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EU adopts long-awaited hydrogen strategy

The European Commission adopted the long-awaited strategies for energy system integration and hydrogen, in order to transform Europe’s energy system and reach carbon neutrality by 2050.

“With 75 per cent of the EU’s greenhouse gas emissions coming from energy, we need a paradigm shift to reach our 2030 and 2050 targets,” commented Commissioner for Energy Kadri Simson. “The EU’s energy system has to become better integrated, more flexible and able to accommodate the cleanest and most cost-effective solutions.”

“The strategies adopted today will bolster the European Green Deal and the green recovery, and put us firmly on the path of decarbonising our economy by 2050,” added Executive Vice-President for the Green Deal, Frans Timmermans.

The two strategies are in line with the European Green Deal and have the potential to stimulate the economic recovery from the coronavirus crisis.

The EU Strategy for Energy System Integration will provide the framework for the green energy transition. Energy system integration means that the system is planned and operated as a whole, linking different energy carriers, infrastructures and consumption sectors. A connected and flexible system that will be more efficient and reduce costs for society.

The three main pillars of this strategy include a more circular energy system, with energy efficiency at its core. Secondly, greater direct electrification of end-use sectors. Finally, for those sectors where electrification is difficult, the strategy promotes clean fuels, including renewable hydrogen and sustainable biofuels and biogas.

The potential of hydrogen

In particular, hydrogen can be used as a feedstock, fuel or an energy carrier and storage and has many possible applications across industry, transport, power and buildings sectors. Most importantly, it does not emit CO2 and almost no air pollution when used. Renewable electricity is expected to decarbonise a large share of the EU energy consumption by 2050, but not all of it. Hydrogen has a strong potential to bridge some of this gap, as a vector for renewable energy storage, alongside batteries and transport, ensuring back up for seasonal variations and connecting production locations to more distant demand centres.

The EU Hydrogen Strategy addresses how to transform this potential into reality, through investments, regulation, market creation and research and innovation

“The new hydrogen economy can be a growth engine to help overcome the economic damage caused by COVID-19,” Mr Timmermans underlined. “In developing and deploying a clean hydrogen value chain, Europe will become a global frontrunner and retain its leadership in cleantech.”  

The priority is to develop renewable hydrogen, produced using mainly wind and solar energy. However, in the short and medium-term other forms of low-carbon hydrogen are needed to rapidly reduce emissions and support the development of a viable market.

The hydrogen ecosystem in Europe is likely to develop through a gradual trajectory, at different speeds across sectors and possibly across regions and requiring different policy solutions, so that finally, from 2030 to 2050, renewable hydrogen technologies would reach maturity and be deployed at large scale across all hard-to-decarbonise sectors.

In this regard, the Commission launched the European Clean Hydrogen Alliance with industry leaders, civil society, national and regional ministers and the European Investment Bank. The Alliance will build up an investment pipeline for scaled-up production and will support demand for clean hydrogen in the EU.

From now to 2030, investments in electrolysers could range between 24 and 42 billion euros. In addition, over the same period, 220-340 billion euros would be required to scale up and directly connect 80-120 GW of solar and wind energy production capacity to the electrolysers to provide the necessary electricity. Investments in retrofitting half of the existing plants with carbon capture and storage are estimated at around 11 billion euros. In addition, investments of 65 billion euros will be needed for hydrogen transport, distribution and storage and hydrogen refuelling stations.

The importance of a clean hydrogen strategy was already highlighted at the end of June with a letter signed by 33 leading energy companies and associations calling for a strategy inclusive of all clean hydrogen pathways.

Among the signatories, there were are also leading Central and Eastern European companies. These include Hungary’s MOL, which in 2019 signed a Memorandum of Understanding with Slovakia’s InoBat to develop a variety of hydrogen technology projects in the region. Also in May, Poland’s PGNiG announced the launch of a comprehensive hydrogen program.

Other than offering the security of supply, clean hydrogen means also new opportunities for re-designing Europe’s energy partnerships with both neighbouring countries and regions and its international, regional and bilateral partners.

In this regard, the Eastern Neighbourhood, in particular, Ukraine and the Southern Neighbourhood countries should be priority partners. The Commission would also be ready to support new hydrogen-related project proposals by international financial institutions, for potential co-financing through this blending facility, for example in the context of the Western Balkans Investment Framework.

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