LEAK: EU puts onus on ‘renewable hydrogen’ in
latest draft strategy
By Frédéric
Simon | EURACTIV.com 22 Jun 2020 (updated:
1 Jul 2020)
By 2030, up
to €50-150 billion would be invested into solar and wind power capacity
dedicated to clean hydrogen production, according to the draft Commission
strategy. [Vattenfall / Flickr]
An updated
version of the European Commission’s draft hydrogen strategy confirms the EU’s
“priority focus” on clean hydrogen produced from renewable electricity, but
also recognises the role played by “fossil-based hydrogen” in the transition.
“Renewable
hydrogen” produced from wind and solar power is “the most compatible option
with the EU’s climate neutrality goal in the long term and is the priority
focus” of the EU executive, states the latest draft of the strategy, seen by
EURACTIV.
“The choice
for renewable hydrogen builds on Europe’s industrial strength in electrolyser
production,” the EU executive argues in the document – due for official
publication on 8 July – confirming the
main thrust of an earlier draft which surfaced last week.
LEAKED: Europe’s draft hydrogen strategy
The European Commission aims to promote so-called
“green” hydrogen produced from renewable electricity over the “grey” sort
obtained from natural gas steam reforming, according to a leaked policy
document obtained by EURACTIV.
Gigawatt-scale
green hydrogen factories
The EU’s
main objective is to rapidly decrease the price of clean hydrogen by rolling
out “dedicated gigawatt-scale green hydrogen factories”.
At least
4GW of electrolysers would be deployed across the EU by 2024 to reach that
objective, with “at least 40 GW” installed by 2030.
Clean
hydrogen can contribute to reducing emissions “ahead of 2030” and “pave the way
for a climate-neutral economy in 2050 by replacing fossil fuels in
hard-to-decarbonise sectors” of the economy, such as steelmaking and chemicals,
the document argues.
By 2030,
the Commission estimates that €13-15 billion could be invested in electrolysers
across the EU, in addition to €50-150bn for a dedicated wind and solar capacity
of 50-75GW. In total, the EU executive projects that up to €180bn could be invested
in clean hydrogen production by 2050.
But the
document also recognises other forms of low-carbon hydrogen produced from
non-renewable energy sources – either through grid-connected electricity or via
natural gas steam reforming.
In the
latter case, hydrogen will be considered “low-carbon” only if the associated
emissions are offset using carbon capture and storage (CCS) technology, the
document says.
“In the
short and medium term, however, low-carbon fossil based hydrogen will also play
a role, primarily to rapidly reduce emissions from existing hydrogen production
and support the parallel and future uptake of renewable hydrogen,” it adds.
For the European Greens, this is a no-go.
“The gas lobby has massive influence on the EU
hydrogen strategy,” said German Greens MEP Michael Bloss. “While the Commission
makes it clear that clean hydrogen must come from renewable energies, it still
wants to invest in fossil hydrogen,” he told EURACTIV in emailed comments.
“It makes
no sense. This means that money is being sunk into a fossil billion-euro
grave,” Bloss warned.
Electricity
giants join forces on renewable hydrogen
Major
European electricity groups – including Enel, Iberdrola, Ørsted, and EDP – have
issued a joint call urging the European Commission to prioritise renewable
hydrogen in its upcoming pandemic recovery plan.
EU climate
chief Frans Timmermans makes no secret of the fact that he sees Europe’s
existing gas network as a crucial asset in the transition to clean hydrogen.
By 2030,
some €120-130bn would be required for hydrogen transport and storage as well as
refuelling stations, the document says. Using existing gas networks could help
bring down the final price tag.
“It is
important that we look at existing natural gas and LNG infrastructure to see to
what extent it is already usable for hydrogen or can be adapted to the use of
hydrogen,” Timmermans told journalists at a recent press briefing.
“The more
we can have dual use of infrastructure, the better it is – also to make the
transition to green hydrogen affordable in the future,” he added, saying he was
“really excited by those possibilities”.
Natural gas
is a 'caveat' in energy transition, EU admits
While
fossil fuel projects are in theory excluded from EU funding, natural gas will
continue to play a key role in replacing coal while helping to build a hydrogen
infrastructure at least cost, EU climate chief Frans Timmermans said on
Thursday (28 May).
“Low-carbon
fossil-based hydrogen”
The draft
strategy elaborates on the potential of gas infrastructure, saying that “around
50% of existing fossil based hydrogen production could be retrofitted to
produce low-carbon fossil-based hydrogen”.
By 2050,
the Commission anticipates that €3-18bn could be invested in “low-carbon
fossil-based hydrogen”. Meanwhile, retrofitting existing fossil plants with CCS
is estimated to cost between €1-6bn by 2030, strategy adds.
But Bloss
is concerned that the 50% retrofitting figure is extracted from a study by
consulting firm Navigant for an industry consortium called “Gas for Climate”.
“It is very
worrying that the Commission relies one-sided on studies of the gas industry
for the question of infrastructure,” the MEP said, insisting that the EU
executive “must use independent studies as a basis for its strategies.”
“The
Commission is walking on very thin ice,” he warned.
The
International Association of oil and gas Producers (IOGP), for its part, warned
that the EU’s hydrogen strategy was “bound to fail” if it focused only on
renewable hydrogen produced from electrolysis, which currently represents only
a tiny fraction of the market.
“We can’t
afford to throw all our weight on a single still marginal technology and hope
for the best, while the fundamentals aren’t in place,” said François-Régis
Mouton, Europe director at IOGP. “A strategy built for success needs to
leverage all clean hydrogen production sources way beyond 2030,” he added,
citing “nuclear, hydropower, methane pyrolysis and gas with CCS” as potential
energy sources.
Creating a
“liquid market”
Elsewhere,
the policy focus of the strategy will be to create a “liquid and
well-functioning hydrogen market and on incentivising both supply and demand in
lead markets” such as steelmaking, chemicals and heavy-duty transport.
Measures on
the demand-side will include initiatives for hydrogen in heavy-duty transport,
including aviation and shipping, as well as a future “EU strategy on clean
steel” that will be fleshed out at a later stage.
France
unveils €15bn in aerospace aid
The French
government on Tuesday (9 June) lifted the lid on a €15 billion support package
for its lucrative but embattled aerospace sector. The scheme involves a €500
million investment fund for smaller companies and a plan to debut a
carbon-neutral plane by 2035.
One key
measure to stimulate supply are so-called “carbon contracts for difference” to
bridge the gap between the CO2 strike price and the actual price of CO2 on the
EU’s Emissions Trading Scheme (ETS). Such a system could be applied, for
example, to stimulate the production of low-carbon steel and chemicals, the
Commission says.
Andreas
Graf, from think tank Agora Energiewende, applauded the move. “It is
encouraging that the Commission is thinking about how to create new incentives
for low-carbon hydrogen production via the ETS, including by reducing free
allocation for conventional fossil hydrogen production facilities,” Graf said.
“This will
create a significantly larger incentive to apply CCS to conventional fossil
hydrogen production” and make renewable hydrogen competitive with fossil
hydrogen, “with or without CCS”, he said.
Graf also
found it “encouraging” that the Commission reaffirms its intention to address
methane leakage in its upcoming Strategy on Methane. “But the Commission
provides little detail here, so it would be good to find out more already in
the final hydrogen strategy,” he said.
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