The European Union has recognized the transformative potential of hydrogen, and a proposal to establish the EU Hydrogen Bank is at the forefront of this endeavour. In her State of the Union speech, President von der Leyen emphasized the pivotal role of hydrogen in Europe’s sustainable future. She highlighted its potential to revolutionize heavy industries, power transportation methods such as trucks, ships, and planes, all while drastically reducing greenhouse gas emissions. It’s no wonder green hydrogen has been hailed as the game changer for the European energy landscape. But what is green hydrogen and how is it different from traditional, ‘grey’ hydrogen? We have a great article to shed some light on that. As the proposal moves through the legislative stages, it is worth examining the arguments raised by experts in the field as well, revealing the complexities and opportunities surrounding this ground-breaking initiative.
The European Hydrogen Bank Proposal: A Brief Overview
President Ursula von der Leyen’s announcement in September 2022 set the stage for the creation of the EU Hydrogen Bank. This ambitious proposal aligns with Europe’s commitment to climate neutrality by 2050, marking a significant step forward in the realization of a sustainable, green energy landscape. To make this vision a reality, Europe is setting ambitious targets. REPowerEU has doubled its 2030 target to produce 10 million tons of renewable hydrogen annually in the European Union. However, the grand challenge lies in bridging the investment gap and establishing a dynamic marketplace for hydrogen. This is where the proposed European Hydrogen Bank comes into play.
The European Commission’s Work Programme for 2023 outlines the legislative proposal for the EU Hydrogen Bank, which is scheduled to be delivered in the third quarter of 2023. This proposal could encompass both legislative and non-legislative elements, depending on the specific requirements and considerations that emerge during the drafting process.
What are the objectives of the initiative?
The Communication on the European Hydrogen Bank released on March 16, 2023, provides a detailed blueprint for this initiative. Its primary objective is to unlock private investments in hydrogen value chains, both within the European Union and beyond its borders. By connecting the supply of renewable energy to the surging demand for hydrogen, the European Hydrogen Bank intends to address the initial investment challenges that have hampered progress in the green energy sector. It also aims to establish an initial market for renewable hydrogen, presenting new growth opportunities and job prospects.
Moreover, the European Union is also engaging in green hydrogen partnerships with various countries globally, including Egypt, Kenya, Namibia, and Latin American nations. These partnerships leverage abundant renewable energy resources to produce clean hydrogen and further boost the decarbonization movement. The goal is to create a level-playing field between EU production and third-country imports.
Talking money
The EU Hydrogen Bank proposal is not only about setting rules but is also underpinned by substantial investments. Europe is investing in hydrogen valleys, hydrogen-powered trains, and clean-steel factories through initiatives like NextGenerationEU and REpowerEU. Additionally, over 17 billion euros in State Aid has been approved for 80 hydrogen projects across the European Union. The first auctions of the Hydrogen Bank, backed by 800 million euros in European funding, are set to launch in November, according to President Von der Leyen’s opening remarks at the Clean Transition Dialogue on Hydrogen, held on October 10. These auctions will reward innovative and competitive companies that can produce hydrogen at the lowest cost, thereby reducing consumer prices and mainstreaming clean hydrogen.
Where is the proposal in the legislative process?
The European Parliament’s Committee on Industry, Research, and Energy (ITRE) is actively engaged in this transformative process. On July 12, it was tasked with producing an own-initiative report (INI) on the European Hydrogen Bank, with MEP Robert Hajšel serving as the rapporteur. As of now, December 11 is the indicative date for its discussion in plenary.
A Multi-Faceted Debate on the EU Hydrogen Bank. Crucial Aspects to Focus On
With the industry finding itself just at the beginning, it is important to incentivize and focus on production, infrastructure, and technology in the hydrogen sector simultaneously. This approach would put into perspective the practical implementation of the EU Hydrogen Bank’s objectives. However, the regulatory framework as it is now would be most effective in an already established hydrogen market. Due to the doubts about the initial demand needed to kickstart the hydrogen market, experts advocate for more flexibility instruments, raising three key demands: targeted instruments to reduce the gap between clean and fossil energy, legally binding targets with concrete steps, and the simultaneous pursuit of sustainability and energy security.
The Role of Transmission System Operators (TSOs)
According to a European Parliament directive from 2019, a Transmission System Operator is a natural or legal person responsible for operating, ensuring the maintenance of and, if necessary, developing the transmission system in a given area and, where applicable, its interconnections with other systems, and for ensuring the long-term ability of the system to meet reasonable demands for the transmission of electricity. While some projects on hydrogen are on the horizon in the next 2-3 years, TSOs require regulatory and early financial support to make them a reality. Regarding the infrastructure needed for hydrogen transmission, the repurposing of existing pipelines is an option that would cost only 30% of the price of building new pipelines. However, the hydrogen traveling through repurposed pipelines would lose some purity percentage, which is relevant due to the need of high-purity hydrogen for specific industries. Beyond the backbone infrastructure, some experts also emphasize the need for diversification, including import terminals. Their perspective demonstrates the dynamic nature of the hydrogen sector, including the necessary regulation of assets.
The creation of the EU Hydrogen Bank is poised to be a game-changing milestone in the journey toward a sustainable and carbon-neutral Europe. As this legislation moves through its various stages, boutique consultancies like Lykke Advice can play a crucial role in advocating for the interests of SMEs in the clean energy sector, helping them navigate the evolving legislative landscape and ensure that their voices are heard, contributing to a more inclusive and prosperous green energy future for all.
by Farweb