The European Commission wants to fund a world-dominating hydrogen market, according to a draft strategy seen by POLITICO.
The document exposes Commission worries that Europe lags behind Asian countries, both in investment and cost competitiveness.
It proposes a massive hydrogen scale-up in the short term, as well as an EU-led regulatory framework for free trade — with “clear sustainability criteria” and a benchmark denominated in euros. However, it does not spell out an overall amount that should be invested in hydrogen.
A final strategy is being fast-tracked for release late June. Brussels has been increasingly hyping hydrogen as crucial to a climate-neutral Europe by 2050 — and a muscled industrial presence on the world stage.
Out of 74 million tons of hydrogen made around the world each year, Europe produces 9.8 million tons.
It wants to ramp that up. Fast.
“The sector’s turnover could increase from €2 billion to €140 billion, creating 140,000 jobs by 2030,” the document predicts.
The biggest problem is price, according to internal Commission numbers.
Cheap and dirty, gray hydrogen can be made by stripping natural gas at €1 per kilogram. Capturing the escaping CO2 to lower emissions, which makes so-called blue hydrogen, ups the cost to €1.50 to €2 per kilogram. Green hydrogen, made from renewable electricity and zero emissions, can cost up to €5 per kilogram.
“The main booster has to be a significant increase in volumes to bring down the price … to a range of €1-€2 per kilogram as quickly as possible,” the draft states. “Time to lay the foundations for this rapid acceleration and industrial leadership is now.”
Production targets would be set for the desired amounts of green, blue and gray hydrogen for 2030, 2040 and 2050.
In the short term, the Commission proposal suggests paying producers of gray hydrogen to go blue by implementing carbon capture technologies.
In parallel, the EU would help develop “dedicated green hydrogen factories with integrated wind and solar” power capable of producing “at gigawatt-scale,” potentially through “temporary grant schemes” to kickstart production.
The draft specifically mentions two existing projects: Hydrogen Valley in the northern Netherlands, a €90 million industrial park project partially funded by the Fuel Cell and Hydrogen Joint Undertaking, and industry association Hydrogen Europe’s 2×40 GW initiative, which aims to increase the production of electrolyzers to reach 80GW of green hydrogen-powered energy over the next decade with an investment of about €20 billion.
The Clean Hydrogen Alliance would play a “central role” by organizing CEO roundtables to discuss all aspects of production, transmission, mobility, industry, energy and heating possibilities for the gas.
The Fuel Cell and Hydrogen Joint Undertaking, as well as the European Innovation Council and the Enterprise Europe Network, could be used to help small and medium enterprises get in on the game, the draft says. Horizon Europe and the Strategic Energy Technology plan could be used to coordinate action and cooperation between countries and larger industrial partners.
Less attention is paid to stimulating demand.
Hydrogen currently accounts for less than 1 percent of Europe’s energy consumption. Under the Commission’s decarbonization scenarios, hydrogen and its derivative fuels would make up between 10 percent and 23 percent of domestic energy consumption by 2050.
The draft strategy suggests focusing hydrogen “on the sectors and end-uses that have no (or only expensive) alternatives to decarbonize” in industry and transport.
That means not competing with electric vehicles and instead going for “aviation, heavy duty transport, shipping and trains,” which would either run directly on hydrogen or on synthetic fuels containing some portion of hydrogen.
The Commission suggested using the “recovery instrument and sustainability requirements in financial support to create a market pull for hydrogen use” by mandating target quotas or blending requirements in cruise ships and aviation.
The document also calls for boosting demand in the fertilizer, steel, chemical and cement industries, but also potentially combined heat and power plants and in the electricity sector.
To make that happen, the Commission proposes creating local hydrogen pipeline networks using existing gas infrastructure around industrial sites, which could eventually be linked together. While this creates a risk of lock-in and stranded assets, it said, “the cost of creating brand-new infrastructure has to be carefully assessed to minimise its impact on consumers and competitiveness.”
“A network of refuelling stations for heavy-duty vehicles” will also need to be created, as well a transportation mechanism to bring the gas to end-users located far from industrial centers.
“Long-term storage is the key in the overall role” of hydrogen, the draft states. “Salt caverns are an existing solution” but are “limited in volume,” and it calls for further research to tackle the technical challenges.
The trade dilemma
While the Commission’s public hydrogen roadmap only mentions domestic production, the draft strategy acknowledges a future of hydrogen imports from Morocco, Ukraine, Algeria, Egypt and others.
It suggests cooperating with the African Union on hydrogen under the Climate Change and Sustainable Energy Partnership.
The Commission also proposes establishing certificates of origin and a rating system for “rules-based free trade in hydrogen … based on clear sustainability criteria.”
Green hydrogen could be promoted over its cheaper and more polluting rivals through diplomatic outreach, with the EU leading by example, the document says.
But the Commission acknowledged that the EU is late to the party. China leads in public hydrogen investment, spending €4 per capita, according to the draft, followed by Japan at €3 per capita, and the U.S. at €0.75 per capita. The EU spends €0.50 per capita on hydrogen.
The draft noted an opportunity to push “the international dimension of the euro” by having hydrogen transactions denominated in the currency.
It made no mention or assessment of how EU labor costs — or the strength of the euro compared with other currencies — might affect the bloc’s standing in a global hydrogen trade context.
Consultation to feed into a final strategy closes June 8.