Energy executives said EU targets for renewable hydrogen, a zero-carbon fuel believed to be crucial for heavy industries to emit fewer greenhouse gases, will not be met due to the bloc’s complex regulations.
The targets, set by the European Commission last year, aim at 10 million tons of “green” hydrogen to be produced in the EU by 2030 and a further 10 million tonnes to be imported. Brussels sees hydrogen as essential to the bloc’s efforts to achieve its goal of reducing greenhouse gases emissions by 55% by 2030 and wean ourselves off Russian fossil fuel imports.
But executives meeting at the world hydrogen summit in Rotterdam threw cold water on the idea that the bloc would come any closer to achieving those goals.
Maarten Wetselaar, chief executive of Spanish energy company Cepsa, told the Financial Times that the EU expected “phenomenal quantities” of hydrogen, but achieving such “real-world” results would only happen if national governments rapidly accelerated permitting processes and allow for “flow subsidies”.
Daryl Wilson, executive director of the Hydrogen Council, said the lockdown should “accelerate significantly if there is any chance of getting close to [the EU’s target]”.
Said another executive of an energy multinational. “The reality is that we are a long way from those goals. Maybe half, but not even.”
The use of renewable hydrogen is in its infancy but will be crucial for steelmakers and fertilizer manufacturers that require massive amounts of energy to achieve net zero goals. Fuel is created by splitting hydrogen molecules from oxygen molecules in water through the process of electrolysis.
Frans Timmermans, the EU’s climate commissioner, told reporters on Thursday he expects the lockdown to go “well beyond” the 2030 targets. within the industry that the regulatory framework we are offering will help them get where we need to go.”
Despite the push to subsidize and accelerate hydrogen projects, executives say final investment decisions are hampered by both a lack of regulatory clarity and demand uncertainty.
“There’s too much complexity and uncertainty,” Wilson said. “Companies can’t make final investment decisions because they don’t know what environment they’re working in.”
Part of the uncertainty stemmed from the fact that the EU only published a definition for green hydrogen in March, after a two-year delay, due to technical disagreements over how to prevent hydrogen from absorbing renewable energy that could otherwise enter directly into the electricity grid.
Brussels will hold its first green hydrogen production auction in the autumn with €800 million in grants on offer.
In the Netherlands, only one out of 25 companies with plans to develop hydrogen infrastructure in the Port of Rotterdam has started the construction phase: Shell is building a 200 MW electrolyser which is expected to be completed in 2025.
Allard Castelein, chief executive of the Port of Rotterdam, said he told the commission the port could deliver nearly half of the EU’s import target, but that domestic production targets would be “more challenging”.
Competition has also been heightened by the generous incentives offered by the US$369 billion Inflation Reduction Actwhich cuts costs by allowing companies to claim $3 in tax credits per kg of green hydrogen produced.
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