 800 MW of new renewable energy.  This amount of renewable energy capacity, in terms of solar energy production, is sufficient to cover the electricity supply of 340.000 Bulgarian households. Another country that has set its sight on developing an ambitious hydrogen market is Brazil, where the AES Corporation signed a Memorandum of Understanding with the Government of the state of Ceará to build a green hydrogen plant and to participate in the development and implementation of an ammonia storage pool in Pecem, the industrial and port complex of the region.[1] In the EU, the European Commission most recently approved at the end of 2021 a €900 million German project to support investments and the development of green hydrogen in non-EU countries with the objective of importing and selling the additional hydrogen capacity in the EU.[2]

The latest figures from BloombergNEF’s Global Hydrogen Tracker show that as of June 16, 2022 a total of 31 countries developed a hydrogen strategy and 18 additional countries are in the course of developing one. The International Energy Agency also lists 37 countries that have signed Memorandums of Understanding on the development of hydrogen, in particular green hydrogen.[3]

In the European Union, the European Commission committed to hydrogen as one of the alternative technologies for its member countries to adopt and has, in the last two years, headed several initiatives for the technology’s uptake at a large scale. In July 2020, the European Commission released its Hydrogen Strategy [4], a key element of the EU’s industrial strategy. The 2020 Hydrogen Strategy seeks to establish a European hydrogen ecosystem to increase research and innovation and scale up the production of hydrogen and the necessary infrastructure. Alongside the 2020 strategy, the European Clean Hydrogen Alliance was unveiled. The Alliance brings together the relevant stakeholders in order to speed up the deployment of hydrogen technologies by 2030.

In May 2022 the European Commission unveiled the REPowerEU Plan[5] to accelerate the green transition as Europe intends to abandon fossil fuels and become less dependent on foreign energy supplies. One of the key objectives of the Plan is to develop a hydrogen market for Europe. The Plan puts forward the concept of a “Hydrogen Accelerator” which looks to put into effect the 2020 Hydrogen Strategy and seeks to increase the EU’s ambitions in the field of renewable hydrogen by producing 10 million tonnes of renewable hydrogen and importing another 10 million tonnes by 2030 through hydrogen partnerships with partner countries. These hydrogen partnerships are a key element of the EU’s external engagement energy strategy, as part of the REPowerEU Plan.

Producing green hydrogen from renewable electricity is achievable today, however the companies that make the specialized equipment need to achieve greater scale and innovation to bring the cost down. Meanwhile the high cost of converting transport vehicles and industry to use hydrogen as a fuel acts as a brake on demand. Consequently the political ambition to promote the scaling of green hydrogen supply and demand must be matched with the necessary funding to accelerate the transition

At national levels, the Recovery and Resilience[6] plans put forward by EU Member States also include heightened hydrogen ambitions and funding for their development. In Bulgaria’s case, the National Recovery and Resilience Plan[7] (BRRP) will support the development of pilot projects for the scaling of green hydrogen and biogas for industrial applications, and help develop the transport sector and the production of electricity and heat. The BRRP foresees a total envelope of EUR 35 million to be allocated to the development of these projects, which will be implemented between 2022 and 2026 and yield 55MW of green hydrogen. The plan also seeks to reduce the bureaucracy around investments in hydrogen projects and includes a reform to promote the production and supply of hydrogen.

The state energy company Bulgartransgaz announced that Bulgaria and Greece are working to develop a hydrogen pipeline between the two countries. [8] They aim to achieve a minimum of 5% connectivity of hydrogen networks between Bulgaria and Greece by 2025; the long-term goal is to achieve 10% to 15% connectivity. By utilizing existing and developing future networks, such hydrogen partnerships can boost national and regional energy security. Greece and Bulgaria view hydrogen as a supplement to natural gas, expanding their countries’ energy sources.

EU funding is available for a wide range of hydrogen projects across different sectors. The Hydrogen Public Funding Compass[9] outlines how stakeholders can access the necessary funds to finance renewable or low-carbon hydrogen activities. Furthermore, the European Investment Bank (EIB) committed over EUR 550 million towards hydrogen technologies in the last decade and mobilized EUR 1.2 billion in additional investments.[10] The EIB continues to support hydrogen and other energy carriers due to their potential to drive decarbonization of the EU economy.

The EU’s Important Projects of Common European Interest (IPCEI) aim to promote innovation in sectors of strategic importance to the EU and seek to address existing gaps in the supply chain. On 16 June 2022, Thierry Breton, Commissioner for the Internal Market, announced the first IPCEI on hydrogen; at the same time, he stated a second IPCEI would be unveiled in September 2022.[11] For the first IPCEI, the Commission will have six weeks to review under state aid rules 41 projects looking to invest in the development of electrolysers, fuel cell production, the secure storage of hydrogen, and heavy-duty vehicles and the technologies which power them. The second IPCEI will equally encompass around 40 projects looking to speed up the development of hydrogen technologies. Combined, the two IPCEIs will aim to deliver a major push to hydrogen innovation in Europe.

Overall, hydrogen presents major potential to help the EU achieve its decarbonization goals. However, the financial cost of unlocking this technology’s potential remains an important obstacle for industry and policymakers alike. The measures taken so far and discussed above are encouraging signals that through the mobilization of substantial resources and increased innovation, Europe will be able to scale up development and commercialization of hydrogen technology, making it a competitive and a powerful weapon to climate change.

 

[1] https://renewablesnow.com/news/aes-brasil-signs-mou-for-green-h2-project-at-cearas-pecem-port-765392/

[2] https://ec.europa.eu/commission/presscorner/detail/en/ip_21_7022

[3] https://www.iea.org/policies?q=hydrogen&jurisdiction=International

[4] https://energy.ec.europa.eu/topics/energy-system-integration/hydrogen_en

[5] https://ec.europa.eu/commission/presscorner/detail/en/IP_22_3131

[6] https://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en

[7] https://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility/recovery-and-resilience-plan-bulgaria_en

[8] https://www.euractiv.com/section/energy-environment/news/bulgaria-greece-to-build-hydrogen-pipeline/?utm_source=piano&utm_medium=email&utm_campaign=22133&pnespid=quhlB3xVNPwfx_ectybkTYLSvRmsVZpvd_XinbdqtAxmkS24hEFL6CIUeYqCZT75_DvZCmkVsg

[9] https://ec.europa.eu/growth/industry/strategy/hydrogen/funding-guide/eu-programmes-funds_en

[10] https://www.eib.org/en/press/news/eib-looking-to-invest-in-hydrogen-projects#:~:text=Over%20the%20past%20eight%20years,1%20billion%20in%20potential%20investment.

[11] https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_22_3785