Europe wants to install the euro as the reference currency for trading hydrogen, but a global market with harmonised standards needs to be put in place first in order to meet demand, the EU’s energy commissioner said on Thursday (26 November).
“What we are proposing is a global rules-based market for hydrogen and, at the heart of that market, harmonised safety and environmental standards,” said Kadri Simson, the EU’s energy commissioner.
“We see great potential for the role of the euro as the reference currency in the international trade of sustainable energy,” she told delegates at the European Hydrogen Forum.
Europe is currently the world leader in developing hydrogen technology, with legislative strategies and funding to support this. Of the 10 hydrogen strategies worldwide, five of them are in Europe.
“What was still a dream a year ago is now becoming a real possibility. Green hydrogen can become a new commodity,” said Valerie Bouillon-Delporte, President of Hydrogen Europe, an industry association.
“Europe will be the birthplace of its credibility as we will be the front-runner in defining the value of clean hydrogen based on carbon content,” she added.
Right now, we have a perfect alignment of conditions for a new hydrogen economy in Europe 🇪🇺, with immediate opportunities on our hands with #NextGenerationEU.
— Kadri Simson (@KadriSimson) November 26, 2020
2020 has seen a boost for renewable hydrogen in Europe and across the world.
Falling technology costs have fuelled interest from policymakers who are scrambling to decarbonise industry and meet greenhouse emission reduction targets set out in the Paris Agreement on climate change.
In July, the European Commission proposed building 6 GW of renewable hydrogen electrolyser capacity by 2025 and 40 GW by 2030 as part of its hydrogen strategy.
France and Germany have both published hydrogen strategies with billions of euros available for development. Spain and Portugal currently have draft strategies, while the Netherlands and Poland are also looking into plans.
The Commission wants to encourage cross-border cooperation to enhance these.
“What we need is to showcase that if you want hydrogen to be a success it has to be across borders in Europe. It has to be not just national, it has to be European,” said Frans Timmermans, the Commission vice-president in charge of the European Green Deal.
The challenge with renewable hydrogen is costs, which are on average more than double those of hydrogen produced from fossil fuels. Over 90% of hydrogen is currently produced using fossil fuels, according to the International Energy Agency.
Scaling up production would reduce cost, a trend analysts say could follow the path of wind and solar energy, whose costs have fallen spectacularly since 2010.
“The more you build, the cheaper it gets by about 18-20%, plus or minus 6 percentage points for every doubling of cumulative installed capacity,” said Martin Tengler, lead hydrogen analyst at BloombergNEF, adding the cost of electrolysers has the potential to fall rapidly.
Despite this, EU countries with electrolyser targets could be doing more, Tengler said.
“They account for 51% of the EU’s electrolyser target, but for 58% of its GDP and when you look at it as a share of the EU’s renewable energy capacity the gap is even larger,” said Tengler.
Global competition and collaboration
While Europe wants to be the world leader in hydrogen, it is expected demand will quickly surpass production capacity and that the EU will rely on imports from foreign countries with more sunshine and wind to produce renewable electricity.
Creating a global market with harmonised standards would make it much easier for European companies to access hydrogen and for the Commission to introduce traceability.
“Where Europe leads in technology, the rest of the world will follow in that technology,” said Timmermans. “When you lead in a technology, you set the standards and we as Europeans in the hydrogen area have this incredible opportunity to not just solidify but enhance our lead,” he added.
However, alongside needing collaboration, the EU also faces challenges to remain the world leader, as America develops cheaper alkaline electrolysers and China produces hydrogen at a fraction of the Western cost.
“The race to who will be the global hydrogen superpower is on. We thought it would be between Europe and China but now with Joe Biden elected, America will return to the race,” said Bouillon-Delporte.
[Edited by Frédéric Simon]