Green hydrogen could be the key to helping Europe achieve its goal of zero emissions by 2050 and it is also likely to provide valuable help in enabling the countries of the European Union to overcome the Covid-19 related economic crisis through an intense program of investment and job creation.
Indicating as much was a document by the European Commission published in July, which not only set out the points of a hydrogen strategy shared at European level, but also revealed Europe’s huge ambition to play a driving role at a global level in the journey towards decarbonization, climate neutrality and genuinely clean energy.
If the goals concerning the development of renewable hydrogen within the European economic system are achieved – and the document uses data and numbers to demonstrate their feasibility – Europe can build a technological advantage when it comes to energy and will represent a guiding light to be followed and replicated all around the world.
But what are the foundations on which a European hydrogen strategy can be built? First of all, it is important to acknowledge that the technology for producing green hydrogen is rapidly closing the gap on grey and blue hydrogen in terms of competitiveness. Proof of this can be seen in the huge growth in investment in the sector. “In the period from November 2019 to March 2020 alone,” the document states, “market analysts have witnessed the lengthening of the list of global investments in electrolyzer construction by 2030 go from a capacity of 3.2 GW to 8.2 GW, of which 57% will be in Europe. Furthermore, the number of companies that have joined the International Hydrogen Council has gone from 13 in 2017 to 81 today.”
Increasingly ambitious targets
What is behind this renewed interest? Europe had already estimated growth from today’s 2% to 13-14% in 2050 in the share of hydrogen in the energy mix as part of its climate neutrality program. But the strategy launched in July set out goals that are even more ambitious: “The rapid and large-scale use of clean hydrogen is fundamental for the European Union for a climate policy that is even more ambitious, capable of reducing greenhouse gas emissions by at least 50% and closer to 55% by 2030 in a way that is also sustainable from a cost point of view.” To this can be added the competitiveness of European technologies for the production of green hydrogen and the benefits that the continent can obtain from the global development of its use as an energy vector. This is able to stimulate an enormous amount of investment by 2050 in Europe, estimated at between 180 and 470 billion euros. In such a scenario hydrogen could, over this same period, end up contributing 24% of the entire global demand for energy, powering an annual market worth 630 billion euros.
A boost to innovation and investments
This pathway boasts a huge potential that at the moment, however, is limited by the current cost of producing green hydrogen, which is more expensive than its grey variant. The challenge at the center of European strategy is to make it competitive through a plan that involves a joint effort by industry and member states. This aims to make green hydrogen economically competitive through a complex series of actions to create a precise regulatory framework to aid progress, incentivizing research and innovation, creating new markets and boosting investments.
According to the Commission, the gradual decline in the cost of electrolyzers, which has already fallen by 60% in the last decades, will make green hydrogen more competitive with its grey counterpart by 2030 in areas in which cheap electricity is produced from renewable sources.
A pathway in three stages
In the short term, by 2024, the goal is to achieve production of 1 million metric tons of green hydrogen each year, destined mainly for decarbonization of energy-hungry sectors, such as the chemical industry, heavy industry and particular types of transport, for example road haulage. This initial effort will make demand structural in the following phase, between 2025 and 2030, when the production of green hydrogen should have increased to 10 million metric tons annually and, in terms of capacity to 6 GW by 2024 and 40 GW in 2030. These efforts should be extended to sectors for which decarbonization is more difficult to achieve, such as steel production, marine transport and railways as well as the increasingly widespread use of hydrogen as an energy vector, that is as a “storage tank” of energy to use when required depending on daily and seasonal needs.
The third phase of the European strategy extends from 2030 to 2050, when it is expected that green hydrogen technology will reach full maturity and its use will be possible in all those sectors in which decarbonization is currently more difficult.
The countries leading the way
Confirming the indications of Europe’s new hydrogen strategy, some countries have already taken their first steps. Germany, for instance, in June launched a 9-billion-euro investment program with the goal of becoming the world’s leading producer of green hydrogen within 10 to 15 years. France has outlined a 7.2-billion-euro plan, which will be added to a further 3.4 billion euros allocated for the “ecological transition” that is already partly earmarked for research into sustainable hydrogen. Spain has approved a strategy to build 4 GW of electrolyzers by 2030, developing a passenger transport fleet powered by hydrogen and increasing substantially the industrial use of green hydrogen. The Netherlands has also approved a wide-ranging plan that includes the creation of numerous production plants.
The strategy being pursued by Portugal, which has set a target for producing hydrogen through electrolysis that is the most ambitious of all in relation to the country’s GDP, is also of particular interest. The country has signed a bilateral cooperation agreement with the Netherlands to connect their respective plans for the development of green hydrogen until 2030 also through logistic and import-export links. Other countries such as Austria and Italy are also betting on the potential of hydrogen as a resource for the future and are currently putting the final touches to guidelines for detailed national hydrogen strategies.