HYDROGEN POTENTIAL OF - IN EUROPE - The European Files
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E D I T O R I A L UNLOCKING THE FULL POTENTIAL OF HYDROGEN IN EUROPE H H ydrogen is a highly abundant com- accelerate the deployment of hydrogen-based calling on the Commission to further ponent of the universe and is cur- applications. Two other important challenges elaborate and operationalise the EU Hydrogen rently enjoying unparalleled mo- are to make clean hydrogen economically Strategy while the European Parliament is mentum in Europe and around the world. viable by lowering the costs of the electrolysis expected to adopt its position in Spring. This With its ambition to achieve climate neutrality process and developing hydrogen transport may lead to intense – but interesting none- by 2050, Europe needs to speed up its energy infrastructure. theless – political debates. transition and reduce by at least 55% its greenhouse gas emissions over the coming Europe is at a turning point to make the In this edition of the European Files, we decade. hydrogen economy a reality. With the pub- explore the potential for a hydrogen-powered lication of its Strategy for Hydrogen last future in Europe through the perspective of The transition towards a low-carbon summer, the EU laid out its vision to support policymakers and businesses. Their contri- economy is both an imperative challenge and the growth of clean hydrogen, outlined a butions analyse the existing economic and a great opportunity to build a better future number of key actions, and presented three political hurdles and recommend policy for our society. Clean hydrogen, whether blue strategic phases in the timeline up to 2050. incentives that will enable the upscaling of or green, can indeed play a critical role in the clean hydrogen technologies and support the decarbonisation path. Hydrogen, which currently accounts for less transition towards a low-carbon economy. than 2% of Europe’s energy mix, is expected to Hydrogen can enable economic sectors, represent around 14% by 2050. The roadmap Editorial by Laurent Ulmann & Cyrille Mai Thanh in particular power generation, industries, aims at establishing a framework that will transport, and buildings to substantially enable a functioning hydrogen market. reduce their carbon footprint. Today, hydrogen Editor-in-Chief production has a high environmental footprint The launch of the Clean Hydrogen Alliance LAURENT ULMANN because it mostly comes from fossil fuels. which gathers together major players from According to the International Energy Agency, the whole value chain – from production hydrogen is responsible for around 830 to application – will facilitate the necessary million tonnes of carbon dioxide per year. investment to help the scaling up of hydrogen technologies across the continent. The challenge is to scale up clean hydrogen produced from zero-emission electricity Regarding the legislative process, the such as renewable and nuclear energy, and Council adopted its conclusion in December Management: The European Files / Les Dossiers Européens - 19 rue Lincoln, 1180 Brussels www.europeanfiles.eu - ISSN 1636-6085 - email: email@example.com Publication Director and Editor-in-Chief: Laurent ULMANN Layout & printing: Drifosett Printing - www.drifosett.com Copyright: Shutterstock
TABLE OF CONTENTS Renewable Hydrogen: Low-carbon electrolytic hydrogen: a win-win for A Key Driver for Europe’s Energy Transition 6 climate and energy system integration 22 Kadri Simson, European Commissioner for Energy Jean-Bernard Lévy, Chairman and CEO of EDF From Ambition to Action: Enabling Europe to Become a The switch from natural gas to green hydrogen, and its Global Leader in Hydrogen Technologies 7 importance for climate change promises 24 Thierry Breton, European Commissioner for Internal Market Morten Helveg Petersen, MEP (Renew Europe – Denmark), Vice-Chair ITRE Committee The New Decarbonised Hydrogen Economy: a Growth Engine in a Post-Covid Europe 8 A Danish perspective on a clever deployment of Hydrogen 25 Bruno Le Maire, French Minister of Economy, Kristoffer Böttzauw, Director General of the Finance and Recovery Danish Energy Agency The Portuguese Hydrogen Strategy to Decarbonise its The International Dimensions of the Economy: The Project to Produce Green Hydrogen by European Hydrogen Strategy 26 Electrolysis 9 Hildegard Bentele, MEP (EPP Group), João Pedro Matos Fernandes, Portuguese Minister of Member of the ITRE Committee Environment & Climate Action Natural Gas and Hydrogen: Bridging the Regulatory Gap 27 How Renewable Hydrogen Will Help Descarbonise the Dr James Watson, Secretary General Eurogas European Economy The Case for Spain 10 Teresa Ribera, Vice-President Government of Spain and Towards greater hydrogen production capacity in Europe 28 Minister for the Ecological Transition and François-Régis Mouton de Lostalot-Lassalle, the Demographic Challenge International Association of Oil & Gas Producers, Regional Director Europe Global cooperation is essential for realising hydrogen’s Olav Aamlid Syversen, Vice President Political and Public huge potential 12 Affairs – Global Head of EU Affairs / Country Manager Belgium, Fatih Birol, Executive Director of the International Energy Agency Equinor Energy Belgium NV Building an investment case for hydrogen 14 Why Europe Needs Targets for Hydrogen Energy Ambroise Fayolle, Vice President of the European Investment Bank Infrastructure Rollout 30 Christian Ehler, MEP, EPP ITRE Coordinator Deploying Clean Hydrogen Energy for a climate-neutral Future 16 Hydrogen valleys driving growth and jobs 31 Jens Geier, MEP (S&D, Germany), Rapporteur on the Bart Biebuyck, Executive director of the Fuel Cells and Hydrogen Strategy, Member of the ITRE Committee, Hydrogen Joint Undertaking (FCH JU) European Parliament The scaling up of hydrogen, a European task 32 Hydrogen - Making Europe a leader in each segment Niels Fuglsang, MEP (S&D group), of this strategic value chain 18 Member of the ITRE committee Didier Holleaux, Executive Vice President ENGIE The future of Hydrogen under the Green Deal ambitions 33 Directing Public and Private Investments Towards Maria Spyraki, MEP (EPP – ND Greece) Member of ITRE Hydrogen Production 20 Committee, European Parliament Angelika Niebler, MEP (EPP Group), Shadow rapporteur on the Hydrogen Strategy, Member of the ITRE Committee
UNLOCKING THE FULL POTENTIAL OF HYDROGEN IN EUROPE Hydrogen : Time to scale up ! 34 When hydrogen partners with electrons: Matthieu Giard, Executive Vice-President clean heating for all 50 Member of the Executive Committee AIR LIQUIDE Maximilian Viessmann, Co-CEO Viessmann Group and CEO Viessmann Climate Solutions Changing the ground for a competitive hydrogen ecosystem in Europe 36 Hydrogen blending standards: is harmonisation needed? 52 Jorgo Chatzimarkakis, Secretary General of Hydrogen Europe Alberto Pototschnig, Florence School of Regulation - Robert Schuman Centre for Advanced Studies at the European Full speed ahead: University Institute Developing European Infrastructure for Hydrogen 38 Torben Brabo, Chief Executive Officer, Energinet Gas TSO Andris Piebalgs, Florence School of Regulation and President of Gas - Infrastructure Europe (GIE) Robert Schuman Centre for Advanced Studies at the European University Institute Towards a Continent Powered by Clean Electricity: Leading the Charge on Hydrogen 39 Clean Hydrogen as A Major Enabler for Kristian Ruby, Secretary General of Eurelectric Making Carbon-Free Ammonia and Fertilizers 54 Dr Antoine Hoxha, Technical Director, Fertilizers Europe Hydrogen Strategies and The Importance of Solving the Dual CO2 And Methane Performance Challenge 40 Unlocking the Green Hydrogen Economy through Nicolás González Casares, MEP (S&D, Spain), Business Model Innovation 56 Member of the ITRE Committee, European Parliament Diego Pavia, CEO of EIT InnoEnergy Hydrogen’s role to decarbonise the European gas grid 42 EU Hydrogen at a crossroads: how to gear up? 58 Jan Ingwersen, General Director of ENTSOG Dominique Riquet, Vice-President of Renew Europe Co-chair of the intergroup on long-term & sustainable Hydrogen as One of the Solutions for the investments & Competitive European Industry Decarbonisation of Transport 44 Elsi Katainen, MEP (Renew Europe, Finland), Member of the Innovation – a key driver of the EU Hydrogen Economy 60 TRAN Committee, European Parliament Stephen Quest, Director-General Joint Research Centre, European Commission Green Hydrogen - The dream of energy transition or just a fade? What does it take to meet the high How can carbon-free hydrogen become more competitive? 61 expectations of a European hydrogen market? 45 Christophe Grudler, MEP (Renew Europe Group), Jan-Christoph Oetjen, MEP (Renew Europe Group), Member of the ITRE Committee Vice Chair of TRAN Committee Clean Hydrogen costs in 2030 and 2050: Hydrogen: a review of the known and the unknown 62 Promising Zero-Carbon Technologies for Future Aircraft 46 Piero Carlo dos Reis, Research Associate - Axel Krein, Executive Director - Clean Sky 2 Joint Undertaking Florence School of Regulation Jean-Michel Glachant, Director - Hydrogen – the Great Unifier? 48 Florence School of Regulation Bertrand Piccard, President of the Solar Impulse Foundation Hydrogen will not be the new oil of the XXI century 64 Green Hydrogen for a carbon neutral transport sector 49 Jean-Marc Jancovici, President - The Shift Project Ismail Ertug, MEP (S&D, Germany), Matthieu Auzanneau, Director - The Shift Project Member of TRAN & ITRE Committees, European Parliament
6 | The European Files | Unlocking the full potential of hydrogen in Europe Renewable Hydrogen: A Key Driver for Europe’s Energy Transition KADRI SIMSON European Commissioner for Energy T he European Green Deal and achieving carbon-neutrality by 2050 has been the main priority of the von der Leyen Commission since taking office at the end of 2019. Despite the challenges of the Covid-19 sustainable for the long-term. But if we can scale up renewable hydrogen, there is every chance it can make a significant contribution to the clean energy transition and strengthen European industrial competitiveness at the only need to scale up individual plants, but to develop the associated hydrogen ecosystem and supply chains for storing, transport, and delivering hydrogen to the end-consumers. Investments will be needed to transform pandemic, 2020 was the year of laying down same time. our industrial processes, to build larger elec- the path towards our 2050 target. To decarbonise our energy system, we need trolysers and to develop the hydrogen trucks, Perhaps the most significant step was the more energy efficiency, more renewables and boats and planes of the future. This creates an agreement by EU leaders that the EU should more electrification. However, we also need enormous industrial opportunity for the EU. reduce greenhouse gas emissions 55% by more renewable fuels and gases. In many Our Member States are already responding 2030 (relative to 1990 levels) – as proposed sectors of industry and transport, electrifi- to this challenge. National strategies have by the Commission. This is a political com- cation has the potential to respond to the been launched by France, Germany, Neth- mitment, which ties the EU into raising our challenge. However, there will be areas, such erlands, Portugal and Spain, with draft ambitions for the coming decade. Our services as long-distance and maritime transport as strategies in preparation by Austria, Italy, in the Commission are now preparing a range well as aviation - or certain industrial pro- Poland and others. Furthermore, 22 Member of proposals for this summer, so that the EU cesses (such as steel production) – where States have signed a collaboration agreement can be “fit for 55%”. electrification is simply not an option as it to jointly develop and support innovative At the same time, the Commission provided is not available or not cost effective. This is cross-border hydrogen projects. A recent a number of other key building blocks in 2020 where renewable fuels and gases are needed. agreement signed by Portugal and the Neth- aimed at achieving our medium and long- And this is why renewable hydrogen can erlands to transport renewable hydrogen term goals. Within the remit of energy policy, potentially hold the key to eliminate emissions from Portugal to the Netherlands shows the these include strategies on energy system in these hard-to-decarbonise sectors. Fur- commitment towards a common approach. integration, renovation, offshore renewable thermore, hydrogen will be important to At the same time, clean hydrogen offers energy, and methane emissions. In legislative help balance a renewables-based electricity new opportunities to re-design our energy terms, we also proposed a revision of the system by providing long-term storage and partnerships with our neighbouring countries rules for the trans-European networks for buffering of renewable energy. and regions, and as a way to contribute to energy and produced a detailed assessment I am frequently asked if I think Europe can their clean energy transition. In particular, of how Member States intend to meet their emerge as a leader in a global shift towards North Africa has great potential to supply targets in the coming decade through their clean hydrogen. I have no doubt that we can. cost-competitive renewable hydrogen to the respective national energy & climate plans Already today, the EU is leading in the devel- EU if the renewable power generation in these (NECPs). opment of electrolysers, a key technology countries accelerates. I am therefore pleased While all of these initiatives combine to set needed to convert renewable electricity into that the European Commission and Morocco us on the decarbonisation pathway, the most hydrogen. At the same time, the EU has the are jointly facilitating a new collaborative exciting element for many is the Hydrogen right policy framework in place to accelerate platform on renewable hydrogen under the Strategy, published last July. Its aim – to the large amount of low-cost renewables International Renewable Energy Agency. kickstart investments to scale up the pro- needed to produce hydrogen. The EU is also The European Green Deal provides us with duction and use of clean hydrogen and fulfil the first region with the objective of climate a holistic approach to tackle the climate its potential as one of the key drivers in the neutrality, which gives our industry the challenge. We are applying the same prin- green energy transition. market and investment certainty. ciples to our hydrogen strategy. Hydrogen Although hydrogen is already used in So where do we stand at present? Today, is part of our growth strategy, it fits within the EU, it is for the moment primarily around 60 MW of electrolysers have been a holistic vision of an integrated energy used as a feedstock and less in the energy tested and demonstrated in the EU. By the system, it is based on a collaborative and joint sector– accounting for only 2% of Europe’s end of 2024, we aim to have 6 GW of elec- approach among our Member States, and it present energy consumption – 96% of this trolysers – a hundred-fold increase, and provides an opportunity to shape the global hydrogen is produced with natural gas, 40 GW of electrolysers by 2030 with the aim energy transition. emitting significant amounts of CO2 in to produce 10 million tonnes of renewable For more information, see Commission the process. This form of hydrogen is not hydrogen. To achieve these objectives, we not webpage on hydrogen
Unlocking the full potential of hydrogen in Europe | The European Files | 7 From Ambition to Action: Enabling Europe to Become a Global Leader in Hydrogen Technologies THIERRY BRETON European Commissioner for Internal Market W e have the ambition to become the first climate-neutral continent by 2050 and reduce emission by at least 55% by 2030. This will not be possible without a deep decarbonisation of meet 24% of world energy demand by 2050, with annual sales in the range of €630 billion. And as investment cycles in many of the con- cerned industries and in the energy sector are around 20-30 years, and as the interest in responsible for the alliance’s operational work. They are in charge of building a project pipeline and an investment agenda in their area, while ensuring coherent implementation along the clean hydrogen value chain. When our industry, our mobility ecosystem and our clean hydrogen is growing globally, we have relevant to their mission, they may also flag energy system. no time to lose. obstacles and bottlenecks for the upscaling of Renewable and low-carbon hydrogen can But most of all, we need to strengthen clean hydrogen, provide input to the work on help us to decarbonise the most polluting partnerships and collaboration among regulations, standardisation, and research and industries like steel, chemicals and heavy industry, EU, Member States and the relevant innovation priorities. transport e.g. trucks or aircrafts, where stakeholders. At the same time, it is clear that public reducing carbon emissions is both urgent and Europe has leading players at each support is necessary for large-scale hard to achieve. For instance, when conditions segment of the clean hydrogen value chain, investments to kick-start the clean hydrogen are right, clean hydrogen could help to reduce but the challenges of scaling up production value chain. The Commission has already emissions in the steel sector by almost 95%. and boosting demand require a systemic identified clean hydrogen and renewables Today, the amount of hydrogen used in the approach along the whole value chain. That as a flagship for the recovery, due to their EU remains limited, and is largely produced is why in July last year the Commission huge potential for energy transition, job from fossil fuels. The aim of the EU action is launched the European Clean Hydrogen creation and cross-border investment. We are to deploy mature clean hydrogen across all of Alliance, which brings together industry, encouraging Member States to do the nec- the most emitting sectors of our economy by national and local public authorities, civil essary investments and reforms as part of the middle of this century, and to become the society and other stakeholders. The Alliance their national Recovery and Resilience Plans. first fully fledged clean hydrogen market in has already attracted a lot of interest, with We also hope to see concrete projects the world. That is the main message sent by more than 1000 organisations - majority of resulting from the manifesto on Important the Hydrogen Strategy for a climate neutral them companies, joining since its launch. Projects of Common European Interest on Europe, which the Commission published last Together with the few thousand participants hydrogen, prepared by the German Presidency year. of the European Hydrogen Forum organised and signed in December by 23 European What is needed however is to create in November, this points to a very big interest countries, which makes clean hydrogen a scale to bring down the costs, especially by from the hydrogen ecosystem. In my dis- truly European endeavour. building a competitive clean hydrogen value cussions with CEOs at the European Hydrogen The EU has supported research and inno- chain in Europe. This of course requires Forum, leading EU companies confirmed solid vation on hydrogen for many years, giving big investments for the scaling up the commitment to objectives of the Alliance. it a head start on the development of clean production of renewable and low-carbon Industrial alliances are built to transform hydrogen and establishing EU leadership for hydrogen, boosting its applications in industry this type of commitment into real action. technologies such as electrolysers, hydrogen and mobility as well as in the necessary The European Clean Hydrogen Alliance will refuelling stations and large fuel cells. infrastructure. establish an investment agenda and support By supporting the development of clean Cumulative investments in renewable the scaling up of the hydrogen value chain hydrogen, we have shown that we are hydrogen in Europe could be up to €180-470 across Europe. It will play a crucial role in serious about decarbonising our industry and billion by 2030, and in the range of €3-18 facilitating and implementing the European attaining our climate neutrality ambitions. billion for low-carbon fossil-based hydrogen. Hydrogen Strategy. It is also a political signal Now we need to consolidate this EU lead- Combined with EU’s leadership in renewables of EU’s commitment to invest in technologies ership to ensure this technology benefits our technologies, the emergence of a hydrogen enabling climate neutrality. economy and society at large. value chain serving a multitude of industrial The work of the European Clean Hydrogen sectors and other end uses could employ Alliance is entering a new phase. Following an up to 1 million people, directly and indirectly. open call for applications, we are now kicking- Analysts estimate that clean hydrogen could off the work of the six thematic roundtables
8 | The European Files | Unlocking the full potential of hydrogen in Europe The New Decarbonised Hydrogen Economy: a Growth Engine in a Post-Covid Europe BRUNO LE MAIRE French Minister of Economy, Finance and Recovery 2020 has witnessed growing interest for the Fairer the innovation race for the development of tiniest and lightest atom: hydrogen. Hydrogen The economic crisis is also an oppor- hydrogen technologies and its uses, but we technologies and uses have found their way tunity for us to rethink our economic model need massive investments for that. In France, in European Recovery Plans, and hydrogen and the kind of society we call for. Beyond we have earmarked EUR 7 bn for the decarboni- strategies are at the heart of many Member the question of sovereignty, relocation of sation of hydrogen production and the design of States’ decarbonation path. industrial production is also a matter of a hydrogen industry. EUR 2 bn of them are to be preserving jobs in our regions. We have the invested in 2021 and 2022 already, in the frame Why is it the right time? expertise and the talents required in Europe of our stimulus plan “France Relance”. In the wake of the COVID-19 crisis, our top to develop new technologies; we need to priority is to get back on our feet swiftly. Indu- invest in them. Massive public intervention Why should we have a European bitably, bouncing back will require fortitude and support will provide the right impetus for approach? and innovation. It also requires that we invest, businesses to move forward. This battle must be fought together with already now, in our future – and that we have our European partners, in order to compete a clear idea of the future we call for. We want Why should we support hydrogen? with the American and Chinese powers, which to come out of the crisis stronger, cleaner and Decarbonised hydrogen technologies support can rely on substantial domestic markets fairer. all three goals. They offer the opportunity to and a single leadership. The European Single create, on the European soil, an industrial eco- Market is a powerful asset to establish a com- Stronger system key to the continent’s future economic petitive economic area and attract necessary We need a more competitive economy. sovereignty. They contribute to shape a investments. But we need investments on a The Covid-19 crisis proved that we depend competitive and fair economy: we expect the scale that no single Member States can match. too heavily on imports in certain market hydrogen sector will create 50 000 to 150 000 I was very proud to sign, on December 17th segments. It can undermine our ability to direct and indirect jobs in France over the next and along with 22 other Member States, the address major societal issues by our own ten years. Decarbonised hydrogen technologies Manifesto on Hydrogen. We agreed to work on means, such as protecting the health of our also give us tools to tackle the great challenge large-scale joint investment projects in order citizens, disposing of the means to defend of the 21st century: the decarbonation of our to support the development and deployment ourselves, or securing our ability to undertake economies. of hydrogen technologies and systems, and the green transition. We should not rely on In France, we have set for ourselves a clear, to grasp the possibility to shape together massive equipment imports to decarbonize unifying goal: to launch a green hydrogen an Important Project of Common European our economy – unlike what we previously did aircraft by 2035. I trust it can be reached. Interest (IPCEI) that would support the rise with photovoltaic panels. I believe in break- However, applications for hydrogen tech- of our industries in hydrogen technologies through technologies as a leverage to deepen nologies are manifold. Hydrogen is an alter- throughout the value chain. The IPCEI is a our economic sovereignty. native to fossil fuels for vehicles (terrestrial, unique opportunity for Member States to coor- airborne, waterborne), and hydrogen tech- dinate their efforts to foster both economic Cleaner nologies can be seen as complementary to the investments and the green transition, and share In Europe, we have made a commitment battery technology. Hydrogen can also be used the benefits of their cooperation. to tackle climate and environmental-related as a feedstock for industries, such as refining, Yet this is only the beginning of the hydrogen challenges. We have already started to mod- ammonia or steel making. Eventually, hydrogen path. The IPCEI scheme must be complemented ernize and transform the economy with the could also serve as energy storage and facilitate by an ambitious European industrial strategy, aim of reaching climate neutrality by 2050. the integration of renewable energy in our elec- a long-term framework for supercharging We have agreed on a 55% GHG emissions tricity mixes. the twin green and digital transition and rein- reduction intermediary target for 2030. We It is now up to public authorities to share forcing industrial value chains for technologies now need to accelerate the pace on environ- the risks with researchers and industrialists key to our strategic autonomy. I stand ready mental issues. We should move swiftly to in order to come up with new and innovative to implement it together with our European give momentum to our stimulus plans and solutions. I am convinced that the EU has the partners. foster new investments in clean technologies. potential to place itself at the forefront of
Unlocking the full potential of hydrogen in Europe | The European Files | 9 The Portuguese Hydrogen Strategy to Decarbonise its Economy: The Project to Produce Green JOÃO PEDRO MATOS FERNANDES Portuguese Minister of Environment & Climate Action Hydrogen by Electrolysis P ortugal was the first country in the world to assume the goal of being carbon neutral in 2050. Working towards that objective our last coal-fired power station will be closed this year. We share of renewables in gross final energy consumption. During the next decade we aim to achieve 2 to 2,5 GW of installed capacity to produce hydrogen, to have between 10% to 15% of hydrogen injected into the natural gas The environmental ambition of the EU Green Deal will not be accomplished if Europe acts isolated. Climate change is global and is not limited by national borders. All EU actions and policies will have to contribute to the believe 2021 will be a decisive one in driving grid and build between 50 to 100 hydrogen achievement of the objectives. The challenges the European economy towards recovery refuelling stations. These objectives amount are complex and interconnected. and growth, preparing for the future, namely to an investment of around 7 to 9 billion euros. through the two-fold – green and digital - tran- We believe that a country from southern sition and strengthening society’s resilience. The hydrogen production in Portugal will Europe like Portugal can have an active role Within the Portuguese Presidency of the reduce imports and energy dependency, and push forward the broad use of hydrogen, Council of the EU we look forward to conclude strengthening ours and European Union’s particularly green hydrogen, becoming a the negotiation of the European Climate Law energy security. This will strengthen the key element in accomplishing Europe’s with the European Parliament, enshrining position Portugal as an exporter of green decarbonization goals. As an ambitious and climate neutrality and an ambitious emission energy while decarbonising the industry, innovative country with a robust track-record reduction target for 2030 of at least 55% transport and heating. It stimulates industry in renewables, we bring forward our com- when compared to 1990. and gives new uses to the natural gas infra- mitment and our current state of play in the structure that the country already has in hydrogen field and contribute to the global Hydrogen will play a very important role in place. This will be not only a major industrial market. decarbonization. It will be key, particularly to project, but also an economic and social devel- transform the more “hard to abate” sectors. To opment project which will create or re-qualify achieve its full potential, it is very important existing jobs by calling for new skills and to make progress, taking the necessary steps increase research and development – namely to make its price competitive and create a on electrolysis with waste and salt water. The market, while maintaining investment in green hydrogen production project is focused research and innovation, to develop the on leveraging solar energy, but also wind essential infrastructures and implement energy, on-shore and off-shore, as factors of measures of certification of origin. Fur- competitiveness, industrial transformation thermore, following up on the excellent work and opportunity to increase exports. done by the German Presidency, Portugal will strive to keep hydrogen as a central priority in Decentralising production is one of Por- the energy sector. tugal’s priorities. With that in mind, the Por- tuguese green hydrogen production plans Portugal aims to start the green hydrogen are not limited to the Sines region and there production project on an industrial scale as will be projects of different scale, scattered soon as possible. We are in a good position to throughout the territory. Together with the do so, considering our strategic advantages: new legislation on energy communities, a well-equipped deep-water harbour in Sines; decentralized hydrogen production is an a solar power price among the lowest in the opportunity to attract investment to the world; public land available to install the interior of the country, allowing each ter- hydrogen industrial complex and a modern ritory to make the best use of its endogenous natural gas supply network. We will combine resources and actively participate in the these advantages with our ambitious decar- energy transition, showing - as we have bonization targets for 2030: a 55% reduction always said - that decarbonization, while chal- in greenhouse gas emissions and a 47% lenging, is above all an opportunity.
10 | The European Files | Unlocking the full potential of hydrogen in Europe How Renewable Hydrogen Will Help Descarbonise the European Economy The Case for Spain TERESA RIBERA Vice-President Government of Spain and Minister for the Ecological Transition and the Demographic Challenge E nergy efficiency and renewable- based electrification are long since the cornerstone of global action towards decarbonisation. While the Inter- governmental Panel on Climate Change has If renewable hydrogen is the best tech- nology available for the 2050-horizon, it seems important we concentrate our financial and regulatory resources on renewable hydrogen, swiftly and decisively, at a time key international actors such as China, South Korea and Japan are solidly committing to climate neutrality and the U.S. Biden administration has made a strong pledge for the energy transition. These made remarkably clear the need to focus from the very start. We must avoid investing countries are in the works of releasing on reducing greenhouse gas emissions, a in non-renewable technologies that risk ambitious national hydrogen strategies, in number of institutions have filled in the becoming stranded assets in the medium- which they show their clear determination details regarding which technologies can term. We cannot afford squandering our to become leaders on cutting-edge tech- support on this endeavour. For example – the resources on technologies that will not be nologies such as electrolysers or fuel-cell International Renewable Energy Agency has with us in thirty years. components. If the EU intends to become estimated that renewable energy and energy a global frontrunner in this strategic, clean efficiency solutions together offer over 90% The international competition on industrial ecosystem, which will be essential of the mitigation measures needed to reduce renewable hydrogen is expected to be fierce, for our future climate-neutral energy energy-related emissions. Completing this picture, hydrogen has been widely acknowledged as a key energy carrier to decarbonise those sectors of the economy where electrification is not feasible or cost-effective. Examples of these sectors are parts of the energy-intensive industry, long-haul high load transport, maritime shipping or aviation. Its potential to storing energy and contributing to balancing out our power system is also extraordinary. Hydrogen can certainly play a pivotal role in helping the world – and the EU – achieve climate neutrality by 2050, only if we make sure hydrogen is developed in line with this objective. The European Commission published in July 2020 the excellent EU Hydrogen Strategy, which made a giant step in moving towards achieving EU climate and energy objectives. This Strategy set the development of renewable hydrogen – produced through electrolysis from renewable sources – as the unquestionable priority for the EU, recog- nising it is the most compatible option with the EU’s climate neutrality and zero pollution goal in the long term and the most coherent with an integrated energy system.
Unlocking the full potential of hydrogen in Europe | The European Files | 11 system, every minute counts. There is no fossil-based hydrogen production – which should plan no new additional investments in time for transition solutions. amounts to 500,000 tonnes per year in natural gas infrastructure, as they risk locking Spain – by renewable hydrogen production. us into fossil fuels for decades, diverting us Fully harnessing the potential for Refining, fertilisers and other chemical from climate neutrality. The geography of renewable hydrogen production within the products are good candidates for such a thing. hydrogen is likely to be significantly different EU, while building a strong, competitive EU Simultaneously, high-temperature industrial from existing natural gas corridors. value chain, must be our priority. For one processes in steel or construction-material reason – the EU has the capacity to succeed manufacturing have a significant potential to Following this vision, Spain has recently in it. According to the International Energy abate emissions by shifting in the short-term approved a National Hydrogen Roadmap, Agency, only between 2020 and 2025, the to renewable hydrogen. Likewise, we see reinforcing Spain’s commitment to renewable increase in renewables-based generation valuable opportunities in the mobility sector, hydrogen. The Roadmap foresees an installed in Europe is expected to be more than nine for example in maritime shipping, aviation or capacity of at least 4GW electrolysers times the rise in electricity demand. Also hard-to-electrify railways. by 2030 – 10% of what expected by the importantly, strategic autonomy and energy European Commission throughout the UE self-sufficiency are valuable assets the EU is In a first stage, Spain is devising the pro- by that year – for which 8.9 billion EURO are in a position to guarantee for the future if we motion of renewable hydrogen clusters, which expected to be mobilised, while foreseeing an make the right decisions now. can bring closer producers and consumers intermediate milestone of 300-600 MW by while creating a synergies-fuelled ecosystem 2024. Spain’s rich renewable resources and R&D&i is going to be an important pillar to kick-start the market. Building renewable solid value chains will be the warrants of this across the whole renewable hydrogen value hydrogen production capacity back-to-back development. Indeed, together with our Por- chain, most particularly for reducing costs to existing hydrogen demand will prevent tuguese friends, we have the potential to build and making renewable hydrogen a cheap, unnecessary transmission and distribution a strong Iberian hub of renewable hydrogen viable alternative to fossil-based hydrogen. infrastructure, reducing investment costs in the medium- and long-term, while first To that end, an Important Project of Common and carbon footprint. In a later stage, we prioritising domestic production and demand, European Interest (IPCEI) on renewable will promote a more distributed production expanding renewable hydrogen clusters and hydrogen can be crucial to facilitate chan- by using electrolysers to facilitate the inte- minimizing carbon footprint and transport nelling the necessary public funds to swiftly gration of increasing shares of renewable costs. achieving technology maturity for renewable electricity, following the guidance provided hydrogen production, while strengthening by the EU Energy System Integration Strategy The post-COVID19 recovery is an excep- cross-border cooperation and creating a and, namely, the principle of energy efficiency tional opportunity. Let us harness it as a genuine EU value chain. first. Before designing any new infrastructure catalyser to inject the impetus renewable or repurposing existing gas infrastructure hydrogen needs to develop its full potential The vision of Spain is to develop the for dedicated renewable hydrogen, we and significant benefits. industrial ecosystem of renewable hydrogen should ensure the existence of sustainable by focusing first on replacing existing and reliable demand. Notwithstanding, we
12 | The European Files | Unlocking the full potential of hydrogen in Europe Global cooperation is essential for realising hydrogen’s huge potential FATIH BIROL Executive Director of the International Energy Agency H ydrogen has for too long been ignored by the energy sector, despite the important role it can play in addressing our environmental challenges like climate change and air pollution – and its data and policy expertise to support gov- ernments in this critical phase. Hydrogen technologies are not the only ones we need to reach our energy and own choices for this important technology opportunity. As we pointed in our 2019 report, the coming decade will be critical for hydrogen’s long-term success. in enhancing energy security. Momentum climate goals. We will need a wide range of To help the world keep track of progress behind it continues to grow, but IEA analysis clean energy technologies – from renewables, on this front, the IEA will start publishing a shows there is still a huge amount of work nuclear power and energy efficiency to bat- new Global Hydrogen Review this year. This to be done for it to reach a scale that would teries, carbon capture and bioenergy. But report will serve as hydrogen’s North Star, make a key difference to efforts to reach hydrogen is a critical part of any ambitious assessing the impact of all government and international energy and climate goals. clean energy transition strategy. industry plans. It will examine how actual on- the-ground progress compares with stated Much has happened since the IEA released The use of hydrogen will need to expand ambitions from around the world, and help our landmark report on hydrogen at the across many parts of the global energy decision-makers to fine-tune their strategies G20 Energy Ministers Meeting in Japan in sector – from road transport to shipping and to drive real progress in investment. June 2019. Over the past two years, around aviation, from iron and steel production to the 80 megawatts (MW) of electrolysers, which power sector. In fact, if the world is to reach And I am very pleased that Noé van Hulst, produce hydrogen from electricity, were net-zero emissions as outlined in the IEA’s the former Hydrogen Envoy of the Neth- installed worldwide, boosting global capacity Sustainable Development Scenario, hydrogen erlands and now the Chair of the International to around 250 MW. The largest electrolyser could account for as much as 13% of total Partnership for Hydrogen and Fuel Cells in plant to date was opened last year in final energy consumption.And practically all the Economy (IPHE), has agreed to act as a Fukushima, Japan. And two large projects hydrogen production by then would need to special adviser to the IEA on hydrogen-related to produce hydrogen from natural gas with be low carbon, either through the use of fossil matters and ensure that we work with all carbon capture became operational in 2020. fuels with carbon capture, utilisation and hydrogen stakeholders to advance the cause. They will capture 1.5 million tonnes of CO2 per storage – or through the use of electrolysers. year. In 2019, 12 500 fuel cell vehicles were Around 3 300 gigawatts of electrolysers The time for hydrogen may have finally sold, double the amount of 2018. would be needed. In practical terms, this come, and countries around the world have to requires bringing the equivalent of today’s be ready to seize the opportunity. The IEA is Governments around the world are largest electrolyser into operation every hour ready to do all it can to support this. stepping up their efforts. Since early 2019, for the next few decades. 12 countries and the European Commission have set out ambitious hydrogen strategies or This is why the IEA is deepening and roadmaps. And at least another nine are due expanding its work on hydrogen to support its to be released very soon. continued development. This includes closely collaborating with the Japanese government These encouraging trends show the energy on the Hydrogen Energy Ministerial Meeting world’s high expectations for hydrogen. But this year. The IEA is proud to be able to con- the progress gives us no cause for com- tribute its expertise and convening power to placency – much more has to be done. The the event, since international cooperation ambition of the strategies that governments will be essential for successfully tapping into are setting out is impressive. The challenge hydrogen’s huge clean energy potential now is to design and implement the policies, regulations and investment plans that will Hydrogen is a big opportunity for many turn those ambitions into reality. The IEA is countries. The IEA is committed to help gov- ready to play a significant role by providing ernments and industries in making their very
Unlocking the full potential of hydrogen in Europe | The European Files | 13 Hydrogen – a key pillar for reaching energy & climate goals Global hydrogen use by sector in the Sustainable Development Scenario, 2019-2070 600 Ammonia production MtH2/yr Synfuel production 450 Transport 300 Other Transport 150 Refining 0 2019 2030 2040 2050 2060 2070 Global hydrogen use grows sevenfold by 2070 compared to today in the Sustainable Development Scenario, with demand growth almost completely met by low-carbon hydrogen. IEA 2020. All rights reserved. Renewables hydrogen costs are set to decline Long-term hydrogen production costs from solar & wind systems USD/kgH2 The declining costs of solar PV and wind could make them a low-cost source for hydrogen production in regions with favourable resource conditions. IEA 2020. All rights reserved.
14 | The European Files | Unlocking the full potential of hydrogen in Europe Building an investment case for hydrogen AMBROISE FAYOLLE Vice President of the European Investment Bank L ow-carbon hydrogen could be the missing piece needed finally to wean our energy systems off fossil fuels. Like oil and gas, low-carbon hydrogen can be stored and used when needed. Low-carbon Hydrogen’s moment While low-carbon hydrogen’s potential has been talked about for over 20 years now, the ticking clock of climate change – and a need for new energy sources – has renewed the To some extent, hydrogen produced from natural gas is already used in industries such as steel and ammonia production, but the production processes entail significant carbon emissions. Renewable energy, such as wind hydrogen can also be used in hard-to-abate focus. To keep the rise in temperature below and solar power, however, can be tapped to industries like steel and ammonia production, 1.5 degrees Celsius, the European Union (EU) produce green hydrogen. The falling prices of and it can decarbonise long-haul transport has pledged to cut its carbon emissions by at renewable energy are making the economic vehicles like buses, trucks, ferries that are dif- least 55% by 2030, compared to 1990 levels, case for hydrogen more clear. ficult to electrify. and aims to become climate neutral by mid- century. In this context, the implementation of Seeing low-carbon hydrogen’s potential, Getting low-carbon hydrogen usage to the the European Green Deal that the European the EU has made low-carbon hydrogen a level of oil or gas requires building large-scale Commission has put forward at the end of core part of the European Green Deal and of production, storage and transport networks – 2019 will be crucial. While existing renewable Europe’s efforts to secure its energy future. investments expected to range from €200 to energy can get us part of the way, hydrogen €500 billion by 2030. Low-carbon hydrogen will be important for the decarbonisation of As a result, political will is coalescing also needs to be competitive with the fossil high emitting and hard to abate industrial around hydrogen. In July 2020, the EU fuels currently used in industry and transport, sectors (for example, steel) which cannot be announced an ambitious Hydrogen Strategy as well as with natural gas, which creates electrified, as well as for transport where bat- that calls for: hydrogen using a steam methane process. teries are suboptimal or not suitable (such as › Scaling up supply and demand for green Whereas hydrogen electrolyser and fuel cell long-distance freight, marine or air). hydrogen; technologies hold big potential for innovation, economies of scale and expanded production will be crucial to bringing down prices for low-carbon hydrogen – as will continued low prices for electricity from renewable energy. In most cases, a higher carbon price on fossil fuels will also be needed to ensure low-carbon hydrogen’s competitiveness. In addition, the regulation governing hydrogen transport and storage may need some adaptation to incen- tivise investment in the needed infrastructure. So far, the European Investment Bank (EIB) has focused on financing research and devel- opment (R&D) in hydrogen transformation and application technologies, as well as public transport schemes deploying hydrogen buses and rolling stock, and supply or refuelling infrastructure. In the future, we also wish to support projects that expand the supply and use of hydrogen at larger scale, and we hope Ambroise Fayolle, EIB Vice-President and Pierre-Etienne Franc, Hydrogen Council Co-Secretary, that we will be able to do that with the right sign advisory agreement to address climate change with increased investment in hydrogen policy and regulatory framework in place at ©Cyrille Lachèvre/EIB the EU and Member State levels.
Unlocking the full potential of hydrogen in Europe | The European Files | 15 for projects based on business models that promise an adequate risk-return ratio. Hydrogen fuel cell technology may be a good alternative to batteries for buses, trains, ships and potentially planes. Knowing this, we have funded a number of hydrogen projects in transport, such as hydrogen buses in Riga and hydrogen refu- elling stations for buses in Denmark. The H2 Corridor project in France, which received a €40 million loan from the EIB, is building the production, transport and distribution infra- structure needed for a hydrogen-powered transport corridor in the Occitanie region in France. We need to act together Active coordination, among the EU insti- tutions, national governments and industry, › Supporting the development of new mar- them in sorting through the various financial is essential if the hydrogen dream is to kets and infrastructure; tools – debt products, guarantees or equity become reality. Europe’s transitioning of its › Establishing Europe as a leader in the instruments – that can reduce investor risks, energy systems from high-emitting fossil hydrogen industry, a creator of highly particularly for new technologies or new fuels to low-carbon hydrogen will require skilled jobs. industries trying to scale up. Our support goes massive investment and monumental beyond financial tools, however, to include coordination. In this context, we welcome the European market research and constructing new Commission’s recent proposal to update the business models. Launching initiatives to support EU member Trans-European Networks for Energy (TEN-E) countries’ national strategies and to develop regulation, to include battery and green An example is our support for the HyDeal new financing mechanisms could help. At hydrogen energy storage. initiative. It involves a number of industrial the same time, however, we need to build players – including gas transmission systems hydrogen production, storage and distribution The enthusiasm for clean hydrogen extends operators, electrolyser manufacturers and links across EU member states. Those cross- to the national level, where EU members solar photovoltaic developers – that are border projects will require specific coordi- such as Germany, France, Portugal and the coming together to build a large-scale, inte- nation and an alignment of public resources. Netherlands have crafted their own hydrogen grated hydrogen ecosystem designed to strategies. Germany has even promised to deliver low-cost green hydrogen for industrial In November 2020, following on the back hydrogen development with a public clients. The hydrogen produced will come good experience with the European Battery budget of €9 billion. from solar-powered electrolysis and will Alliance, the European Commission launched be transported via pipelines to a number of the European Clean Hydrogen Alliance, which Providing a catalyst storage and delivery hubs. brings together the industry, public authorities In the last eight years, the EIB has invested and civil society to identify a pipeline of €2 billion euros in hydrogen projects – plowing A public push hydrogen investments. Hydrogen projects are money into electrolysers, catalysts, fuel cells, Building the low-carbon hydrogen eco- being included in the list of Important Projects electric trains, hydrogen bus fleets, refueling system up to the point that it could con- of Common European Interest (IPCEI), which infrastructure and industrial applications. tribute to replacing fossil fuels would require allows them to receive public support. Today, we have approximately €1 billion of enormous investments in renewable energy hydrogen-related projects in our pipeline, such as wind and solar or substantial new The EIB, which cooperates with the and we are looking for more innovators to capacity for carbon capture and storage. The European Battery Alliance, is looking forward finance. At the same time, our new energy EIB has experience in these kinds of projects. to doing the same with the hydrogen industry. lending policy focuses on decarbonisation Higher-risk financing instruments, developed and the potential of low-carbon gases like There is also need and scope for further together with the European Commission, have hydrogen. We have also forged partnerships technological progress in hydrogen con- proved helpful in addressing projects in this with the Hydrogen Council, a group of leading version technologies – from low-carbon sector, which entail significant technical and energy, transport, industry and investment electricity to hydrogen (electrolysers) and to market risk. In addition, EIB advisory services companies, and France Hydrogène, the French electricity (fuel cells). This is an area, where can play a key role to help not-yet mature association for hydrogen and fuel cell devel- the Bank has already accompanied multiple projects to develop. opment, to identify promising projects and companies – small and large – in their R&D innovation. and innovation activities. The Bank remains committed to continue its support for investments in clean hydrogen – in We have the technical experience, through In addition, investment in hydrogen line with the indications of the EU Taxonomy our Advisory Services, in helping innovators transport and storage and re-fuelling – which could range from R&D investments and governments put together projects in (for transport) infrastructure is needed. to demonstration projects, as well as the a way that can attract financing. We guide Investment and finance can be mobilised building of the necessary infrastructure.
16 | The European Files | Unlocking the full potential of hydrogen in Europe Deploying Clean Hydrogen Energy for a climate-neutral Future JENS GEIER MEP (S&D, Germany), Rapporteur on the Hydrogen Strategy, Member of the ITRE Committee, European Parliament T he European Union has endorsed the Paris Agreement and has committed with the European Green Deal to achieve climate neutrality by 2050 through a just transition. This transition implies the However, hydrogen is not the silver bullet solution to decarbonisation. Instead, direct electrification should be considered the pref- erable option for decarbonisation. In addition, the EU needs to base its hydrogen economy hydrogen and to establish a functioning and predictable clean hydrogen market that attracts investments, a comprehensive regu- latory framework for hydrogen needs to be put in place. The EU gas market regulatory decarbonisation of the entire economy, on clean hydrogen, as only clean hydrogen framework could serve as a blueprint, due to including hard-to-decarbonise sectors. This is sustainable in the long term. To ramp up the common features of hydrogen and gas, transition towards a clean energy system clean hydrogen production and establish the together with the Clean Energy Package, due also needs to ensure security of supply hydrogen economy fast enough to achieve to its holistic approach to reviewing the func- and affordability of energy. As hydrogen our climate goals, low-carbon hydrogen can tioning of the energy market. produced through electrolysis with electricity play a transitional role, as clean hydrogen from renewable energy sources is a clean is not yet sufficiently abundant and com- To ramp up clean hydrogen production alternative to fossil fuels and can be used petitive. However, the European Commission and to prevent diverting renewable energy for various purposes, including feedstock for should continuously assess for how long, for from other use cases to hydrogen production, industrial processes, fuel cells and energy which purposes and how much low-carbon the EU also needs to create sufficient addi- storage, it can make a valuable contribution to hydrogen is needed. I am furthermore con- tional renewable energy production. This this transition. However, hydrogen represents vinced that it is important that fossil-based goes hand in hand with providing the nec- only a small part of the European energy hydrogen is phased out as soon as possible. essary infrastructure for renewable energy, mix and 95% of our hydrogen production is including transporting renewable energy to currently based on fossil fuels1. Furthermore, Hydrogen Classification and Standards hydrogen production sites. The Commission clean hydrogen is not yet competitive. Due In order to create an ecosystem for and Member States should ensure that the to the currently limited availability of low- investments, a single European classifi- missing infrastructure is provided as soon as carbon and clean hydrogen, its use should be cation for the different types of hydrogen is possible. In addition, as renewable electricity concentrated on sectors that operate close to needed. I support the Commission’s proposed is responsible for a significant part of clean competitiveness of hydrogen or that currently classification based on the carbon content hydrogen production costs, it is important to cannot be decarbonised by other means. of hydrogen and stepping away from the reduce costs by abolishing taxes and levies Examples are the steel and chemical industry commonly used colour-based approach. on renewable electricity in order to achieve and aviation and maritime transport. In addition, we need to be able to clearly competitiveness. identify clean hydrogen. For this purpose, I Thus, the EU needs to develop a sustainable suggest the development of standards and Hydrogen Infrastructure hydrogen economy that aims at making clean a European certification and labelling system The EU should avoid a chicken and egg hydrogen competitive as soon as possible. based on an independent, science based problem between hydrogen infrastructure, For this, a hydrogen strategy that covers the review of the lifecycle emissions of hydrogen production facilities and demand. We need whole hydrogen value chain, includes demand production. As clean hydrogen production to develop all elements from the start. The and supply sectors and is coordinated with is based on renewable electricity, we also EU should incentivise infrastructure devel- national efforts, is necessary. The European need guarantees of origin for hydrogen and opment, e.g. through the revision of the Commission has made a first step in this renewable electricity. These elements are TEN-E regulation. I support the Commission’s direction by adopting “A hydrogen strategy for important for hydrogen consumers to be approach to start planning the medium range a climate-neutral Europe” in July 2020. able to invest consciously in clean hydrogen and backbone transmission infrastructure options. from the start to develop a fully-fledged internal hydrogen market as soon as possible. 1 European Commission: Hydrogen generation in Ramping up Hydrogen Production Europe: Overview of key costs and benefits, July To achieve the ambitious goals set in As cost-efficiency is always important, the 2020, https://op.europa.eu/en/publication-detail/-/ publication/7e4afa7d-d077-11ea-adf7-01aa75ed71a1/ the Commission proposal for a Hydrogen existing gas infrastructure could be retrofitted language-en strategy, to scale up the production of clean for pure hydrogen use, which could reduce
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