Hydrogen as the major player of EU’s decarbonization strategy | roadmap

The share of hydrogen in Europe’s energy mix is projected to grow from current less than 2% to 13 – 14% by year 2050.

Over 90% of hydrogen in Europe is used in refining, ammonia and methanol production. At the same time, the production of hydrogen in Europe is realised mainly from natural gas or coal (around 96%), resulting in the release of 70 to 100 million tonnes CO₂/year in the EU alone.

However, the hydrogen itself can be used as a feedstock, a fuel or an energy carrier and storage with multiple envisaged applications across industry, transport, power and buildings sector. It does not emit any CO₂ and almost no air pollution when used.

Therefore, the hydrogen, theoretically, has the necessary requirements to become an important player in the EU’s strategy to reach carbon neutrality by 2050 and for the global effort to implement the Paris Agreement while working towards zero pollution.

To drive a successful development of hydrogen in Europe, major investments are required together with enabling regulatory framework, new lead markets, sustained R&D and large-scale infrastructure network.

Total investments into renewable hydrogen in Europe could be up to EUR 180 – 470 billion by 2050 and in range of EUR 3 – 18 billion for low-carbon fossil-based hydrogen.

The general deployment of hydrogen, as an intrinsic part of the energy integrated eco-system faces numerous challenges as today neither renewable hydrogen nor low-carbon hydrogen, especially fossil-based hydrogen with carbon capture, are not cost competitive against fossil-based hydrogen.

As the EU’s top priority is to develop renewable hydrogen, it is expected a gradual trajectory, with different speeds across sectors and possibly across regions. For example, a key driver of the progressive renewable hydrogen development is its deployment in countries where the renewable electricity is cheap, as in these areas is expected that renewable hydrogen would be competitive with fossil hydrogen by 2030. The bottleneck for this short-term driver is still the limited transport/distribution infrastructure and the creation of an appropriate demand.

Between 2020 up to 2024, EU’s strategic objective is to install at least 6 GW of renewable hydrogen and to achieve a production of 1 million tonnes of renewable hydrogen. These targets would be necessary to decarbonise existing fossil hydrogen production and new hydrogen consumption in end-use applications such as heavy-duty transportation and new industrial processes.

On the demand side, such is expected to be located near to the production sites at this stage. In certain areas, blending with natural gas might occur, but planning of medium range backbone infrastructure should begin. Although blending is considered by the EU as temporary solution, Romania is considering it as a possible solution in its Integrated National Energy and Climate Plan. Upon a much-needed revision, this is expected to change for the medium- and long-term objectives.

The policy focus will be to enable a regulatory framework aimed at ensuring a liquid and functioning hydrogen market and on incentivising both supply and demand in lead markets, including through bridging the cost gap between fossil generation and renewable hydrogen production and through appropriate State aid rules. The framework should take into account the development of large wind and solar plants dedicated to gigawatt-scale renewable hydrogen production before 2030. The main pipeline of investments is expected to be indicated by the European Clean Hydrogen Alliance and funded under Next Generation EU and the ETS Innovation Fund instruments.

Between 2025 up to 2030, EU’s strategic objective is to install 40 GW of renewable hydrogen electrolysers by 2030 and the production of 10 million tonnes of renewable hydrogen in the EU, while the renewable hydrogen must become an intrinsic part of an integrated energy system.

To facilitate the consumption of the increased available renewable hydrogen, dedicated demand policies will be needed for industrial demand to gradually include new applications, including steelmaking, trucks, rail and maritime transport applications.

At the same time, hydrogen should play a role in balancing the renewable-based electricity system by transforming electricity to hydrogen when renewable electricity is abundant and cheap and by providing flexibility. Hydrogen will serve as an enhancing security of supply in the medium term and for daily and seasonal storage.

Planning of the backbone of a pan-European grid will need to start and a network of hydrogen refuelling stations must be established.

While the necessity for transportation and distribution of the hydrogen will increase, the existing gas grid could be partially repurposed for the transport of renewable hydrogen over longer distances. For large-scale underground storage technologies, salt caverns – already in operation, depleted gas fields or rock caverns are indicated as appropriate. Romania may play an important role for the storage of the renewable hydrogen, especially in view of future need for balancing the renewable-based electricity system.

International trade can also develop, especially with the EU’s neighbouring countries in the Eastern Europe and North Africa.

At this stage, in terms of policy, the efforts should concentrate to obtain a fully-fledged hydrogen ecosystem. The objective of the strategy at this point for the EU is to achieve an open and competitive EU hydrogen market, with unhindered cross-border trade and efficient allocation of hydrogen supply among sectors.

From 2030 onwards and beyond 2050, renewable hydrogen technologies should reach maturity and be deployed at large scale to reach all hard-to-decarbonise sectors, where other alternatives might not be feasible or have higher costs.

The renewable electricity production must increase massively as it is envisaged that around ¼ of its production shall be used for renewable hydrogen production.

Hydrogen and hydrogen-derived synthetic fuels based on carbon neutral CO₂ should penetrate a wider range of sectors from aviation to shipping and to hard-to-decarbonise industrial and commercial buildings.

Renewable hydrogen is considered as a key element to achieve the reduction of the gas emissions ahead of 2030 and zero pollution economy in 2050. Being a nascent market with global reach, the opportunities presented in this sector are extraordinary and they range from unique opportunities in the research and innovation fields creating economic growth and jobs across the full value chain and across the Union.

Nevertheless, the EU’s efforts should be consistent and determined to maintain leadership in this field, as the competition at global level shall be fierce. Already South Korea and Japan declared that they would build up a hydrogen economy. The mission is further difficult when considering that EU is fully dependent for 19 out of 29 raw materials relevant to fuel cells and electrolysers. Hence implementation of Circular Economy Action Plan and a life-cycle approach are needed to lower the burden on the availability of raw materials and minimise the negative and environmental impacts of the hydrogen sector.