As part of its comprehensive plan to move the European Union away from dependence on Russian fossil fuels (‘REPowerEU’), on Wednesday 18 May the European Commission presented a communication aiming to redefine the EU’s external energy policy, giving hydrogen a prominent place in the new strategy.
More than 10 years after the adoption of the EU’s previous external energy strategy, the Commission believes that an update is needed to take account of global developments, in particular the Russian invasion of Ukraine.
“Climate change, geopolitical shifts, technological developments and increased global energy demand create a challenging and fast-changing environment that require our energy systems and relations to adapt”, the communication says.
In order to move away from Russian gas, the EU wants to diversify its gas and liquefied natural gas (LNG) supplies by negotiating political commitments with existing or new suppliers such as Algeria, Azerbaijan, Egypt and Israel (the Commission wants to conclude a trilateral agreement with these last two countries before the summer to supply the EU with LNG).
The aim is to find gas alternatives for the share of Russian supplies that could not be replaced by renewables, low-carbon energy sources, energy efficiency and energy saving.
The Commission estimates its needs for non-Russian gas supplies at around 10 bcm for pipeline gas and 50 bcm for LNG (see EUROPE 12956/2).
While this diversification and the changes in the world not linked to the war in Ukraine represent challenges, they also bring “new opportunities for producing energy”, especially with hydrogen. This is an area which the Commission believes will become a key issue in international relations: “While trade in conventional energy commodities will gradually decline, new commodities such as hydrogen and ammonia will begin to be traded internationally and demand for low emission technologies will grow”.
As part of its efforts to diversify the EU’s gas supply, the Commission therefore wants to encourage energy partnerships “combining gas cooperation with long-term energy cooperation on hydrogen, renewable gases (including biomethane) and other green energy sources to avoid stranded assets and ensure the green transition”.
The communication also includes an entire section on “preparing the EU for renewable hydrogen trade”.
The stated objective is ambitious: to import around 10 million tonnes of renewable hydrogen by 2030 in order to reach 20 million tonnes of renewable hydrogen at EU level (10 million tonnes imported + 10 million tonnes from domestic production), which represents 15 million tonnes more than what was planned in the ’Fit for 55’ legislative package (5.6 million tonnes)
In order to achieve this objective, the Commission’s plans include: - establishing three major import corridors from the North Sea region (Norway and the UK), the southern Mediterranean and Ukraine; - developing a Mediterranean Green Hydrogen Partnership between the EU and southern Mediterranean countries as a first step towards broader cooperation on renewable hydrogen between Europe, Africa and the Gulf; - signing a Memorandum of Cooperation on Hydrogen with Japan by the end of 2022; - developing a Global European Hydrogen Facility to boost the global renewable hydrogen market.
An unrealistic objective?
These hydrogen ambitions are nevertheless subject to criticism.
In a report published in collaboration with the think tank Transnational Institute (tni), the NGO Corporate Europe Observatory (CEO) denounces an “unrealistic” objective in terms of cost and energy that “will damage North Africa” by diverting renewable electricity from local needs and climate objectives.
The report, which focuses on Algeria, Morocco and Egypt, estimates that production costs will make renewable hydrogen up to 11 times more expensive than natural gas, even before transportation costs are taken into account.
CEO therefore calls on the Commission to review its hydrogen import targets and to focus more on increasing investment in energy efficiency and renewable energy.
Agreeing with the NGO on the latter point, Maria Pastukhova, a policy advisor at the think tank E3G, lamented the focus on “securing new gas and oil supplies” and the lack of “new instruments to forge strategic partnerships on clean energy and supply chains”.
See the communication: https://aeur.eu/f/1r7
See the CEO and tni report: https://aeur.eu/f/1rb (Original version in French by Damien Genicot)