European Commission publishes “A hydrogen strategy for a climate-neutral Europe”
Posted 10th July, 2020
The European Commission launched its much-anticipated Hydrogen strategy this week (July 8th). According to the EC, hydrogen “offers a solution to decarbonise industrial processes and economic sectors where reducing carbon emissions is both urgent and hard to achieve”, making it an essential part of the European ‘Green Deal’.
While Europe is well positioned to benefit from the development of clean hydrogen, investment will be required to scale up production. According to the EC, the development of renewable hydrogen builds on “European industrial strength in electrolyser production, will create new jobs and economic growth within the EU and support a cost-effective integrated energy system”. The Commission also believes that “in the short and medium term, other forms of low-carbon hydrogen are needed” to support the parallel development of renewable hydrogen.
The Commission has set out a high level ‘Roadmap’ aimed at developing the European hydrogen market;
From 2020 to 2024, the EU is targeting production of 1 million tonnes of renewable hydrogen, and 6 GW of renewable hydrogen electrolysers, to decarbonise existing hydrogen production along with Carbon Capture and Storage (CCS). The policy focus is set to establish a “liquid and well-functioning hydrogen market and on incentivising both supply and demand”. Plans will also be developed for large wind and solar plants dedicated to renewable hydrogen production.
From 2025 to 2030, hydrogen will become “an intrinsic part of an integrated energy system” with a target of 10 million tonnes of renewable hydrogen by 2030 and 40 GW of electrolyser capacity. Hydrogen will play a crucial role in balancing the electricity system by transforming electricity into hydrogen when renewable electricity is abundant. Local hydrogen clusters or "Hydrogen Valleys" will develop, initially relying on local production of hydrogen transported over short distances. The need for EU-wide logistical infrastructure will also emerge, with existing gas grids potentially repurposed for transporting hydrogen over long distances.
By 2030, the EC will aim to establish an “open and competitive EU hydrogen market, with unhindered cross-border trade and efficient allocation of hydrogen supply among sectors”. The Commission also recognises that “sustainable biogas may have a role in replacing natural gas in hydrogen production with CCS to create negative emissions.”
In order to deliver this Roadmap the EC has identified the following areas of focus;
1. An investment agenda for the EU
The Commission will launch the Clean Hydrogen Alliance bringing together industry, national, regional and other stakeholder to “build a concrete pipeline of projects”. From now to 2030, investments in electrolysers could range between €24-€42 billion, with €220-340 billion required to connect 80-120 GW of solar and wind capacity to these electrolysers. From now to 2050, investments in production capacities could amount to €180-470 billion. A range of funding mechanisms will be utilised to deliver the required investment, including but not limited to Next Generation EU, the InvestEU programme, the ETS innovation Fund, the European Regional Development Fund and the Cohesion Fund. The Commission also intends to leverage the Connecting European Facility Energy to fund “dedicated infrastructure for hydrogen, repurposing of gas networks and carbon and capture projects.”
2. Boosting demand for and scaling up production
According to the EC, “building up a hydrogen economy in Europe requires a full value chain approach”. In order to reach the objective of 40 GW electrolyser capacity by 2030, an appropriate policy framework is needed to enable hydrogen to contribute to decarbonisation at the lowest possible cost. With the need to scale-up renewable and low-carbon hydrogen before it becomes cost-competitive, support schemes are likely to be required.
3. Designing a framework for hydrogen infrastructure and market rules
With increasing demand, the need for longer-range transportation to ensure that the entire system will emerge to provide a competitive and secure hydrogen market. According to the EC “elements of the existing pan-European gas infrastructure could be repurposed to provide the necessary infrastructure for large-scale transport of hydrogen”. To enable repurposing of existing assets, the review of the regulatory framework for competitive decarbonised gas markets will allow such investment with an overall energy system perspective in mind. An enabling regulatory framework will be developed, including “removing barriers for efficient hydrogen infrastructure development through a review of the gas legislation for competitive decarbonised gas markets” by 2021.
4. Promoting research and innovation in hydrogen technologies
The EC has identified that to “ensure a full hydrogen supply chain to serve the European economy, further research and innovation efforts are required”. On the generation side, this will entail upscaling to larger size electrolysers; later this year the EC intends to launch a call for proposals for a 100 MW electrolyser. The repurposing of existing gas infrastructure for transporting hydrogen will also require research and standardisation activities. “Under the Research and Innovation framework Programme Horizon Europe, a ‘Clean Hydrogen Partnership was proposed with main focus on renewable hydrogen production, transmission, distribution’ storage and end-use technologies”.
5. The international dimension
The EC has also identified the potential for hydrogen imports from neighbouring countries, including those connected to the EU market through pipelines which have strong potential for renewable hydrogen. For example North-Africa, due to its abundant solar potential and proximity, could be a “supplier of cost-competitive renewable hydrogen to the EU”. According to industry's estimate 40 GW of electrolysers could be installed in the Eastern and Southern Neighbourhood by 2030.
Both renewable and low-carbon hydrogen can make a significant contributions to achieving Europe’s Climate ambition. Gas networks can play a key role in this regard helping to deliver a functioning and integrated European market for hydrogen which maximises the potential of hydrogen to decarbonise energy systems. A key first step in this regard will be the signalled review of the gas legislation for competitive decarbonised gas markets in 2021.
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Author: Stephen O’Riordan, European Affairs Manager, Gas Networks Ireland