Europe is hedging its bets on clean hydrogen to achieve climate neutrality. Will it work?
As the European Union gets to work on climate ambitions that aim to encourage businesses and consumers to choose greener options, the bloc and the energy industry are hedging their bets on hydrogen.
But could clean hydrogen be the answer to achieving climate neutrality?
Clean hydrogen, or green hydrogen, is made without fossil fuels and uses electricity from renewable energy technologies. But it is also the most expensive way to produce gas and the cost is a barrier.
Currently, the most widely used means of producing gas is what is called “gray hydrogen”, but it is one of the most polluting methods. It operates using natural gas by steam methane reforming but the emissions are not captured.
Clean hydrogen will be essential to help decarbonize sectors such as industry, heavy transport and seasonal storage, according to a report from Hydrogen4EU, a research partnership made up of international organizations and energy giants.
But the report makes it clear that this is not the silver bullet to solving the entire climate problem. Instead, it is the missing link for sectors that cannot be easily decarbonized by electrification.
Oil and gas companies and governments have also hailed clean hydrogen as the gas of the future, which could help Europe meet its goal of net zero carbon emissions by 2050.
Europe’s hydrogen plan
The European Commission unveiled its Fit for 55 climate package on July 14, which included some of the bloc’s most ambitious proposals to cut carbon emissions and wean the EU 27 off fossil fuels.
Part of the draft proposals to achieve this is to give a significant boost to the development of the European hydrogen industry.
As such, it details a plan for a target share of 50% of hydrogen consumption in the industrial sector. It has also set an ambitious target of 10 million tonnes of renewable hydrogen to be produced in the EU by 2030 and to make hydrogen refueling stations more widely available.
How much will it cost to implement cleaner hydrogen?
The challenge of clean hydrogen is to reduce costs to compete with fossil fuels.
“I think what is really important at the moment is that you cannot make money with hydrogen projects because clean technologies are more expensive than dirty technologies”, Johannes Trüby, director from the economic energy and modeling consultancy at Deloitte and one of the authors of the report, told Euronews Next.
“As soon as the regulatory frameworks are in place for companies to break even, the hydrogen projects will come, and you cut costs.”
He said the profits would come next in turn, but it is currently impossible to put a price on what the clean hydrogen industry might be worth.
“Green hydrogen certainly plays a very important role in the transition to achieving net zero,” said Trüby.
“I think what we also recognize is that the amount of infrastructure you need for this green hydrogen is really gigantic,” Johannes Trüby of Deloitte, one of the report’s authors, told Euronews Next .
But even though producing green hydrogen may be more cost effective, the Hydrogen4EU report says it will not be enough to meet all future demand for clean hydrogen.
He said that to meet Europe’s demand for hydrogen in 2050, “1,000 to 1,700 GW of dedicated photovoltaic solar panels, a similar amount of wind power and 680 to 1,500 GW of electrolysers” would be required.
But this should increase tenfold since the EU has installed 120 GW of photovoltaics and 170 GW of wind power in total.
He estimates that developing hydrogen structures could cost Europe between 1.3 and 1.5 trillion euros, which would include facilities for producing, shipping, storing and pipelines for hydrogen.
Another way to boost clean hydrogen would be to increase the production of blue hydrogen, which is made from natural gas and the resulting carbon capture and storage (CCS).
It is considered low carbon because it buries the associated CO2 emissions underground. But environmental groups and some EU members are hesitant because it is not as clean as green hydrogen.
But the Commission and industry experts agree that blue hydrogen will be needed to develop the market.
The Hydrogen4EU report advises keeping all options open when it comes to hydrogen production and argues that a technologically diverse model cuts the cost of building a low carbon hydrogen value chain by 2,000 billion euros by 2050.
A European hydrogen hub?
Europe wants to be a world leader in the clean hydrogen market and is in a strong position to do so, says Noé van Hulst, hydrogen advisor at the International Energy Agency (IEA) and advisor at Gasunie, a Dutch gas company.
“We will have to have a policy in which you reallocate the pipelines,” van Hulst told Euronews Next.
“Then you can transport clean hydrogen from the supply sources to the demand centers, which may be further away, but luckily we can do that by reallocating the pipelines.”
He said that Europe has fortunately already recognized this possibility and that European gas infrastructure companies have devised the so-called hydrogen backbone plan, thanks to which in the next decades and already in the five to ten next few years, it can be done gradually.
“By 2040, hydrogen will be able to be transported mainly from east to west, from north to south, and vice versa across Europe. And that’s what you need to build a truly integrated clean European hydrogen market, including storage, ”he said.
Van Hulst predicts that in the long run, we will likely see clean hydrogen come to market around the world. But to do this, we will need to know clearly what product is being marketed and what its carbon footprint is.
“There has to be a respected, strong and reliable certificate market built on that. Clean hydrogen can then become a new global commodity market,” he said.
The International Hydrogen and Fuel Cell Partnership is currently working on a methodology on how to calculate the amount of carbon produced for different ways of producing hydrogen.
What future for hydrogen?
For now, the achievement of the EU plan to produce 10 million tonnes of renewable hydrogen by 2030 is a long way off.
The Trüby team at Deloitte is monitoring the various hydrogen projects announced across Europe and calculating how much hydrogen they could produce once they are up and running.
He said that in the past two and a half years, only a third of the EU’s 10 million tonne ambition had been produced in 2020.
“The supply gap is still pretty big. I mean, there’s still nine years to go until 2030 and you could see more projects coming in,” Trüby said.
“But it just shows that if you take the Commission’s expectations and compare them to what is happening on the ground, there is still a pretty big supply gap.”
That said, uses of clean hydrogen are plentiful, including for heavy transport, especially trucks, as electric vehicles struggle to travel long distances and haul heavy weights. It can also be used for airplanes and ships.
Hydrogen is also beneficial for heavy industries such as steel, cement and chemicals.
“It’s a topic that really touches many stakeholders in the energy industry and I think that’s why we can expect it to be important,” Trüby said.
“How deep is it going to go then, that’s another story. But everyone is talking about hydrogen for exactly these reasons, because it has an impact on everyone.”