Green hydrogen central to EU emission-cutting ambitions, but more capacity needed
Green hydrogen central to EU emission-cutting ambitions, but more capacity needed
By Alan Chan, Managing Partner at Full Vision Capital and Chief Investment Officer at The Hong Kong and China Gas Company Limited (Towngas) The European Union’s primary long-term challenge is to deliver on its legally binding commitment to net-zero carbon emissions by 2050. Its strategy involves multiple layers, with hydrogen fuel playing a crucial role across many of them.
By 2030, the EU aims to reduce greenhouse gas emissions by least 55% from 1990 levels , with a tentative target of a 90% reduction by 2040, from 1990 levels. While public support is strong, concerns persist about the potential negative impact on economic growth as countries invest billions of dollars in renewable energy sources.
The EU’s Net-Zero Industry Act, which came into force at the end of June 2024, highlights hydrogen as critical to achieving carbon neutrality by 2050. By then, renewable hydrogen is forecast to cover around 10% of the EU’s energy overall needs.
To achieve this, Europe must transition away from ‘grey hydrogen’, produced using natural gas and steam methane, which emits significant amounts of CO2. This is already underway with a major shift towards ‘green hydrogen,’ produced with electrolysis using renewable energy sources. The EU aims to produce 10 million tons of renewable green hydrogen and import a further 10 million tons by 2030. However, capacity expansion is behind schedule and few expect the 2030 targets to be met.
Substantial funding allocated
The EU and member states have allocated significant funding for low-carbon hydrogen development – almost $138 billion. Meanwhile, the UK has a further $3.9 billion.
Similar challenges exist in other parts of the world. Take Hong Kong, for example, a small territory with limited natural resources and land, which has taken its first step in domestically producing green hydrogen. Towngas and Veolia are collaborating on a project to produce green hydrogen from landfill biogas. The project, expected to commence in 2025, will have a daily capacity of around 330 kg if hydrogen enough to power seven or eight hydrogen buses for a full day. It’s technology than can be used wherever there’s a landfill.
Towngas is also producing ISCC EU-certified green methanol, an important feedstock for green hydrogen, at its plant in Inner Mongolia. Its facility utilises biomass and municipal waste, including used truck tires, to produce green methanol using proprietary technology.
Storage and transportation will be critical As renewable energy generation increases – accounting for more than half the world’s power supply by 2035 – efficient energy storage will be crucial. At present, lithium-ion batteries are one of the main go-to storage tools, given their relatively low cost. But these batteries have high operating expenses, are less effective in extreme climates, have a limited lifespan and bring safety and environmental challenges.
US-based EnerVenue, partnered by Towngas and others , has developed advanced long-duration energy storage technology in the form of metal-hydrogen batteries. These can last more than 30 years, making the cost-per-kilowatt-hour negligible. They operate in extreme temperatures and allow for 30,000-plus cycles without degradation. The functionality and cost benefits are clear to see.
Hydrogen is expected to contribute over 20% of global carbon abatement by 2050. But to do that, it will need to be possible to transport it to locations without pipelines. Hydro X, winner of the TERA Award 2024, has developed a water-based, non-toxic, non-flammable and non-explosive hydrogen carrier, simplifying safety maintenance and reducing infrastructure costs for hydrogen project These innovations, along with the advances made by European companies, are driving the hydrogen economy forward in Europe. The TERA Award 2025, the smart energy innovation competition organised by Towngas and backed by Full Vision Capital, continues to support startups developing clean fuels and smart energy systems. This year’s award is still open for submission
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Green hydrogen central to EU emission-cutting ambitions, but more capacity needed
