The European Commission unveiled on Wednesday 8 July its strategy to make clean hydrogen a viable solution to decarbonise different energy sectors over time and thus contribute to the objectives of the European Green Deal, with the ambition that it will enable the European Union to play a global pioneering role in this field.
“The new hydrogen economy can be a growth engine. In developing and deploying a clean hydrogen value chain, Europe will become a global frontrunner and retain its leadership in clean tech”, said Commission Executive Vice-President Frans Timmermans, responsible for the Green Deal.
Blue hydrogen to stimulate green hydrogen.
As stated in the draft strategy released by the press and detailed in our articles (see EUROPE 12511/11 ; 12496/15), “renewable hydrogen will receive premium support”, the Vice-President also stressed.
However, the strategy foresees that in the short to medium term, other forms of low-carbon hydrogen, including fossil hydrogen with carbon capture, will be needed to rapidly decarbonise existing hydrogen production - which is almost exclusively (more than 96%) derived from fossil fuels - and to support the parallel and future adoption of renewable hydrogen.
Indeed, the Commission estimates that CO2 emissions from current hydrogen production - amounting to 9.8 million tonnes - need to be addressed as soon as possible, in particular through CO2 capture, utilisation and storage (CCUS) technologies that will allow up to 90% of the CO2 emissions from the production process to be treated.
Asked about the time frame envisaged for converting the current ‘grey’ hydrogen (hydrogen produced from fossil sources without carbon capture) into low-carbon hydrogen, often referred to as ‘blue hydrogen’, a Commission source estimated that this replacement was feasible within the next ten years.
Another high-level Commission source also indicated that the carbon capture projects available in the EU are unlikely to be implemented before 2024 or 2025, hence the need to develop renewable hydrogen in parallel.
Concerning the envisaged duration of the transition period to 100% renewable hydrogen and the risk of lock-in to blue hydrogen, the same sources stated that low-carbon hydrogen will be replaced over time by renewable hydrogen, without giving a precise deadline.
While acknowledging that CCUS technologies have a life cycle of around 25 years, they said they are not concerned about a lock-in, as their forecasts show that renewable hydrogen is expected to become competitive from 2030 onwards and can then replace low-carbon hydrogen.
6 GW by 2024 and 40 GW by 2030.
While the strategy is broadly similar to its draft version (see EUROPE 12511/11), with three phases consisting of different time frames (2020-2024, 2025-2030 and 2030-2050), some changes are nevertheless to be noted.
Thus, the strategic objective in the first phase is no longer to install at least 4 GW of renewable hydrogen electrolysers in the EU, but at least 6 GW, which is six times more than the current EU capacity.
The target for 2030, on the other hand, remains 40 GW, while the target for 2050 is that hydrogen should account for 14% of the EU’s energy mix.
In addition, the Commission appears to have increased the investment needs.
By 2030, it now estimates them at: (1) between 24 and 42 billion euros in electrolysers ; (2) between 220 and 340 billion euros to increase solar and wind power generation capacity from 80 to 120 GW and connect it directly to electrolysers ; (3) around 11 billion euros to equip half of the existing plants with carbon capture and storage systems ; (4) 65 billion euros for hydrogen transport, distribution and storage, as well as for hydrogen filling stations.
In addition, there are the costs of adapting end-use sectors to hydrogen consumption and hydrogen-based fuels (e.g. it takes about 160-200 million euros to convert an end-of-life steel plant to hydrogen).
Another difference is that the definition of renewable hydrogen has been broadened. It now refers not only to hydrogen produced by the electrolysis of water using electricity from renewables, but also to hydrogen produced by reforming of biogas or biochemical conversion of biomass, provided that it meets sustainability requirements.
Key Measures
In order to create sufficient demand for clean hydrogen, the Commission will in particular develop a pilot programme of Carbon Contracts for Difference to facilitate the use of clean hydrogen in the production of steel and chemicals.
As planned, the Commission will also work on the creation of common standards, certifications and terminology, as well as the establishment of quotas for specific sectors (see EUROPE 12511/11).
The institution will also explore the possibility of direct market-based support programs for renewable hydrogen.
In order to support the development of clean hydrogen, the Commission counts in particular on the Clean Hydrogen Alliance, officially launched a few hours after the presentation of the strategy.
The European Clean Hydrogen Alliance
Inspired by the European Battery Alliance, this initiative is a collaboration between public authorities, industry and civil society regarding hydrogen.
It “will channel investments into hydrogen production [and] it will develop a pipeline of concrete projects to support the decarbonisation efforts of European energy intensive industries such as steel and chemicals”, said Commissioner for the Internal Market Thierry Breton.
Asked about the leading role of industry in the Alliance compared to that of civil society (see EUROPE 12521/5), Mr Timmermans considered that industry will play a key role in stimulating the use of renewable hydrogen.
“We want to have input from both sides, NGOs and industry, to create a balance”, he then added.
See the hydrogen strategy: https://bit.ly/2O82YSt (Original version in French by Damien Genicot)