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Politicians should manage expectations about the hydrogen economy or risk hitting a brick wall when market realities contradict their ever-increasing ambitions.

Last year, the European Commission set an aspirational target: producing 10 million tonnes of renewable hydrogen by 2030 on European soil and importing 10 million tonnes by the same date.

Are we getting there yet? Opinions differ.

According to Germany’s Vice-Chancellor Robert Habeck, “the hydrogen train has left the station”. Speaking to lawmakers in the Bundestag last week, the green politician said he expects the hydrogen economy to provide “a great economic stimulus programme for this republic and for Europe.”

But the world looks different in Paris, where the International Energy Agency is located.

“Lagging policy support and rising cost pressures put investment plans for low-emissions hydrogen at risk,” the IEA warned in its annual global hydrogen review published last week, departing from its usually optimistic views on the energy transition.

Even industry lobby group Hydrogen Europe appeared worried, with CEO Jorgo Chatzimarkakis saying the report paints “a concerning picture of an insufficiently rapid scale-up of green and low carbon hydrogen projects around the world.”

In short, the IEA found that global clean hydrogen projects were struggling to leap from corporate presentation slides into green fields.

While “the number of announced projects for low emissions hydrogen continues to expand rapidly,” the agency warned that “installed capacity and volumes remain low as developers wait for government support before making investments”.

There are many reasons behind this, such as rising inflation and supply chain disruptions.

But one fundamental reason behind the IEA’s pessimism is that the list of use cases for hydrogen keeps getting shorter as more and more sectors of the economy turn to direct electrification instead.

Klaus-Dieter Borchardt, former deputy director-general at the European Commission’s energy directorate, explained this during a recent Euractiv event.

“I remember when we started writing the hydrogen strategy for Europe, we had plenty of use cases, plenty. And over the years, one after the other got lost. So what remains are the industries which have absolutely no other choice,” he said referring to steelmaking, chemicals, fertisliers, and long-distance air and maritime transport.

Unlike fossil fuels, hydrogen does not emit planet-warming gases when burned and can be almost entirely climate-friendly when produced from water electrolysis using renewable electricity or nuclear power. But, the process is energy-intensive, making hydrogen expensive and unattractive to investors.

Meanwhile, existing hydrogen production today is far from being sustainable. Of the 95 million tonnes produced across the globe, 83% is of the dirty, fossil-based kind, while less than 2% can be considered sustainable.

And instead of bravely charging into a green future, the global hydrogen economy is backsliding. In 2022, fossil-based hydrogen production increased by 3 million tonnes only, despite billions of taxpayer money thrown at cleaning the sector, the IEA report found. 

Because fossil hydrogen is among the dirtiest fuels out there, producing 95 million tonnes of it results in CO2 emissions above 900 million tonnes – more than the emissions of Indonesia and the UK combined.

Looking at the pipeline of projects announced until 2030, a mere 6% are up and running or have reached a final investment decision. The remaining 94% are merely papers gathering dust on a project manager’s cramped desk.

The IEA attributes the market’s reluctance to the global energy crisis, inflation, and supply chain disruptions. Indeed, given China’s dominance in producing key minerals – like Iridium or Scandium – that are needed to produce clean hydrogen, I, too, could be tempted to invest my money elsewhere.

Make no mistake: switching to clean hydrogen will be challenging, but that doesn’t mean society should give up. The companies that consume hydrogen today are slow-moving behemoths. Getting them off the dirty stuff must start as early as possible. 

But much like with the green transition, which politicians sometimes still try to portray as a painless move to a society without scarcity, reality needs to set in. 

Producing clean hydrogen is worthwhile and unavoidable. But it won’t be “a great economic stimulus” for Germany and Europe. Politicians must face that fact or experience severe head trauma when hitting the wall.

– Nikolaus J. Kurmayer

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The Capitals – editor’s pick

PARIS. Macron announces French strategy for climate action, wants more EU funds. France will totally phase out coal by 2027, French President Emmanuel Macron announced on Monday, adding that he hopes for more European climate funding. Read more.

BRUSSELS. Belgian state sued over climate policy shortcomings. The non-profit group ‘Affaire Climat’ and over 70,000 citizens again called on the courts to impose binding emissions reductions on the Belgian government after the last ruling to reduce greenhouse gas emissions was largely ignored by the state. Read more.

BUCHAREST. Ecological coalition emerges ahead of Romania’s 2024 elections. A progressive green coalition – comprised of several small parties – was launched in Bucharest on Monday to participate in the four rounds of elections scheduled in 2024. Read more.

PRAGUE. Left coalition emerges in Czechia, plans to reject Green Deal. A joint candidate list of minor political left groupings is taking shape in Czechia ahead of the 2024 EU Parliament elections and they’ve got plans that include rejecting the European Green Deal. Read more.

VIENNA. Austria’s right takes aim at plans to raise national CO2 tax. Lower Austria’s conservative far-right government of ÖVP and FPÖ is going against federal plans to increase the country’s CO2 tax, claiming high inflation requires support, not additional burdens. Read more.

ROME. Italian government begins discussions on clean nuclear power. The Italian government has launched the National Platform for Sustainable Nuclear Power, which will lead within nine months to developing guidelines for possibly reintroducing nuclear power among national energy sources. Read more.

TIRANA. Albania’s Skavica hydropower project to be examined by Constitutional Court. Albania’s controversial but yet-to-be-built Skavica mega-dam, which threatens some 41 villages in the north of the country, will be reviewed by the country’s highest court following a constitutional complaint by a coalition of energy and environmental NGOs. Read more.

PARIS. France must triple renewable energy capacities by 2035, says network operator. To meet its EU targets, France will need to triple its use of renewable energy and reduce its energy consumption by a third by 2035, France’s electricity grid operator RTE said in its outlook for the energy mix in 2030 and 2035. Read more.

PRAGUE. Czech government pushes for lithium mining despite regional scepticism. The Czech government is making every effort to facilitate lithium mining in the country as it is a strategic raw material for the recovery of the Czech economy, Prime Minister Petr Fiala (ODS, ECR) said on Wednesday while visiting potential mining areas. Read more.

Must reads

• EU policy ‘superior’ to US Inflation Reduction Act, say European economists – By Jonathan Packroff
• EU urged to restrict export of ‘black mass’ from used electric vehicles – By Frédéric Simon
• Green NGO supports controversial CCS to ensure e-fuels reach CO2 neutrality – By Jonathan Packroff and Sean Goulding Carroll
• EU bank chief warns against ‘Colonialism 2.0’ as green transition progresses – By Annita Elissaiou
• EU reaches deal banning ‘climate-neutral’ product claims – By Nikolaus J. Kurmayer
• Berlin considers slashing electricity tax by 95% to boost heat pump uptake – By Nikolaus J. Kurmayer

News in brief

EBRD urged to end all support for fossil fuels. Campaigners on Wednesday (27 September) called on the European Bank for Reconstruction and Development (EBRD) to stop all investments in fossil fuels as part of an upcoming review of its Energy Sector Strategy expected before the end of year.

The EBRD has already excluded coal and upstream oil and gas fields and the draft energy strategy update further excludes midstream oil and oil-fired electricity generation, campaigners say. However, the draft strategy update would continue allowing some investment in new fossil gas pipelines and other transportation infrastructure, as well as gas power generation and heating, they add, calling on the EBRD to stop all funding for new fossil fuel projects.

“Continued investment in gas projects will risk locking in stranded assets, burdening countries of operation with reliance on costly and volatile imports, and will increase the threat of runaway climate change,” said Natalie Jones from the International Institute for Sustainable Development (IISD), one of the signatories of the statement.

From 2018-2021, the EBRD invested €2.9 billion in the fossil energy sector, the majority going to gas, the statement says. This makes the EBRD the third biggest funder of fossil fuels among all multilateral development banks, behind the World Bank Group and the Islamic Development Bank.

The call was signed by 130 civil society groups from over 40 countries, including 350.org, Climate Action Network Europe, CEE Bankwatch, Greenpeace, and Friends of the Earth Europe urges the EBRD to stop all funding for fossil fuel projects. The EBRD was founded in 1991 after the collapse of the Soviet Union and operates in central and east European countries. The full statement is available here. (Frédéric Simon | Euractiv.com)

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EU’s Sinkevičius picks up rubbish in Brussels canal on World Cleanup Day. The EU’s environment commissioner, Virginijus Sinkevičius, joined efforts last week to pick up rubbish from the Brussels Canal as part of a campaign to raise awareness about World Cleanup Day. 

“We live in Brussels and we love the city, so we wanted to do our bit to tackle the problem of the canal,” said Sinkevičius who performed the publicity stunt in collaboration with volunteers from the organisation Canal It Up.

Cans and plastic bottles constitute the majority of waste found in Brussels’ waterways. Canal It Up calls for a deposit scheme to ensure better management of waste, and for supermarkets and manufacturers to invest more in plastic-free, reusable packaging. (Annita Elissaiou | Euractiv.com)

Opinions

• The David vs Goliath legal climate case – By Romain Didi
• France’s nuclear power sector is not delivering – By Philippe Girard
• No more trade-offs: Pitting people against planet is dangerous and not how we will thrive – By Astrid Schomaker and Francine Pickup
• Industrial carbon capture: Only for truly ‘unavoidable emissions’ – By Antoine Grall, Dominika Floriánová, Ella Oksala and Leon de Graaf

On our radar

• 2 OCTOBER. Hearing of Wopke Hoekstra in the European Parliament (ENVI committee)
• 3 OCTOBER. Hearing of Maroš Šefčovič in the European Parliament (ENVI committee)
• 3 OCTOBER. European Commission communication on critical technologies
• 12 OCTOBER. Trilogue on Energy Performance of Buildings Directive (EPBD)
• 16 OCTOBER. Environment Council
• 17 OCTOBER. Energy Council
• 17 OCTOBER. Report on the promotion of investments in clean technologies
• 24 OCTOBER. Parliament ENVI committee vote on Packaging and Packaging Waste Regulation
• 24 OCTOBER. European Wind Power Package
• 25 OCTOBER. Parliament ITRE committee vote on Net Zero Industry Act
• 26-27 OCTOBER. European Council
• 20 NOVEMBER. Plenary vote on Packaging and Packaging Waste Regulation
• 30 NOVEMBER-12 DECEMBER. UN Climate Change Conference (COP 28), Dubai
• 14-15 DECEMBER. European Council
• 18 DECEMBER. Environment Council
• 19 DECEMBER. Energy Council
• Q4. Revision of REACH regulation

[Edited by Frédéric Simon and Alice Taylor]

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