With more and more countries pledging climate neutrality, the world needs to find solutions to decarbonise every last part of our economy.
Hydrogen is the word on everyone’s lips, and there are good reasons behind the hype. Because of its multifaceted and versatile nature, it can play a key role in addressing the challenges ahead. On the one hand, it can serve as an energy carrier or as feedstock. On the other hand, it can be used to store seasonal renewable electricity. Hydrogen has a strong potential to facilitate the decarbonisation of ’hard-to-decarbonise’ and energy intensive industrial sectors, such as steel. Moreover, it can be used as green fuel for heavy-duty transport modes, for which currently existing electric battery technologies are impractical.
As the EU moves away from its dependency on fossil fuel, hydrogen will play a key role in our future energy systems, and for delivering on the aim set out in the European Green Deal of achieving carbon-neutrality in the EU by 2050. Through a combination of renewables, smart storage, energy efficiency and flexible grids, latest modelling estimates that clean and sustainable energy can be delivered at scale and at speed – with many experts forecasting that hydrogen will be at the very heart of this transition. But the first question is what form of hydrogen is best suited to realise our climate ambition.
Different types of hydrogen and its abilities
Hydrogen is the most abundant element in our universe, yet it only represents a small fraction of the global energy mix in the EU and beyond. Today, less than 2% of Europe’s energy consumption comes from hydrogen, and that is mainly used for making chemical products like plastics and fertilisers. Moreover, almost all of this hydrogen – a noteworthy 96% – is made from natural gas, emitting significant amounts of CO2 emissions in the process. The first challenge is therefore how to decarbonise hydrogen production.
In simple terms, hydrogen needs a primary source of energy to be produced. This energy source and the process used determine how clean – or dirty – the end product is. Fossil-based hydrogen sourced from natural gas is often referred to as grey hydrogen, and is by far the most common type used at present. Low carbon hydrogen, often referred to as blue hydrogen, is also made from natural gas, but the CO2 emitted during its production are captured and stored underground, which makes it a cleaner option with lower emissions.
Whilst low-carbon hydrogen can play an important transitional role to replace grey hydrogen, the cleanest option of them all is renewable hydrogen, often referred to as green hydrogen. It is created by putting renewable energy sources like wind and solar power through an electrolyser, and its only by-product is water. Accordingly, its production is almost emission-free, which is why it is the form of production generating the most interest – from policymakers, scientists and investors.
Decarbonising our industries
Having identified the form of hydrogen that we favour, the EU is now looking at how to scale up the cost-efficient production, transport and consumption of renewable hydrogen to use the flexibility and versatility that this energy source offers in driving the clean energy transition.
Energy-intensive industrial sectors that are unable to decarbonise via direct electrification are looking for greener, more carbon-neutral energy carriers. Renewable hydrogen therefore offers a promising and realistic prospect of green steel or fertiliser production towards 2030. In transport – given the limitations and costs of current battery technologies, the aviation, shipping, and heavy goods sectors are all searching for carbon-neutral options to fuel long-range hauls.
As the EU is committed to a greater global uptake of renewable energy sources, renewable hydrogen goes hand in hand with an electricity sector that is increasingly dominated by renewable power generation. It helps provide both long-term and large-scale storage of renewables, and gives the energy system immediate flexibility. The storage potential of hydrogen, primarily in salt caverns that are currently used for storage of natural gas, is particularly beneficial for power grids, as it helps to balance electricity supply and demand when there is either too much or not enough renewable electricity generation.
EU hydrogen strategy and long-term investments
The European Green Deal combines the twin effort of reducing our greenhouse gas emissions and preparing Europe’s industry for a climate-neutral economy. Within this framework, hydrogen has been singled out as central for addressing both issues and for evolving our energy systems.
To this end, the Commission launched two different initiatives last July – a strategy for energy system integration and a separate hydrogen strategy. The first strategy outlines how to make our energy system more flexible, where energy can be freely exchanged between the consumer and producer and across different end-use sectors, and where new technologies can be boosted and more easily integrated into the energy market, fostering a climate-neutral energy system with renewable electricity, circularity and renewable and low-carbon fuels at its core. The second strategy takes a more specific look at the necessary steps on making renewable and low carbon hydrogen a key commodity in the energy system.
The EU is committed to increasing the share of renewables, and this commitment translates into an ever-growing share of renewable energy in its mix. In addition, its cost is expected to come down further in the coming years. In this context, the hydrogen strategy explores the potential for renewable hydrogen to help decarbonise the EU economy in a cost-effective way, outlining a range of actions to support the production, transport and creation of demand for this hydrogen as the share of renewables increases.
Renewable hydrogen not only has the potential to support our future renewables-based electricity. Thanks to Europe’s industrial strength in electrolyser production, it can also create new jobs and economic growth in the EU, which will be critical in the recovery of the COVID-19 crisis. This is why the hydrogen strategy also sets out a vision of how the EU can install at least 6 GW of renewable hydrogen electrolysers by 2024, and 40 GW by 2030 in Europe.
Immediate and long-term investments are a fundamental first step for renewable hydrogen to fully take off, and give European industry a head start in an increasingly globally competitive market. In the future EU budget, the Commission highlights the need to unlock investment in key clean technologies and value chains, including clean hydrogen. This has been reinforced in the additional measures aimed at supporting European recovery following the COVID-19 pandemic, which underlines the fact that recovery can go hand in hand with our decarbonisation ambitions. To this end, the Commission has prepared a ‘Power Up’ initiative to encourage EU countries to use their European recovery funding to invest in more renewables, and renewable hydrogen production. Alongside measures to boost investments, the European Commission’s so-called ‘fit-for-55-package’ that will entail policy proposals to reduce greenhouse gas emissions by at least 55% by 2030, will also cover policy proposals to create a well-functioning EU hydrogen market.
Hydrogen projects, research and innovation
Apart from setting out policy and strategy guidance on hydrogen, the EU also supports many projects and initiatives on hydrogen. Key among these is the European Clean Hydrogen Alliance, announced as part of the new industrial strategy for Europe in March 2020 and launched on 8 July 2020, at the same time as the EU hydrogen strategy.
The alliance brings together industry, national and local public authorities, civil society and other stakeholders. It aims at an ambitious deployment of hydrogen technologies by 2030, bringing together renewable and low-carbon hydrogen production, demand in industry, mobility and other sectors, and hydrogen transmission and distribution. Already more than 1000 stakeholders have joined the alliance, and can now submit their projects and boost an uptake of investable hydrogen projects.
In addition, the EU also promotes several research and innovation projects on hydrogen within the Horizon 2020 framework. These projects are managed through the Fuel Cells and Hydrogen Joint Undertaking (FCH JU), a joint public-private partnership that is supported by the European Commission. This includes the EU-funded Djewels project, which will build a 20MW electrolyser to help ensure low-cost green hydrogen for its customers, and STORE&GO that supports new technologies to feed renewable methane into the gas grid, and thereby helps ensure sustainable energy supply in Europe.
In addition, the Hybrit project in the north of Sweden is a good example of how hydrogen can help green our industries, as it uses renewable electricity hydrogen instead of coal to produce carbon free iron and steel. In a similar vein, a 6MW electrolyser developed under the EU funded H2 project supplies green hydrogen to a steel plant in Linz, Austria, and also provides electricity grid services thanks to its flexible power consumption.