The idea of a ‘hydrogen economy’ to replace the hydrocarbon-fueled economies of the 20th century has been discussed for at least the past 50 years.
Maria João Duarte is the Representative to the EU Institutions of Mitsubishi Power Europe.
Until now, this vision has remained in the realm of science fiction. The costs associated with production, storage and transportation of hydrogen have restricted most of its current usage to a few niche industrial processes.
This is changing due to the urgency with which many governments, including the EU, now view climate change. For example, the European Commission wants to halve the EU’s greenhouse gas emissions by 2030.
Hydrogen is regarded as having two key roles to play in decarbonizing our economies: enabling greater use of renewable electricity; and decarbonizing every part of the global economy, including those CO₂-intensive sectors, such as heavy industry, that are difficult to electrify.
The attraction of hydrogen is that it can replace fossil fuel use in industry, heating and transport − and its only emission is drinkable water.
However, hydrogen production poses a decarbonization challenge of its own: today, 95% of hydrogen is produced through processes that extract it from either fossil fuels or wood.
Hydrogen’s potential to play a major role in decarbonizing our planet rests largely on finding a cost-effective way of producing it without emitting CO2.
Greening hydrogen production
The European Commission’s hydrogen strategy says hydrogen could account for 13-14% of Europe’s energy mix by 2050. Today it makes up less than 2%.
Ramping up of production capacity will ideally come from using renewable electricity sources to power electrolysis and creating so-called “green” or renewable hydrogen.
The Commission sets the goal of Europe installing at least 40 gigawatts of renewable hydrogen electrolyzers, and the production of up to 10 million tonnes of renewable hydrogen, by the end of the decade. However, it also recognizes that it will take time to fully mature this technology.
The Commission predicts that hydrogen production from fossil fuels combined with carbon capture and storage (CCS) will be necessary in the short to medium term.
However, this begs the question of who will invest in CCS for hydrogen production when, according to the strategy’s estimates, renewable hydrogen will become cost competitive in 2030. Eight years is a very short period of time when investing in major infrastructure like CCS plants.
EU policy and support for CCS and long-term certainty for investors will determine whether Europe’s hydrogen economy can become a reality.
The scale of the challenge for every form of environmentally-friendly hydrogen production is massive.
A partner for renewables
The challenge for renewable hydrogen is particularly stark: electrolysis accounts for just 1% to 2% of hydrogen production globally. As the Commission acknowledges, the most significant barrier for renewable hydrogen is the cost of electrolyzers. The shortage of large-scale facilities has meant an under-developed supply chain, which in turn has made equipment and production relatively expensive.
One market driver that may encourage investment in more large-scale electrolyzers is the rapidly falling electricity costs in countries with high proportions of renewable electricity.
Using offshore wind is becoming increasingly attractive as it provides utility-scale levels of electricity at low cost. Meanwhile, heightened government ambition for mass decarbonization before 2050 is also providing business case certainty to investors.
The upcoming Offshore Renewable Strategy presents itself as a unique opportunity to frame the discussion on how dedicated offshore renewable capacity can evolve and connect with hydrogen production.
However, many European governments are already planning offshore wind tenders with renewable hydrogen components: Germany recently announced an extra 5GW of offshore wind to produce direct to hydrogen (and €9 billion in total funding); while Denmark will create energy islands in the Baltic and North Seas with a mixture of offshore wind and hydrogen production.
Meanwhile, companies such as MHI Vestas Offshore Wind are exploring how the wind turbines of the future will interact best with electrolyzers and help find the optimal balance between the creation of electrons and molecules in the future energy mix.
This drive for more renewable hydrogen electrolyzers is also an opportunity to decarbonize hard-to-abate sectors. In Linz, Austria, a 6MW electrolyzer – currently the world’s largest – is operating at a site owned by steel manufacturer voestalpine. Primetals Technologies, part of Mitsubishi Heavy Industries Group, is working with voestalpine to develop a process for replacing fossil fuels with hydrogen in steel production.
Hydrogen is also a viable partner to batteries for large-scale seasonal energy storage, helping to maximize renewable energy production. Mitsubishi Power, part of MHI Group, is taking part in developing the world’s largest renewable energy storage facility: the Advanced Clean Energy Storage project in Utah, U.S. seeks to produce renewable hydrogen from solar power, which is later used for power generation using Mitusbishi Power’s hydrogen turbines. Could projects like this be replicated in Europe?
Once hydrogen is produced, developing the infrastructure that can support society’s greater use of hydrogen remains a challenge.
The gas needs to be compressed for both storage and transportation. Moving the gas will require adaptions to existing gas pipelines, or specially designed hydrogen tankers.
The Commission urges going beyond local connections and focusing on dedicated pipelines, upgrades to existing natural gas pipelines, refueling stations, storage facilities and shipping.
Eleven European gas infrastructure companies from nine EU countries have already presented their European Hydrogen Backbone plan for a dedicated hydrogen transport system, including an analysis of costs.
The strategy’s promise of legislation to smooth trade of hydrogen across the Continent is therefore welcome. The development and further expansion of existing hydrogen carriers such as methanol or ammonia, which benefit from established international markets, could ensure Europe is linked to the global market.
Through the revision of today’s European legal framework, in particular the Renewable Energy Directive, Europe should also seek to deliver a level playing field between hydrogen and other renewable carriers and fuels. Are quotas, as mentioned in the strategy, a sufficient driver? A supportive policy and regulatory framework, as well as long-term certainty for investors, will determine whether Europe’s hydrogen economy can become a reality. Let’s not miss this once-in-a-lifetime opportunity.