Focus on renewable hydrogen to decarbonise the EU energy system
Renewable hydrogen can play a leading role in decarbonising energy-intensive industries as well as heavy or long-haul modes of transport. It also has significant potential to contribute to the EU’s greenhouse gas emissions reduction target by replacing fossil hydrogen production and fossil fuel consumption in industry and the transport sector. The production of renewable hydrogen from solar and wind resources will also support energy system integration. With accelerated deployment, the share of hydrogen in the EU energy mix could reach 13-20% in 2050.
A first comprehensive EU hydrogen strategy was adopted in July 2020, which considered hydrogen investments as essential to accelerate the energy transition and in the context of the recovery from the COVID-19 crisis. Since existing hydrogen production relies on imported natural gas, Russia’s war on Ukraine has placed hydrogen, and renewable hydrogen in particular, in an even more prominent place in the accelerated transition of the EU to move away from Russian fossil fuels and diversify its energy supplies.
Manufacture and use
Hydrogen is a chemical energy carrier, which is produced by consuming energy which is then transferred in molecular form. Energy carriers allow energy from an external energy source to be stored, transferred, and released over time.
Today, most hydrogen is produced from natural gas. Renewable hydrogen is identical to hydrogen of fossil origin, but it is produced by electrolysis from water, which involves the separation of the water molecule into hydrogen and oxygen by applying electricity from renewable energy sources, such as wind and solar. It can also be obtained from biomass as a raw material. As a result, the production of renewable hydrogen is nearly emission-free.
Currently, hydrogen is mainly used as an energy feedstock in industrial processes, but it could also contribute to the production of other gases and liquid fuels. Thanks to its energy density properties, it can also transport and store energy, which makes it particularly suitable for long distance transport and heavy goods. Another aspect that could accelerate its production is the fact that existing infrastructure in gas transport and storage can be reallocated to hydrogen.
An EU-wide hydrogen backbone
The 20 action points of the EU hydrogen strategy, which were implemented and delivered in early 2022, aimed to stimulate demand and scale up production of renewable energy in the EU , to design and enable a supportive legislative framework and to strengthen the leading role of the EU in the international hydrogen market. The REPowerEU plan builds on the ambitions of the strategy, combining various measures to accelerate the deployment and production of renewable hydrogen.
Accelerating hydrogen production
The REPowerEU plan foresees a “hydrogen accelerator”, which sets targets of 10 million tonnes of domestic production of renewable hydrogen and 10 million tonnes of imports of renewable hydrogen by 2030. It includes measures to develop the hydrogen infrastructure, which relies heavily on the deployment of renewable energy. energy and port infrastructure, and its connection to industrial and transport users.
In the plan, the Commission also identifies a series of actions aimed at accelerating the uptake of renewable hydrogen and its derivatives in sectors that are difficult to decarbonise, in particular in transport and industry. For example, it is estimated that around 30% of EU primary steel production could be decarbonized based on renewable hydrogen by 2030.
Further developments in the EU regulatory framework are essential to boost domestic production of renewable hydrogen. A legislative proposal on authorization and a related recommendation presented by the Commission under the REPowerEU plan will help to speed up authorization procedures for renewable electricity needed for hydrogen production. EU rules for renewable hydrogen will be further defined through two delegated acts expected to be adopted by the Commission by the end of the year.
Investments and financing
To take the hydrogen economy “from niche to scale”, the Commission announced in September 2022 the creation of a European Hydrogen Bank which aims to support investments aimed at connecting hydrogen supply and demand during its scale-up phase and to enable the profitable and predictable purchase and sale of renewable hydrogen indoors and outdoors. outside the European Union. The bank will be able to invest 3 billion euros to contribute to the construction of the future hydrogen market.
Financial incentives and access to investment are essential to encourage demand and stimulate production. Among the various EU funding tools to help finance hydrogen projects, the Hydrogen Public Funding Compass offers detailed information on EU funding programmes, funds financed from the long-term budget of EU 2021-2027 and NextGenerationEU, as well as national funding programs and funds available at national level. . According to the Commission, 15 EU countries have already included measures covering hydrogen in their recovery and resilience plans, representing at least €9.3 billion of investments.
An international commitment
The EU’s international commitment to hydrogen helps accelerate the energy transition of key partner countries, notably by supporting their deployment of renewable energy sources, while increasing its own imports of renewable hydrogen. The European Commission co-leads the Hydrogen Initiative in the framework of the Clean Energy Ministerial Conference, is a member of the International Partnership for Hydrogen and Fuel Cells in the Economy and was the co-facilitator of the IRENA Collaborative Framework on Green Hydrogen. In addition, the EU plays a leading role in international research and innovation cooperation in the field of renewable hydrogen through Mission Innovation, the global initiative to accelerate efforts to innovation in the field of renewable energies.
Through Green Hydrogen Partnerships, the Commission will encourage the import of renewable hydrogen from third countries while encouraging decarbonisation and the development of renewable energy production for domestic use. These partnerships and the facility will provide a framework to ensure a level playing field between EU production and imports from third countries. At COP27, the European Commission signed partnerships with Egypt, Kazakhstan and Namibia on the development, deployment, use and undistorted trade of renewable hydrogen and its derivatives.
The European Hydrogen Bank will also have an international component aimed at supporting renewable hydrogen partnerships and coordination, in order to facilitate investments and the development of the necessary regulatory framework. This will include the activities offered under the European Global Hydrogen Facility and will be developed in close cooperation with EU countries, the EU Energy Platform and international energy partners.
Innovation across the entire value chain
Renewable hydrogen projects serve both the EU’s long-term energy security strategy and the path to decarbonisation.
The Clean Hydrogen Partnership, a successor to the Fuel Cells and Hydrogen Joint Undertaking, was established in November 2021 to accelerate the development of advanced clean hydrogen applications through enhanced science capacity. Its main focus is the production, transmission, distribution and storage of renewable hydrogen, as well as certain fuel cell end-use technologies in transport, buildings and industry.
The Commission is also supporting investments in renewable hydrogen under the EU ETS Innovation Fund by mobilizing increased financial resources focusing on priority areas. A call dedicated to applications based on renewable hydrogen in industry as well as to the manufacture of electrolyzers in clean technologies was launched in November 2022.
Cross-border projects will play a key role in the development and integration of innovative hydrogen technologies into EU energy infrastructure. In July 2022, the first Important Project of Common European Interest (IPCEI), IPCEI Hy2Tech, was approved. It aims to develop innovative technologies for the hydrogen value chain to decarbonise industrial processes and the mobility sector, with a focus on end users. A second project, IPCEI Hy2Use, was approved in September 2022 and complements IPCEI Hy2Tech with a focus on building hydrogen-related infrastructure and developing innovative and more sustainable technologies for hydrogen integration in the industrial sector.
The European Clean Hydrogen Alliance, which supports the large-scale deployment of clean hydrogen technologies by 2030, presented at the end of 2021 a pipeline of more than 750 projects from all links in the value chain of hydrogen, including applications in industry, transport and energy systems. and buildings. Many of these projects are expected to enter service by the end of 2025.
Despite the remaining challenges, mainly related to its cost-competitiveness and infrastructure needs, renewable hydrogen is expected to play a key role in enabling emission-free transport, decarbonizing industrial processes and ensuring storage and protection of the environment. inter-seasonal energy in the EU in the near future.