Hydrogen’s Versatility
Hydrogen will play a vital role in the European Green Deal, yet it stands out from other renewable opportunities for a myriad of reasons. Foremost, it is not a traditional primary energy source in the way we think of solar and wind or oil and gas. Instead, it’s a product created from other natural resources. Still today, we extract 96% of our hydrogen from methane and other natural gases, liquid hydrocarbon and coal to produce ammonia or remove sulphur from fuel in what is dubbed ‘grey’ environmentally harmful hydrogen. More recent technological advancements in carbon capture and sequestering have led to the development of ‘blue’ low-carbon hydrogen. However, as the EU pushes for a climate-neutral future, it is ‘green’ fully sustainable hydrogen that captures the most attention of policymakers.
Clean hydrogen, often called green hydrogen, is created when we use renewably generated electricity to separate water (H2O), splitting the oxygen away from the hydrogen. Currently, this is an expensive and inefficient process, but costs are rapidly falling as the technology advances, and the scale of green hydrogen production grows.
Green hydrogen is turning policymakers’ heads because of its resounding versatility as a feedstock and fuel to de-carbonise traditionally carbon-intensive industries and its capacity to act as an energy carrier and storage comparable to how we store electricity in batteries but at much cheaper rates and in a far more easily transferable form.
‘Next Generation EU’ highlights hydrogen as an investment priority to boost economic growth and resilience, with resounding potential to create local jobs and consolidate the EU’s global leadership. The bank Morgan Stanley cites that by 2050, hydrogen could represent US$2.5 trillion in global annual sales, up from $130 billion in 2017.
Hydrogen’s Future Role
Hydrogen’s popularity stems from what it can achieve renewably that electricity cannot. One long-posed dilemma in the renewable transition is that wind and solar energy are at their most productive when they are least required. Sunny days with a steady breeze may allow for optimal electricity generation. Still, it is precisely those days when consumers use the least amount of power in their homes, which can lead to overloaded energy grids and waste. The reverse also poses true, that when the wind drops, and it is dark, consumers wish to use more electricity at a time when less is being generated. One solution is batteries, but hydrogen offers a much cheaper and more versatile solution. By converting renewable power to hydrogen, it can be stored for long periods and then converted back to electricity as needed. Moreover, once converted to hydrogen, energy is far easier to globally transport as it is not reliant on inter-connected electricity grid networks. Hydrogen can be shipped via cryogenic liquid tankers or gaseous tube trailers and then converted back to electricity at its destination.
Another niche that hydrogen will likely fill is fuel-cell technology for commercial transportation. When it comes to cargo shipping and long-haul lorries, hydrogen fuel boasts faster refuelling, greater carrying capacity for goods and a more extended range due to its higher energy density than its electric battery counterparts. The Alternative Fuel Infrastructure regulation will support hydrogen refuelling stations every 150km along the TEN-T core network and within every urban node. At the same time, the FuelEU Maritime Proposal pushes for the de-carbonisation of our shipping routes. Likewise, the Energy Taxation Directive sets preferential tax rates for the use of renewable and low-carbon hydrogen by end consumers, further incentivising the logistics and transportation industries to make this transition.
Where are the Business Opportunities in the Hydrogen Strategy?
As outlined in the 2020 EU Hydrogen Strategy, by 2024, the EU intends to produce a minimum of 6GW of renewable hydrogen electrolysers and support the production of up to 1 million tonnes of renewable hydrogen. Just half a decade later, in the outlined 2030 targets, the EU plans for the share of renewable hydrogen electrolysers to reach 40GW, accompanied by 10 million tonnes of renewable hydrogen.
From 2030 onwards, the Strategy dictates that Hydrogen will be deployed on a vast scale, focusing on traditionally hard to de-carbonise sectors. For example, steel production accounts for 8% of global emissions because it requires coking coal and blast furnaces, a process that cannot be replicated with renewably sourced electricity. However, by using hydrogen as a replacement fuel in a process known as direct reduction, ‘green’ steel can be produced. Similarly, hydrogen is a critical energy source and feedstock for the chemicals industry, responsible for 70-90% of construction, electronics, and automotive emissions. If the chemicals industry does not de-carbonise, many other sectors will fail to do so as a knock-on effect.
Given these momentously ambitious EU plans and the confidence that hydrogen provides in de-carbonising sectors that solar and wind power cannot, the EU Hydrogen Strategy stresses the need for several policies and initiatives to increase the roll-out of green hydrogen production.
These include the creation of a sustainable industrial value chain to produce vaster quantities of clean hydrogen; policies that incentive and boost demand for clean hydrogen, specifically from the mobility and industrial applications sectors; a clear supportive policy framework that includes well-functioning markets and a dedicated infrastructure and logistical network; the promotion of research and innovation in further hydrogen technologies; international cooperation to establish a global hydrogen market and finally; The European Clean Hydrogen Alliance’s commitment to helping build a robust pipeline of investments.
How Lykke Advice Can Help You Navigate European Energy Policy
The EU’s determined push for climate neutrality creates fantastic funding, resource and networking opportunities for businesses and associations that can contribute to its objectives. Lykke Advice is a Brussels-based consultancy with experience guiding companies and associations through the latest developments in the European Institutions and ensuring your voice is heard in the legislative process. If you wish to learn more about European energy policy, the EU Hydrogen Strategy or other topics, then do not hesitate to get in touch.
by Farweb