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Inclusion of nuclear in EC sustainable power taxonomy boon for hydrogen: trade body

Highlights

Some countries rely on nuclear for clean hydrogen

Hydrogen blending key to clean gas-fired power

EC to soften stance on 'additional' renewables for hydrogen

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The European Commission's inclusion of nuclear power generation in its sustainable investment taxonomy will help build a hydrogen economy across the continent, industry association Hydrogen Europe told S&P Global Platts Jan. 7.

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Countries that do not have ready access to renewable power generation will depend on other climate-neutral technologies in the interim to enable them to develop and use hydrogen in their energy systems, Hydrogen Europe CEO Jorgo Chatzimarkakis said in an interview.

Such countries, including the Czech Republic and Slovakia, as well as countries with large nuclear generation fleets such as France "could not take part in all these climate-neutral technologies if they could not have the possibility to use nuclear", Chatzimarkakis said.

The European Commission has proposed including nuclear power, along with natural gas under limited strict conditions, in a list of environmentally sustainable energy investments in a document sent to national governments Dec. 31.

Chatzimarkakis emphasized a transitional role for nuclear power.

"Renewable hydrogen will come in bulk at a certain time," he said. "Until then, we cannot afford to ignore use certain applications of hydrogen. We need to do it, and therefore this nuclear aspect is quite an interesting and important aspect as a transition technology."

Hydrogen blending in gas

The EC has also drafted strict rules for counting gas-fired power generation investments as sustainable in certain circumstances.

Conditions include greenhouse gas emissions lower than 270g CO2/kWh, new facilities must replace higher emitting generation and plan to switch to using only low-carbon gas by 2036.

"Hydrogen blending mandates contribute" to the EU's gas-fired power generation taxonomy rules, Chatzimarkakis said. "Biogas and biomethane will also become much more important."

"We need gas infrastructure to be retrofitted or repurposed for hydrogen use as a main driver of the use of hydrogen in order to mitigate climate impact. We need the infrastructure. It is by far the cheapest way to transport hydrogen from hub to hub, or from production to client, or even from outside Europe."

Renewables 'additionality' rules

The draft EC delegated act is an important aspect of Europe's energy transition, in addition to other legislative proposals such as its 'Fit for 55' climate package and the hydrogen and gas decarbonization package released in 2021, Chatzimarkakis said.

"We are quite happy to see this delegated act in combination with all the other legislative proposals that have been tabled," he said.

The EC is also due to publish a separate delegated act ruling on 'additionality' criteria for renewable power sources for hydrogen production plants to qualify as renewable.

A draft released in 2021 had strict requirements that electrolyzers were connected to new renewables built within a short time of the hydrogen facility, as well as being in close proximity.

Hydrogen Europe and others have said that such rules unfairly discriminated against hydrogen technology and risk stalling investment in the sector.

However, Chatzimarkakis felt the EC had taken the industry feedback on board.

"I think we can now count on a new renewable act that brings together both the additionality principle, which is absolutely important, without hampering the use of hydrogen technology. I think the Commission understands."

"The tendency of the new German government towards the concept of additionality is more down-to-earth. It is not singling out one technology," he said.

Chatzimarkakis said a decision from the EC was expected in coming weeks, which would be important to give investors' confidence in the market framework for hydrogen in Europe.

Prices off peaks

Blue hydrogen produced from fossil fuel sources coupled with carbon capture and storage is projected to be cheaper to produce than green hydrogen from electrolysis powered by renewables, but costs were expected to fall rapidly this decade.

S&P Global Platts assessed the cost of producing renewable hydrogen via alkaline electrolysis in Europe at Eur15.91/kg ($17.99/kg) Jan. 6 (Netherlands, including capex), based on month-ahead power prices.

Prices have fallen sharply from almost Eur25/kg in late December, when soaring gas prices lifted power generation costs across the continent but remain well levels of below just Eur4/kg a year ago.

PEM electrolysis production was assessed at Eur18.85/kg Jan. 6, while blue hydrogen production by steam methane reforming (including carbon, CCS and capex) was Eur6.53/kg.