Podcast’s Essential Bites:
[2:42] SK: "Europe has, I think, three things going for it when it comes to clean hydrogen. First, it's actually ahead of the game, at least relative to the US. Europe has been pushing hydrogen as a decarbonisation lever and starting to implement rules around it for years, whereas the US really just showed up at the party this year. Second, Europe does not benefit from the abundant cheap natural gas that the US has, which makes the competitive benchmark for low carbon hydrogen all the more attractive there. But third, [...] Russia's invasion of Ukraine, which has completely upended the energy market in a variety of ways that will have long term ramifications for the hydrogen market in that region."
[3:20] SK: "On the other hand, you've got a regulatory construct that is still very much in development in Europe, and that is causing some significant headwinds for anybody who's trying to actually get something built in hydrogen in Europe. And then you've got questions around imports versus domestic production and what types of resources are going to power these big electrolyzer units and all these thorny questions that will determine the degree to which hydrogen actually acts as a mechanism to decarbonize everything in Europe, from industry to shipping to aviation to more."
[8:56] GF: "There has definitely been an upscaling of ambitions and hopes in the European hydrogen strategy [since the Russian invasion]. So we've seen the REPowerEU plan by the European Commission, which is the European Commission's plan to reduce European dependency on Russian gas and to accelerate renewable rollout and renewable hydrogen rollout. And particularly, what we've seen is the upping of the target from 10 megatons of clean hydrogen by 2030 to 20 megatons of hydrogen in 2030. And 10 of that is due to be imported, 10 of that is to be produced domestically. So hopes are high and ambitious are high, but in terms of actual deployment [...] everything keeps getting delayed by this lack of clarity of regulation."
[9:58] GF: "The key question is: What qualifies as renewable hydrogen? And this is not as simple as it sounds. [...] It is not as simple as determining its carbon content, because then the next question that follows is how do we determine that carbon content?"
[10:48] GF: "There are three things that have been proposed in what's called the Delegated Act, which is an amendment to the Renewable Energy Directive II. This delegated act specifically applies to hydrogen. The three criteria are: One, additionality, which means that every single unit of electricity that's going to go towards hydrogen production should be from newly built renewable assets. [...] Criterion number two is temporal correlation, which specifies that hydrogen can only be produced within a specific timeframe of the production of clean electricity by the underlying renewable asset. [...] And then finally, the third element [...] is geographical correlation. And the purpose of this is to prevent grid congestion between bidding zones. The Act stipulated that hydrogen production must occur in the same bidding zone as renewable energy production."
[25:54] GF: "The issue we will run into is that hydrogen is very expensive to transport. So I think the way it will be split is that when hydrogen needs to be produced for hydrogen sake, [...] in other words for end users that require hydrogen, whether that's heavy trucking, whether that's steel, [...] in the chemical industry, there is an appetite to produce that within Europe. [...] On the other hand, there are certain molecules that have some of the transport options for hydrogen, things like ammonia or methanol, [...] that can be produced abroad and imported into Europe. [...] Some countries have a natural competitive advantage in access to cheaper, renewable resources, and thereby making their hydrogen production costs lower."
Rating: ⚡⚡⚡
Additional Links:
Publication: "12 Insights on Hydrogen" (Agora Energiewende, 2021)
Publication: "GREEN HYDROGEN: - HOW GREY CAN IT BE?" (Florence School of Regulation, 2022)
