Our call to get real about green hydrogen
One of our core values is that “we are optimistic about a sustainable future, and realistic about the way to get there”. And right now, we believe the world needs a bit more optimism and realism when it comes to green hydrogen.
The European Commission called for at least 10 million tons of domestic production by 2030 in its 2021 RePowerEU proposal. Other studies point out that even more green hydrogen is needed to to decarbonize our economy (Hydrogen4EU, Deloitte, 2021).
This requires a massive increase in green hydrogen factories – up to 100 gigawatts in total.
To put this into perspective: The biggest plants in the EU today at 10 to 20 megawatt in size, and still in the pilot phase of production. Current total production capacity of green hydrogen is around 100 megawatt.
This means European industry needs to build factories that are 10 times bigger and increase total capacity up to 1,000 times.
Currently, this growth path does not seem within reach, but we do believe Europe has what it takes to take the lead in green hydrogen if it dares to step up the current pace of development.
Europe can take the lead
At HyCC, we build on more than 100 years of experience in electrolysis, including facilities of 200 megawatt for the production of other products, such as chlorine. We know how to apply this to make hydrogen and scale up further to decrease cost.
And we are not alone. Europe is home to leading producers of elektrolyzer equipment, experienced electrolysis operators, some of the world’s foremost engineering companies and leading developers of offshore wind and solar energy. Together, we can scale up production and help decrease the cost of green hydrogen to fuel the transition.
But we need to get serious about the transition. Here are our three recommendations for European leadership in green hydrogen:
- Accelerate the development and scale-up of hydrogen technology
Large-scale green hydrogen projects require billions of euros of investments into a developing industry, in a time when the price of capital is rising. Taking risk is part of doing business, but starting an entire new industry overnight without an existing market requires an extra push, or we will simply be too late to achieve our climate goals.
The EU and national governments can help decrease the risk with developing new technology at this scale with instruments like the European Hydrogen Bank, which is currently in a pilot phase. The bank should be expanded to cover the broader market to buy & sell green hydrogen based on competitive tenders. This would cover the current pricing gap for green hydrogen, allowing the industry to scale up further and bringing down the cost in the long run.
- Invest in affordable supplies of renewable electricity
The green hydrogen industry and renewable energy can work hand-in-hand. By placing green hydrogen plants close to offshore wind and solar, we can reduce the need for expensive infrastructure to transport electricity further inland. Moreover, green hydrogen plants can act as ‘balancing’ facilities, by automatically producing more when there is more wind or sun, and less when there is a shortage of electricity. This helps balance the grid.
To stimulate this, green hydrogen facilities should be exempted from the high grid fees required to power traditional plants and governments should stimulate the co-development of renewable power connections and hydrogen factories.
- Set obligations for green products, regardless of origin
Industrial producers for products such as steel, ammonia or fuels should have clear obligations to increase the share of CO2-neutral production. This means, among others to:
- Increase the target for fuels from green hydrogen (RFNBO’s) from 1% to 3%. To achieve this, we should we look at both the fuels themselves and the production process. We can already replace fossil hydrogen used in refineries with green hydrogen today, to save thousands of tons of CO2. This is a no-regret decision, because the same green hydrogen and refineries can be used to produce net-zero fuels in the future.
- Introduce obligations for other products such as green steel and sustainable fertilizer.
- Ensure all obligations are applied equally to production within the EU and to imports. Our common goal should not be to push production out of the EU, but to transform our industries into global sustainability leaders.
Good news for future generations
The green hydrogen industry is still in an early development stage. This is also good news, as we are convinced that the coming years will bring many improvements as technology and manufacturing become more efficient.
By 2030, the EU could be home to the world’s leading green hydrogen companies, fueling an industry that produces sustainable, circular products without CO2 emissions, at competitive prices. But to get there with more urgency, we need a little bit more optimism, and a little bit more realism.