5 months ago
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Have we finally woken up from our green hydrogen daydream? – Now that hydrogen scarcity is finally at the forefront of the discussion, time has come for targeting hydrogen to those sectors with no other decarbonisation pathway, but the EU is not there yet.
This op-ed first appeared in ‘Windpower Monthly’ written by Marta Lovisolo, Senior Policy Advisor on Renewable Energy Systems at Bellona Europa.
Three years ago, when I moved to Brussels and started working on energy policy, the narrative around renewable hydrogen was focusing on three pillars: it will be abundant, cheap, and easily imported from all over the world.
Talks were filled with dreams of a hydrogen powered society: the hype was real. The fact that Bellona warned the community of the resources hydrogen would cannibalise from other sectors portrayed us as the “anti-hydrogen” lobby.
Three years down the line, we stand in a very different place. Now that rules are defined and hydrogen is to be produced and consumed, political and industrial players are realising that it’s not abundant. On the contrary, it requires a massive amount of renewable electricity to be produced.
It’s also not cheap: a run towards subsidies is happening across the globe and matching the cost of production and the price the users can pay is getting increasingly difficult. Finally, importing hydrogen into Europe from renewable rich regions is proving hard, both technically and financially.
This leaves us with two certainties: decarbonised hydrogen is and will be scarce for the foreseeable future, and sectors such as the steel or fertiliser industries will need a lot of it to decarbonise. Policy should thus carefully steer this resource to no-regret sectors, instead of promising it to sectors with much more efficient decarbonisation pathways.
Bellona put together a five-ingredient policy recipe to make this happen:
- Target support schemes, such as subsidies and tax reliefs, to no regret sectors;
- plan infrastructure strategically to connect points of supply with industrial clusters;
- adopt binding targets to create demand in those sectors that absolutely need hydrogen for decarbonisation;
- ban blending;
- and use public procurement to kickstart lead markets of final green products such as steel and fertilisers.
Is the European Union’s current policy framework following this recipe? Mostly not.
The hydrogen bank is the main support scheme put in place by the EU, but instead of targeting the use to priority sectors, it directs the limited available funding to those who are the most willing to pay, irrespective of the use.
Infrastructural planning is also failing at this. The TYNDP (ten year network development plan) foresees hydrogen demand in light duty vehicles and space heating, and uses the hydrogen backbone as a blueprint for future infrastructure, despite the fact that this was developed with very strong vested interests by the gas sector. Similarly, the AFIR (alternative fuel infrastructure regulation) mandates the deployment of hydrogen refuelling stations for road transport, despite the sector’s clear trajectory towards electrification.
The Renewable Energy Directive (RED III) adopted a binding target in industry to decarbonise 42.5% of the current use by 2030, and 60% by 2035. It also targets refineries decarbonisation by mandating that 1% of all fuels supplied in Europe will need to be based on renewable hydrogen by 2030. Similarly, the adoption of Fuel EU and Refuel EU pushes the progressive uptake of hydrogen-based fuels in the shipping and aviation sectors. This goes a long way in creating a market for hydrogen in priority sectors. However, by concentrating on current industrial consumption, the steel sector remains outside the boundaries of this mandate.
Blending rules are in negotiation within the Gas Market Package, seemingly bringing the accepted blend level at interconnection points from the Commission’s original proposal of 5% down to a maximum of 2%. This is a step in the right direction, which needs to remain solid throughout the remainder of the negotiations.
Finally, the potential of green public procurement is clearly underutilised. This tool needs to be leveraged to enable the creation of lead market for low-carbon end-use products that need hydrogen for their decarbonisation, such as steel. By setting mandatory environmental criteria in project tenders, with embodied carbon thresholds, public authorities would send the market signals needed to drive the uptake of these products, guaranteeing a long-term demand and assuming the initial green premium to enable a later uptake by the private sector. The EU needs to update its procurement policies beyond voluntary provisions in sectoral legislations, to effectively unlock the potential of the big buyers for decarbonising European industry. ….
Overall, the target setting in the EU is an example that other regions of the world should follow in terms of creating demand for hydrogen in the right sectors, while backing it up with the renewable generation deployment to meet the demand from the electrolysers. However, the supportive landscape that could ensure targets are met is largely missing, leaving the EU strategy towards hydrogen use ambiguous and thus less effective.
The post Europe’s Hydrogen Journey: It’s Time to Move from Hype to Prudent Planning appeared first on Bellona.org.
