Green hydrogen is made by using clean electricity from renewable energy technologies to electrolyse water (H2O), separating the hydrogen atom within it from its molecular twin oxygen.

Europe’s energy transition commits to a green hydrogen future

6 minutes, 38 seconds Read

Europe’s transition to a zero-carbon future is well underway. Greenhouse gas emissions have fallen by 20% since 2005, according to World Bank data, and the EU is now targeting net zero emissions by 2050.

The largest share of emissions globally is generated by the power sector, and this is where efforts have focused over the last 15 years. Through the Renewable Energy Directive, the Energy Efficiency Directive, and the Emissions Trading Directive the European Union has harnessed the power of regulation and of markets to drive a nearly 16% reduction in consumption of all fossil fuels between 2005 and 2018.

Over the same period, consumption of energy from renewable sources and bio-fuels has risen by nearly 85%.

This start of an energy transition is being embedded in long-term EU policy, through the proposals for a Green Deal and a Climate Law which will formalise the goals of achieving significant reductions in greenhouse gas emissions towards the achievement of net-zero emissions by the middle of the century.

National political decisions have helped to underpin this ambition. Three EU member states have already closed all their coal plants, while eight others have never had significant coal-fired capacity. Ten more are intending to exit coal by 2030, and Germany and Poland have set deadlines after 2030.

Current plant economics data show that burning coal to generate electricity loses money for utilities, while using gas remains profitable.

The EU’s Emissions Trading System has played a key role by raising the cost of incumbent fossil generation to the point where new technologies like wind and solar have been able to compete. Now that these renewable technologies are able to compete with fossil generation without subsidy, nobody is building coal-fired plants in Europe, and even new gas plants are being canceled.

Earlier in March Drax, formerly one of the UK’s biggest coal generators, scrapped plans to build Europe’s  largest gas-fired plant, and agreed to sell its remaining gas-fired units. Instead it will focus on biomass and carbon capture, hoping to sequester more CO2 than it generates, and so become “carbon-positive”.

To be sure, gas-fired generation still has a significant future in Europe, particularly in countries where coal generation dominates: Poland, Romania and Bulgaria, for example. But elsewhere, the focus is shifting beyond even natural gas.

As renewables continue to make sizeable inroads into power generation across the continent, most of the attention among politicians and companies has begun to shift to replacing the use of fossil fuels in industrial processes. The focus is now on bringing hydrogen to a central role as a zero-carbon alternative.

The EU in 2020 published a hydrogen strategy document that outlines how the bloc hopes to support and incentivize a shift to hydrogen for industrial applications. In response there have been a slew of announcements in recent months of investments into hydrogen.

Hydrogen emits no carbon dioxide – just water vapor – when burned. It has a high energy content by weight, though less by volume, and needs to be stored at high pressure. It’s not easy to transport either, since it can corrode metal pipelines.

Hydrogen is most commonly manufactured by steam-reforming methane (natural gas) or by coal gasification, processes that emit CO2. Many of the current projects to boost hydrogen output are based on steam reforming, with the end product becoming known as “grey” hydrogen.

By capturing and storing the CO2 emissions underground, “grey” hydrogen becomes “blue” hydrogen, a the greenhouse gases are not allowed to enter the atmosphere.

However, the ultimate goal is to make hydrogen through a process of electrolysis, in which the power supply comes from a renewable source. The resulting hydrogen stream is commonly referred to as “green”, since no CO2 emissions are produced.

Manufacture of steel, cement and petrochemicals are all energy-intensive processes that currently require coal or natural gas as sources of energy. The production processes themselves also generate carbon dioxide.

For example, the steelmaking process reacts iron ore with carbon monoxide from burning coke to produce pig iron and CO2. Burning hydrogen instead of coke produces pig iron and water vapour.

It’s processes like this that are driving European governments to develop strategies to boost hydrogen, and companies to invest heavily in hydrogen production.

“”In 2020, six European countries and the European Commission released hydrogen strategies amid the COVID-19 crisis, in most cases as part of a green recovery plan,” IHS Markit wrote in its quarterly Power-to-X report. The company expects blue and green hydrogen investments in five countries – France, Germany, Italy, Portugal, and Spain – to top $44 billion by 2030.

“Hydrogen development is tied directly to decarbonization,” IHS Markit said. “What Europe has done in the last six months is to begin to put in place the financing framework for hydrogen. If hydrogen going to take off, it needs to have [incentive] schemes, like renewable power.”

In its Hydrogen Strategy document published last year, the European Commission targeted an increase in electrolyser capacity from less than 1 GW today to 40GW by 2030 and identified a wide range of support measures to enable green hydrogen to become cost-competitive by the end of the decade.

Not only does hydrogen need incentives to boost renewable power capacity, but it also requires higher costs for using fossil fuels. The Commission strategy estimated that in order to make blue hydrogen – made using natural gas combined with carbon capture – cost-competitive with grey hydrogen today would require a price of carbon between €55-90/tonne, far in excess of current prices (€42-43/tonne).

Th current review of the EU ETS is expected to produce legislative proposals this summer to tighten the carbon market and set a course for prices to reach these levels over the course of the decade.

There are also opportunities for green hydrogen to make inroads into the use of fossil fuels for transportation, though production costs will need to fall even further to make this possible. Analysts and experts see the potential for some limited applications in public transport but are more doubtful that hydrogen will or even should replace electric vehicles.

author

Alessandro Vitelli

Alessandro Vitelli is an independent journalist with more than 30 years of experience in energy markets. Since 2004 he has also worked as a journalist and analyst covering global carbon markets and climate policy. He has worked as a journalist for S&P Global, Bloomberg, and as an analyst for IDEAglobal.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *