Euractiv – Hydrogen 2.0: Strengthening the EU’s role as a global leader
A stable regulatory environment, international cooperation and more focus on hydrogen derivatives are key for Europe to scale its hydrogen market for priority end uses.
The European Commission has a golden opportunity to develop a ‘Hydrogen strategy 2.0’ that is more grounded in economic and physical realities. Such a strategy should aim to ensure enough hydrogen for those that truly need it – steel production, heavy road transport, long-haul aviation and shipping.
Michaela Holl is senior associate at Agora Energiewende and Oleksiy Tatarenko is senior principal at Rocky Mountain Institute.
The European Commission has a golden opportunity to develop a ‘Hydrogen strategy 2.0’ that is more grounded in economic and physical realities. Such a strategy should aim to ensure enough hydrogen for those that truly need it – steel production, heavy road transport, long-haul aviation and shipping – while building on realistic targets and robust rules.
Today, Europe is far from its aspiration of 20 mt of renewable hydrogen production and imports by 2030, as laid out in REPowerEU. This is not necessarily bad news.
Producing and consuming this amount of hydrogen was never feasible nor necessary, as Agora’s 2023 study showed. In fact, such an ambition prioritises the upscaling of hydrogen over direct electrification. It thus overlooks the needs of other industries and applications, such as AI and heat pumps, that rely on competitive power prices. The approach should be to aim for less but with more focus.
Zooming in on renewable hydrogen, we see a significantly lower uptake than was anticipated. The slower pace is due to inflation, overoptimistic electrolyser and renewable power cost assumptions, infrastructure delays, pending implementation by EU governments of the targets for renewable fuels of non-biological origin, and modest financial support by public sector.
In such a context, it is paramount to maintain a stable regulatory environment, not the least to provide investment certainty which is critical for developing the renewable hydrogen market. This includes sticking to the agreed criteria for renewable hydrogen that have yet to be applied in full.
The EU’s renewable hydrogen rules strike a balance, offering a transition period while preventing underregulated hydrogen from increasing emissions and power prices. This has supported clean hydrogen project development, especially in Northern and Southern Europe, where cheap renewable power is abundant.
The EU’s hydrogen framework has positioned the bloc as a global regulatory leader. On the other side of the Atlantic, the US is adopting its own hydrogen rules. While President-elect Trump’s return to the White House brings some uncertainty, similar rulebooks could help lay the groundwork for a Transatlantic hydrogen market.
Emerging markets like India are also closely watching the EU’s progress. And there are producers in the US, Canada, Brazil, the Middle East, and Africa preparing to deliver renewable hydrogen and its derivatives – which meet the current criteria – to Europe by the early 2030s at 3-5 euros per kilogram.
Strong regulations will also help the EU Commission as it develops green lead market proposals and public procurement strategies to support climate neutrality. It needs to be able to rely on clear rules to reward top performers and help accelerate the creation of urgently needed offtake markets.
Infrastructure planning is another key element of a solid hydrogen strategy.
So far based on overly ambitious targets, the EU infrastructure planning for hydrogen should be revisited. It should better reflect the location of industrial clusters, also considering the potential and needs of non-gaseous hydrogen derivatives such as ammonia. Carefully assessing the role of domestic production versus imports, and which hydrogen derivatives to import, would also contribute to a cost-effective and realistic strategy.
Finally, hydrogen is only one tool in the toolbox.
Alongside developing the hydrogen market, the new policy cycle is an opportunity to unlock the huge potential of electrification in industry. A recent Agora study shows that by 2035 we can electrify around 90 percent of the energy needs of European industry that have so far not been electrified.
With technologies already available today, such as electric arc furnaces or large heat pumps, the share is 60 percent. These results underline the importance of a comprehensive approach in driving industrial transformation, combining the best measures at our disposal for true technological neutrality.
There is no doubt that Europe needs to scale its clean hydrogen market. But it needs to be smart about it. A focus on sectors that cannot do without hydrogen along with robust rules can bring the bloc back onto a cost-effective path towards net zero and a more pragmatic clean industrial policy.
READ the latest news shaping the hydrogen market at Hydrogen Central
Euractiv – Hydrogen 2.0: Strengthening the EU’s role as a global leader, source
