Will the green hydrogen be the future of climate-neutral Europe?
Everything seems to indicate that we are ahead of a great push for hydrogen across Europe. On July 8, the European Commission published its hydrogen strategy, according to which between 180 and 470 billion euros are to be allocated to the production of hydrogen in the EU by 2050. Hydrogen is expected to help achieve a climate-neutral European economy by 2050. The EU sees a special role for this technology in sectors where electrification is difficult to achieve or where fossil fuels have been necessary so far.
Hydrogen is not always made the same way
Listening to numerous statements by the vice president of the European Commission, Frans Timmermans, the man responsible for the European Green Deal, it might seem that hydrogen is a novelty on the energy map of Europe. Meanwhile, as in the case of electric cars, the technology has been with us for a long time.
However, it is worth remembering that the extraction process may be carried out in several ways. In energy-orientated journalism, it is assigned a colour depending on the production process used. Currently, the most popular is grey hydrogen, which is obtained using coal or natural gas. According to the IEA, 6% of the world’s gas and 2% of the coal are used to produce hydrogen, making the annual amount of carbon dioxide released in the production of hydrogen approximately equal to the combined emissions of Great Britain and Indonesia for the same amount of time (approx. 830 million tonnes). Therefore, this process has nothing to do with the green harvesting of energy.
However, there are other methods of obtaining hydrogen, e.g. blue hydrogen. Although natural gas is used in its production, it also uses the technology known as Carbon Capture & Storage (CCS) to sequester carbon dioxide. Turquoise marks hydrogen obtained through the pyrolysis of methane.
The Holy Grail of all the latest hydrogen strategies is green hydrogen, which is free of greenhouse gas emissions. It is produced using electrolysers, which break down water into hydrogen and oxygen through the use of electricity (a process called electrolysis).
The electricity needed is obtained from renewable sources such as wind farms and photovoltaic cells. The problem is that only about a few of per cent of the world’s hydrogen production can currently be assigned the colour green. A report by the Polish Economic Institute from the end of June this year stressed that almost all hydrogen production is based on fossil fuels—76% from natural gas and 23% from coal.
Green will cost less and less
Why is this greenest production model not being used? Because it’s much more expensive. IEA estimates for 2018 indicate that hydrogen from renewable energy sources (RES) has the highest production costs by far.
|Natural gas||0.9–3.2 USD/kg|
|Natural gas with CCUS technology||1.5–2.9 USD/kg|
However, this does not mean that the current high costs rule out the potential ultimate success of the technology. Although the global production capacity of electrolysers was only 25 MW at the end of last year, a 10-MW plant opened in Japan in March. It’s a niche technology for now, but there is clear progress. Everything indicates that it will accelerate even more.
According to experts advising the British government, the Committee on Climate Change (CCC), over 80% of the cost of producing green hydrogen in the electrolysis process goes to producing and delivering energy from renewable sources—not initial capital or operating costs. In other words, the continuously decreasing RES costs will result in a similarly large drop in the price of green hydrogen production. Even despite the disturbances from the coronavirus in the first half of 2020, global investment in offshore wind farms was four times higher than the year prior. Importantly, it is the off-shore sector that is most often mentioned in the context of green hydrogen production for the European continent. The cost of making hydrogen that way will also be determined by the economies of scale, which will reduce costs as the popularity of this technology rises.
This is just the beginning
One of the main issues with hydrogen, which has hampered its development so far, is its lower energy density compared to traditional fossil fuels. In other words, less energy can be obtained from the same unit of volume. Moreover, hydrogen usually does not exist in a free state, so to use it for energy purposes, it is necessary to separate it first. This requires large amounts of energy. It is not enough to just physically extract hydrogen from underground, like crude oil or gas.
Another challenge is the storage and transport of the energy carrier once it is obtained. Due to hydrogen’s high diffusivity, low energy density, higher permeability in comparison to gas, and relatively high explosiveness and flammability, storage and transport are still costly.
Although the ambitious national hydrogen targets declared by Germany, the Netherlands, and Austria are glamorous, they are putting the cart before the horse. First of all, it is necessary to create an appropriate transport and storage infrastructure.
Bridge to join continents
However, hydrogen transport and storage is not only a risk; it is also an opportunity. Many have high hopes for this process and see it as the answer to the long unanswered problem of efficient electricity storage. The use of RES surplus to produce clean hydrogen may help to balance the power system and may become a solution to eliminate the greatest weakness of renewable sources: the lack of production stability. Hydrogen can be shipped in gaseous or liquid form, e.g. from North Africa, where there are much better conditions for solar panels than in Europe. Therefore, transmission over long distances via pipelines or ships could be in the future cheaper and more efficient than via traditional power networks.
The new EU strategy may additionally provide an opportunity to develop international hydrogen connections. Stimulating the demand in order to popularise the technology with the unrealistic for now assurance of an adequate supply from European sources will most likely require hydrogen to be imported from outside. Germany is already trying to build intercontinental energy relations. In June, Berlin signed a contract with the Moroccan government to construct a 100-MW renewable power plant dedicated to the production of green hydrogen. Morocco can serve as a model for renewable energy, with its particularly attractive location—large sun exposure and strong, stable winds, thanks to which several local onshore wind farms can achieve the efficiency of offshore wind turbines.
Solution for high-emission transport?
The energy sector is not the only area which can benefit from the development of hydrogen technologies. Probably the greatest future for green hydrogen lies in an industry sector, particularly in the high-emission chemical, refining, and steel sectors. Hydrogen can replace diesel in generators (e.g. for emergency power supply) and heavy transport —generally speaking, in those sectors of the economy that are difficult or very expensive to electrify.
Another proposed use of hydrogen is powering passenger cars. However, despite the pro-hydrogen campaigns by car companies, there is less optimism in this industry. Only 0.5% of cars sold with a small carbon footprint run on hydrogen. The lack of hydrogen charging stations is particularly troublesome (and this is unlikely to change as long as the vehicles themselves are few and far between) because, unlike electric cars, one cannot recharge a hydrogen car in one’s driveway.
However, this argument is less relevant when we consider long-haul trucks. Here, the future looks brighter. Hydrogen has a higher energy density than traditional automotive batteries, which means that the same volume of hydrogen tanks allow for a much greater range than their battery-powered counterparts. Hydrogen compressed to 700 bar has 2 to 5 times as much energy as a lithium-ion battery per litre. In April, Daimler and Volvo invested 1.2 billion euros in a joint venture for fuel cells in lorries.
Another feasible application is in rail transport. In 2018, the German giant Alstom successfully commissioned fourteen hydrogen trains. Difficulties in the electrification of secluded areas may be a determinant of great potential for hydrogen in the railroad. In 2018, only 40% of the UK rail network was electrified. The European average is only 54%.
Strategy for a climate-neutral Europe
How does the European Union view these opportunities and threats? On 22 May, European energy giants—e.g. Enel, Iberdola, Orsted, EDP, and Vestas—appealed to the European Commission to prioritise investment in green hydrogen technologies in the post-pandemic economic recovery. The European Commission responded with its Hydrogen Strategy for a climate-neutral Europe.
The EU considers hydrogen produced from renewable sources as a priority and the long-term goal. The document confirms plans to build 6 GW of electrolysers by 2024 and at least 40 GW of capacity by 2030 from large green factories dedicated to hydrogen, as set out in the New Industrial Strategy for Europe.
Hydrogen is expected to help achieve a climate-neutral European economy by 2050. The EU sees a special role for this technology in sectors where electrification is difficult to achieve or where fossil fuels have been a necessity.
The estimated expenses are impressive. From 24 to 42 billion EUR for electrolysers, 220–340 billion EUR for wind farms and photovoltaic cells (dedicated to hydrogen production), and 65 billion EUR from 2030 for investment in the transport and storage of hydrogen.
The EC has not ruled out the production of hydrogen from natural gas during the transition period, with the assumption that CCS technology is used. Investment in these innovative solutions is slated for 11 billion EUR. It is a response to the opinion expressed by the International Association of Oil and Gas Producers whose experts warned against investing only in green hydrogen, which is currently a very small part of the market. They emphasised the need to build the foundations for transformation through the use of nuclear energy, hydropower, or gas during the transitional period.
In order to encourage investment in low-carbon hydrogen, the European Commission is considering reducing the exclusion of grey hydrogen production from the Emissions Trading System (ETS). The problem is that creating a disproportionate demand without ensuring an adequate supply of climate-neutral hydrogen may inadvertently promote less environmentally friendly, cheaper grey hydrogen, which would not bring Europe closer to green solutions.
The European Commission is by no means a pioneer in legislation related to greener hydrogen. For example, France has already set a target of 10% green hydrogen in the industry by 2023 and 20%–40% by 2028. The issue of hydrogen also resounded in the Dutch parliament on 30 March, when the government’s hydrogen strategy was presented.
On 10 June this year, Germany also announced its national hydrogen strategy, with the production of up to 5 GW by 2030 and up to 10 GW 10 years later. The 7 billion EUR fed into the development of German companies and their R&D is meant to increase the demand for this raw material and, with the steady growth in the sector, to reduce its costs continually. Another 2 billion EUR is to be allocated to the creation of the global green hydrogen market, in which Berlin wants to take a leading role. The strategy promotes green hydrogen, but like its EU counterpart, it allows blue and turquoise hydrogen during the transition period.
Will hydrogen save carbon-heavy Poland?
Poland is one of the European leaders in the production of hydrogen. As much as 14% of the EU’s demand for this fuel is produced in Poland. However, it is almost entirely the grey type. On 7 July, a letter of intent regarding the construction of the Polish hydrogen economy was signed by representatives of the Ministry of Climate and 17 Polish entities, e.g. Gaz-System, PGNiG, Grupa Azoty, PKN Orlen, and Grupa LOTOS. The signatories declared a joint effort to undertake research and development in the hydrogen economy in our country. Commenting on this event, Polish Minister of Climate Michał Kurtyka announced that the government’s Hydrogen Strategy until 2030 will be consulted in the fall.
Everything seems to indicate that we are ahead of a great push for hydrogen across Europe. Particularly high hopes have been placed on the possibility of storing energy produced from unstable, yet very popular renewable sources. In an industry as well, hydrogen can be an alternative to fossil fuels. Its best prospects lie in areas where electrification is difficult—in steel production, oil refining, and heavy transport. However, bear in mind that we are just starting this journey. Ambitious goals, loud declarations, and astronomical figures should not obscure the harsh reality—that green hydrogen makes up only a few per cent of the market. Poland should allow itself to get carried away by the European hydrogen hype because the planned investment is too much to ignore. Otherwise, it will once again be doomed to an never-ending struggle to catch up with Western Europe, even if it is not in a losing position, yet. This time, Poland will not be able to blame the future failure on the legacy of a communist past. Only we, the Poles, will be to blame.
Polish version is available here.
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