Top-down investment alone will not be enough to make the European hydrogen economy a reality, writes Andreas Schierenbeck. Not only does production need ramping up, Europe must also establish a framework for a functioning hydrogen market, he argues.
Andreas Schierenbeck is the CEO of Uniper and member of Germany’s National Hydrogen Council.
Hydrogen is garnering real interest as a source of clean energy for the future – and for good reasons. In Europe and around the world, there is a growing realisation that this abundant element, which emits zero CO2 when used as a fuel, will play a vital role in building a decarbonised energy supply. It can also help shore up energy security through its storage capabilities and decarbonise hard-to-abate sectors such as heavy industry, chemicals and transport.
For these reasons, the EU recently made hydrogen a central part of its Green Deal and set out a clear strategy and roadmap for its adoption to help meet its goal of net-zero emissions by 2050.
Many of the headlines have focused on the vast sums the EU set aside to promote hydrogen’s development. And, indeed, the figures are substantial. The European Commission expects investment in renewable hydrogen to reach up to €470 billion by 2050, and between €3 billion and €18 billion for low-carbon fossil-based hydrogens.
However, top-down investment alone will not be enough to make the European hydrogen economy a reality. Not only does production need ramping up, as hydrogen currently only makes up 1% of Europe’s energy supply, but we must establish a framework for a functioning hydrogen market.
To achieve this, everyone involved in the value chain – from private energy companies, national governments, scientists, industry and other sectors – must look for ways to work together, pooling expertise and resources to accelerate change.
Working hand-in-hand with renewables
Many people think that promoting hydrogen as a clean energy source means an outright displacement of renewables. This is far from the truth. In fact, with rising energy demand there’s plenty of room for both and partnerships between renewables plants and hydrogen generators are vital to realising the full potential of both energy sources.
Almost all the 70 million tons of hydrogen produced annually comes from fossil fuels, but renewables can help make hydrogen cleaner. Electricity generated from renewables can be used for electrolysis, where water is split into oxygen and so-called ‘green hydrogen’, emitting zero carbon in the process. This is the reason for much of the excitement surrounding hydrogen.
By the same token, hydrogen is vital to sustaining a grid that is increasingly reliant on renewables. Hydrogen’s greater storage capacity, when compared to renewable-generated electricity stored in batteries, means that gas plants can be quickly fired up to mitigate the fluctuating nature of wind and solar, ensuring supply continues to meet demand.
Making the most of the intertwined relationship between both energy sources requires collaboration, not competition – and green hydrogen projects need to be developed in partnership with renewable generators.
The role of R&D
Recent technological developments on the production level are part of the reason hydrogen is now gaining traction. Yet greater scientific innovation is still needed to develop end-use applications for hydrogen to accelerate demand for this new market.
Sectors where hydrogen opens new avenues for decarbonisation must adapt to take advantage of this opportunity. For instance, green hydrogen could eventually be used in fuel cells to power cars, trains and ships. And, when combined with captured CO2 from ‘blue hydrogen’ obtained from natural gas, it could produce climate-neutral chemicals and synthetic fuels that will make complex forms of transportation far more climate-friendly.
This is where the European Clean Hydrogen Alliance and similar national groups, such as Germany’s National Hydrogen Council, can play at pivotal role. By bringing policymakers, energy producers, industry and scientists together, they can take a holistic view of the hydrogen economy and ensure that innovation and investment is targeted at areas where it is needed most.
Policy levers to accelerate adoption
Effective policy is essential to create the economic conditions that will kick-start a hydrogen economy. This is necessary, as renewable and low-carbon hydrogen are not yet cost-competitive compared to hydrogen produced from fossil fuels.
The growth of renewables provides a clear path to follow. Their cost has come down dramatically in the past decade, but tax breaks and levies helped drive their adoption in the early stages until they achieved a tipping point in scale and became economically viable. Similar policies are needed to accelerate the growth of hydrogen.
Reducing the cost of hydrogen through incentives will make the sector more attractive to private investors, meaning there will be a further injection of funds into the sector and lead to more collaborative initiatives.
Hydrogen will play a big role in decarbonisation. But achieving this requires real collaboration between all stakeholders from every corner of this new sector, forming new alliances and partnerships. Only by taking this approach can the necessary infrastructure, market forces and end-use cases be developed in parallel to speed up adoption and realise hydrogen’s full potential.