The European Union continues to race towards a sustainable future, competing most closely against North America and Asia to become the world’s first climate-neutral continent by 2050.
This will only be achievable if it is able to advance the deployment of technologies contributing to the energy transition. That means ready and available solutions for renewable generation, storage and network or grid upgrades, as well as rapidly advancing technologies like hydrogen.
Hydrogen is a key fuel of the future and fundamental component of Europe’s energy journey. Its ability to act as a clean energy carrier positions it as a versatile and potent tool in the decarbonisation of multiple sectors, from transportation to heavy industry.
However, at the current pace of investment and deployment for first-of-a-kind (FOAK) projects, we’re lagging well behind where we need to be to meet our European net zero targets.
The true potential of hydrogen lies in the diversity of its means of production and application. It can be produced from numerous sources, including natural gas, nuclear power, biomass and, most importantly, renewable energy sources such as wind and solar power.
When powered by renewables, electrolysis yields ‘green hydrogen’ by splitting water into hydrogen and oxygen, releasing no carbon dioxide in the process.
Green hydrogen
However, despite the clear climate benefits of green hydrogen, the pace of deployment has been slow. The cost of green hydrogen, per kilogramme, is currently higher than using traditional production methods with a heavy carbon footprint. A higher comparative cost slows uptake and therefore can stilt demand.
A further challenge is the current lack of global market standards to enable a trading market for green hydrogen.
It’s necessary to drive the end-consistency required of any technology with mass-application. Subsidising the production of green hydrogen in the short-term is one way to remedy the issue, helping to increase the size and speed of implementation of green hydrogen projects throughout Europe.
Driving down cost and boosting availability gives the market the necessary access and price point to increase green H2 adoption.
Hydrogen-dedicated renewable energy capacity has been forecast to rise by 45GW between 2022 and 2028, by the International Energy Agency (IEA). This presents a huge challenge for European hydrogen with less than six years to meet the 2030 deadline.
One step towards meeting rapidly growing market demand is Siemens Energy’s electrolyser production facility in Berlin, which opened in November last year in partnership with Air Liquide.
Future ambitions
By 2025, at least 3GW of electrolysis capacity per year will be produced from this site. However, despite this being a meaningful production level, it’s one of the many electrolyser facilities we’ll need in Europe to meet the continent’s overall hydrogen requirements.
The EU plans to produce 10 million tonnes of renewable hydrogen by 2030 and also import an additional 10 million tonnes.
To put those numbers in perspective, we will need around 100GW of annual electrolyser capacity to produce the first 10 million tonnes, and there will need to be another 100GW outside of Europe willing to sell renewable hydrogen as an export.
Increasingly, achieving Europe’s 2030 goals will be a mad sprint to the finish line but they’re by no means impossible. It simply requires a huge step change in the pace of investment, as well as the scale and number of contracts awarded.
Public-private partnerships are essential to de-risking and scaling hydrogen, which is more expensive and higher risk for private sector investors than other green technologies. Reducing that green premium, as with all technologies, can only be successful through investment and scale.
While the EU has allocated huge sums for investment, with initiatives like the Hydrogen Strategy for a Climate-Neutral Europe and the Clean Hydrogen Alliance, regulatory frameworks and policies need to keep pace with technological advancements. Clear and supportive policies are essential to encourage investment in hydrogen technologies and infrastructure, and to create a market for hydrogen across different sectors.
Building the necessary infrastructure is another area where progress can be accelerated. This includes the development of hydrogen refuelling stations for transportation, pipelines for distribution, and storage facilities.
It is likely that the expansion of infrastructure will most meaningfully increase in parallel to production, which is why FOAK projects are so important.
E-methanol
One of our European flagship collaborations is the world’s largest e-methanol production facility, commissioned by European Energy and supported by shipping giant Maersk in Kassø, Denmark. The facility will create 42,000 tonnes of e-methanol a year, produced by combining green hydrogen and captured carbon dioxide, and play a key role in reducing the cost of future, similar investments.
The Kassø project will help to create standardisation of module manufacturing and pre-packaging of arrays. Standardisation of processes in this way will, on an increasing basis, become one of the key outputs of FOAK projects in their contribution to green hydrogen’s European advancement.
Yet, we need a great deal more projects just like it. The shipping industry alone has been estimated to need 59.5 million tonnes of hydrogen by 2050 to produce or use as direct fuel. Similarly, the International Maritime Organisation has committed to halving the sectors emissions by 2050 in order to meet targets set within the Paris Agreement.
The journey to a green hydrogen-based economy is complex and there is only so much that the private sector can do to create stimulus and momentum.
We’re now at a crucial juncture where, especially given it’s a year of European elections, the continent needs commitment to increase the pace of investment and open up regulatory frameworks to make net zero targets a reality.
The potential rewards for the climate, the European economy, and our energy security make it a pursuit worth doubling down on.
