This week, the European Commission presented its hydrogen strategy. It sets out how to make clean hydrogen a viable solution for a climate-neutral economy and build a dynamic hydrogen value chain in Europe in the next five years, write Kadri Simson and Francesco La Camera.
Kadri Simson is the EU Commissioner for Energy. Francesco La Camera is the director-general of the International Renewable Energy Agency. This opinion piece was written exclusively for EURACTIV.
Europe’s investment in renewable hydrogen is anchored in its Green Deal strategy and commitment to zero emissions by 2050. The EU is accelerating the build-up of its renewable power capacity, particularly from off-shore wind.
It has proposed a climate law that provides policy certainty to governments and the private sector. It has similarly placed green investment, including in hydrogen electrolysers, fuel cells and storage technologies, at the centre of its 750 billion euro recovery plan “Next Generation EU”.
This strategy is an important milestone for Europe’s energy policy, but carries a broader significance: hydrogen is a strategic opportunity and should be a shared priority at global level for a climate-safe recovery.
To deliver on the net zero objective, we need renewable based electricity, but also decarbonised fuels in sectors where electrification is not an option – like heavy industry, some areas of transport or heating.
In a world with an increasing share of renewable energy generation, the questions of storage and balancing become more and more crucial. Hydrogen can fill many of these gaps that exist at present.
Hydrogen can be used as feedstock in steel-making and in refineries, ammonia production and chemical industry. It can fuel buses, trains and trucks and in the future, potentially ships and planes.
It can balance a renewables-based electricity system by turning electricity into hydrogen when the wind blows or the sun shines and store large amounts of this power to be used later.
Yet, for hydrogen to realise its potential, it needs to be clean, cost-competitive, abundant and transportable.
We need well-designed policies to make renewable hydrogen cheaper so that it can replace hydrogen currently produced from fossil fuels. This is achievable. Renewable power is already increasingly cheaper than any new electricity capacity and electricity prices, particularly for solar and wind, are expected to decrease further.
IRENA calculates that electrolyser costs are already five times lower than five years ago, and are expected to further decline within the next decade. Well-targeted subsidies, research and innovation policies, de-risking investment can all help.
As hydrogen is progressively used in new applications, production capacities have to increase. IRENA’s Global Renewables Outlook shows that globally, at least 1700 gigawatts of electrolysers are needed for a climate-safe energy transition by the middle of this century, compared to only 300 megawatts of capacity in operation.
Today, manufacturing capacity is below 2 gigawatts per year. We need much more. In Europe, hydrogen currently makes up less than 2% of the energy mix – it could be 13-14% by 2050.
Expanding the capacity for transportation and logistics will be needed to gradually use hydrogen in areas where it is not produced. This means going beyond local connections and focusing on dedicated pipelines, upgrades to existing natural gas pipelines, refueling stations, storage facilities and shipping.
A supportive regulatory framework, including certification, should enable smooth cross-border trade. We need to work towards the harmonisation of codes and standards for trading renewable hydrogen and its derivatives globally.
Post-Covid 19 stimulus and recovery plans now present an opportunity to address these challenges, to invest in renewable hydrogen including supply infrastructure and deployment.
In Europe, investments in electrolysers could range between €13 and €15 billion by 2030 and between €120-130 billion on hydrogen transport, distribution and storage, and hydrogen refueling stations. Around USD 20 billion dollars could be needed per year globally.
Collaboration at global level can be a multiplier for national strategies. IRENA has taken the lead in supporting countries and facilitating the global discourse on the role of renewable hydrogen for national energy transition strategies.
Following the last Ministerial Roundtable on Green Hydrogen in January 2020, IRENA has established a collaborative framework on renewable hydrogen, to leverage knowledge exchange and international cooperation. The EU will be part of this effort.
Hydrogen is not an answer to all the questions on the clean energy system of the future, but it can answer some of the hardest. It can stimulate innovation, jobs and growth, for recovery. It deserves a global cooperative effort to harness all its potential.
