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EC seeks views on huge EU clean hydrogen output, use growth plans

Highlights

Wants a hydrogen market with strong price signals

Looking at public funding options for green hydrogen

Mulling new EU rules to help drive massive scale-up

Brussels — The European Commission wants to see a massive scale-up in EU clean hydrogen production and demand to help meet its 2030 and 2050 climate goals, and is asking stakeholders how best to achieve this.

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The EC now considers clean hydrogen so important that it will present a dedicated EU hydrogen strategy alongside its EU energy sector integration strategy expected on June 24.

Investing in renewable energy and clean hydrogen supply, storage and transport also has "a strong potential" to help EU economies recover from the coronavirus pandemic lockdown impacts, the EC said in a public consultation paper on Wednesday.

The hydrogen strategy would prioritize support for renewable "green" hydrogen, which is made by electrolyzing water using renewable power.

But low-carbon "blue" hydrogen, made from natural gas with carbon capture and storage or pyrolysis, for example, could help build medium-term demand for hydrogen until green hydrogen becomes more competitive, the EC said.

The EC considers both green and blue products as clean hydrogen.

Price signals needed

Strong price signals and effective markets with an "enabling" legal framework are key to overcoming the "current market failure" to develop clean hydrogen, the EC said.

These would help ensure resources are allocated efficiently and clean hydrogen is used where it is most valued.

The EU would have to address lack of production and infrastructure, high costs and low efficiencies in the clean hydrogen value chain to reach the scale needed to contribute to its 2030 and 2050 climate goals "in a timely and cost-effective way," the EC said.

The EU has a binding 2030 target to cut its CO2 emissions by at least 40% below 1990 levels, and is considering increasing this to 50%-55% as part of efforts to be climate-neutral by 2050.

Hydrogen currently accounts for less than 1% of EU energy use. It is mainly produced from natural gas and used as feedstock for industrial processes such as making fertilizers and in refineries.

This "grey" hydrogen is much cheaper than the current lower-carbon alternatives.

International trade

The EC sees "a pressing need" for a coordinated EU approach to this new hydrogen market, as national governments like Germany and the Netherlands start to develop and adopt their own strategies.

Ensuring hydrogen can be traded and flowed across national borders easily is a key driver in mainstreaming its use by avoiding fragmented markets, the EC said.

International relations will also be important for work on global hydrogen standards and supply security, the EC added.

There is scope, for example, for the EU to develop new hydrogen supply relations with neighbors such as Ukraine, the western Balkans, and Mediterranean countries.

The EC did not mention Russia, however, which is the EU's single biggest external supplier of natural gas and potentially a major supplier of competitively-priced blue hydrogen.

Global collaboration on hydrogen would help speed up technology breakthroughs and enable "efficient and consistent" use, for example in long-distance shipping.

Policy support

The EC wants to identify the policy measures needed to enable the massive clean hydrogen scale-up, and could propose EU legislation on this in June 2021.

It is looking at developing the EU market and grid rules for clean hydrogen, and creating a "robust certification scheme."

Such a scheme would help the market differentiate between hydrogen with different carbon footprints and production methods.

The measures could also include public funding and research support to develop large-scale renewable hydrogen, and investments for infrastructure.

The EC is also looking at measures "to support a clean energy industrial value chain," and to boost cooperation both between the EU's national governments and with international partners.

The EU hydrogen strategy road map consultation is available on the EC's website and open until June 8.