Steelmakers frustrated with slow start of EU green hydrogen production –

Steelmakers frustrated with slow start of EU green hydrogen production –

Despite favourable winds due to high gas prices, Europe’s fledgling hydrogen-based industrial transformation is hitting several roadblocks: lack of legal certainty, next-to-no infrastructure and limited availability of green hydrogen made from renewables.

Prices of fossil gas, a key source of high-temperature heat for industry, first began spiking in late 2021. And with Russia’s war in Ukraine, prices on the Dutch TTF market are likely to remain at least 800% higher than in 2021 for the next two years.

But while this creates incentives for heavy industry to switch to green hydrogen – the sort made from renewable energy that the EU seeks to prioritise – supplies are still nowhere to be seen.

Today, around 10 million tonnes of hydrogen are produced and sold in the EU, mostly from burning coal or gas, a CO2 and energy-intensive process. 

Green hydrogen plays an important role in achieving the EU’s net-zero emission objective for 2050. In its 2020 hydrogen strategy the European Commission envisions a 13-14% share for renewable hydrogen in the bloc’s energy mix by mid-century.

Hydrogen “is the future of energy-intensive industry,” said Jens Geier, a German social democrat MEP who is the European Parliament’s lead negotiator on the hydrogen and gas directive.

In May, the European Commission further increased its ambition on hydrogen following Russia’s invasion of Ukraine. By 2030, the EU wants to produce 10 million tonnes of green hydrogen, obtained from renewable electricity.

But as industry looks to green hydrogen to replace gas, supply is struggling to keep up.

Sparse “green” hydrogen

“Given the prices of natural gas today, green hydrogen would be absolutely compatible if we would only have it,” MEP Geier said at a EURACTIV event on Thursday (27 October).

Geier, who leads the German social democrat delegation in the European Parliament, hails from Duisburg, a town dominated by the steel industry. And steelmakers are especially keen to produce “green steel” with renewable hydrogen.

“For the creation of a market for renewable and low carbon hydrogen, you first of all need production,” explained Ruud Kempener, hydrogen team lead at the European Commission’s energy department, who spoke at the event.

According to him, the EU’s hydrogen strategy, published in 2020, came at the right moment, just one year before the energy crisis started to bite.  

“We have quite a lot of policy proposals … which explicitly focus on production,” Kempener said, referring to the ‘Fit for 55’ package of energy and climate laws tabled by the European Commission last year. 

Kempener cited the reform of the EU’s emissions trading scheme and updated state aid guidelines among the instruments put forward by the Commission to support the production of hydrogen. The EU’s €800 billion recovery fund from the COVID-19 crisis also “has a big hydrogen component in it,” he added.

But despite those efforts, producing sufficient amounts of green hydrogen remains a formidable challenge given the quantities required by industry to meet its decarbonisation goals.

German steel giant ThyssenKrupp is among the potential buyers. According to the company’s calculations, up to 2 million tonnes of green hydrogen may be needed by 2030 in addition to the 75 Terawatt hours (TWh) of renewable electricity it is planning to consume  in order to meet its decarbonisation targets. 

“All this represents 165 TWh of electricity only in 2030,” explained Bianca Wien Prado of ThyssenKrupp.

To give an order of magnitude, she said this represents “about double the electricity consumption of Belgium in 2020”.

EU hopes to build on past experience to fast-track hydrogen market

In its attempt to create an EU-wide market for clean hydrogen, the European Commission aims to build on years of experience spent trying to integrate EU markets for gas and electricity. These lessons could prove crucial to grow the hydrogen market and meet the bloc’s 2030 climate goals.

Matching ambition with regulation

Among the main roadblocks is the EU regulatory framework, which is not yet in place.

“We are at a crucial time in terms of regulation of hydrogen,” said Catherine Banet, a Professor at Oslo University who is also research fellow at the Centre on Regulation in Europe (CERRE), a Brussels think-tank.

While ambition levels are high, “we need to fill the gap to accompany ambition with regulation,” she told attendees of the EURACTIV event.

Hydrogen is governed by various laws, like the gas package proposed by the European Commission in December 2021 and the EU’s Renewable Energy Directive (RED), which is also under revision.

These new laws need “to make sure that [hydrogen] will fit into that market, and that it will be traded between partners and across borders,” Banet said.

Eurofer, the European association of steel producers, highlighted the need for legal certainty to ensure supply matches demand.

“If the regulation is not in place, if the regulation is not clear and doesn’t provide legal certainty, it is really hard for companies to make investment decisions,” said Prado, who chairs Eurofer’s energy committee.

Rules for “renewable” hydrogen production have been delayed for years due to national interference and the European Parliament going at it alone in defining “additionality” criteria for the production of green hydrogen.

“If everything is not aligned together and coherent between each other, it’s really hard for companies to put those projects forward,” Prado warned.

Hydrogen Europe CEO: ‘We need legal certainty now’

Despite the recent change of direction in the European Parliament, the hydrogen industry continues to insist that the Commission adopts a delegated act on the so-called additionality principle, Jorgo Chatzimarkakis told EURACTIV in an interview.

Lack of infrastructure

Hydrogen is a local commodity: 85% of it is consumed where it is produced, according to IEA figures.

Yet, as demand increases, specific pipelines will also need to be built in order to transport hydrogen to Europe’s industrial consumers.

In Germany, where steelmaker ThyssenKrupp is located, there are two small-scale pipeline networks – the longest being 240 kilometres long.

“We’re really dependent on a pipeline to get hydrogen to us,” Prado said.

“We don’t have the land enough to construct the amount of renewable electricity that we need to really provide the amounts of renewable hydrogen that we envisage,” she said, adding that pipelines are “crucial for us to achieve these decarbonisation projects.”

> Watch the full EURACTIV event on YouTube:

[Edited by Frédéric Simon and Nathalie Weatherald]

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