European Commission: In focus- Renewable hydrogen to decarbonise the EU’s energy system

Renewable hydrogen can play a prominent role in decarbonising energy-intensive industries as well as heavy-duty or long-distance transport modes. It also harbours significant potential to contribute to the EU’s greenhouse gas emission reduction target by replacing today’s fossil-based hydrogen production and fossil fuel consumption in industry and the transport sector. Renewable hydrogen production from solar and wind resources will also support energy system integration. With an accelerated deployment, the share of hydrogen in the EU’s energy mix could be as much as 13-20% in 2050.

A first comprehensive EU hydrogen strategy was adopted in July 2020, which considered hydrogen investments as critical to accelerate the energy transition and in the context of recovery from the COVID-19 crisis. Since existing hydrogen production relies on imported natural gas, Russia’s war against Ukraine has put hydrogen, and renewable hydrogen in particular, in an even more prominent place in the EU’s accelerated transition to shift away from Russian fossil fuels, and diversify its energy supplies.

Production and use
Hydrogen is a chemical energy carrier, which is produced by consuming energy that is transferred afterwards in molecular form. Energy carriers allow energy from an external energy source to be stored, transferred and released over time.

Today, most hydrogen is produced from natural gas. Renewable hydrogen is identical to fossil-based hydrogen, but it is produced through electrolysis from water, which involves the separation of the water molecule in hydrogen and oxygen by applying electricity from renewable energy sources, such as wind and solar. It can also be obtained from biomass as raw material. Accordingly, renewable hydrogen’s production is almost emission-free.

Currently, hydrogen is mostly used as an energy feedstock in industrial processes, but it could also contribute to producing other gases and liquid fuels. Thanks to its energy density properties, it can also carry and store energy, which makes it particularly suitable for long-distance and heavy-goods transport. Another aspect that could accelerate its production is the fact that existing infrastructure in gas transport and storage can be repurposed for hydrogen.

An EU-wide hydrogen backbone
All 20 action points of the EU hydrogen strategy, which were implemented and delivered by the beginning of 2022, aimed at boosting demand for and scaling up renewable energy production in the EU, designing and enabling a supportive legislative framework and strengthening the EU’s leading role in the international hydrogen market. The REPowerEU plan builds up on the strategy’s ambitions, combining diverse measures to accelerate the deployment and production of renewable hydrogen.

Accelerate hydrogen production
The REPowerEU plan foresees a “hydrogen accelerator”, which sets objectives for 10 million tonnes of domestic renewable hydrogen production and 10 million tonnes of renewable hydrogen imports by 2030. It includes measures to scale up hydrogen infrastructure, which highly relies on the deployment of renewable energy and port infrastructure, and its connection to industrial and transport users.

Within the plan, the Commission also identifies a series of actions to accelerate the uptake of renewable hydrogen and its derivatives in hard-to-decarbonise sectors, particularly in transport and industry. For instance, it is estimated that around 30% of the EU’s primary steel production could be decarbonised on the basis of renewable hydrogen by 2030.

Further developments in the EU’s regulatory framework are essential to boost the domestic production of renewable hydrogen. A legislative proposal on permitting and a related recommendation put forward by the Commission within the REPowerEU plan will contribute to speeding up permitting procedures for renewable electricity needed for hydrogen production. EU rules applicable to renewable hydrogen will be further defined through two delegated acts expected to be adopted by the Commission by the end of the year.

Investments and financing
To move the hydrogen economy ‘from niche to scale’, the Commission announced in September 2022 the creation of a European Hydrogen Bank that aims to support investments to connect hydrogen supply and demand during its scale-up phase and to enable cost-efficient and predictable purchase and sales of renewable hydrogen from within and outside the European Union. The bank will be able to invest EUR 3 billion to help building the future market for hydrogen.

Financial incentives and access to investments are essential to encourage demand and boost production. Among the EU’s various funding tools to help finance hydrogen projects, the Hydrogen Public Funding Compass offers detailed information about EU funding programmes, funds financed by the 2021-2027 long-term EU budget and NextGenerationEU, and national funding programmes and funds available at national level. The Commission has 15 EU countries have already included measures covering hydrogen in their Recovery and Resilience Plans, amounting to at least EUR 9.3 billion in investments.

An international engagement
The EU’s international engagement on hydrogen contributes to accelerating the energy transition of key partner countries, notably by supporting their deployment of renewable energy sources, while scaling up its own renewable hydrogen imports. The European Commission co-leads the Hydrogen Initiative under the Clean Energy Ministerial, it is a member of the International Partnership for Hydrogen and Fuel Cells in the Economy and has been the co-facilitator of IRENA’s collaborative framework on green hydrogen. Moreover, the EU takes a leading role in international cooperation on renewable hydrogen research and innovation through Mission Innovation, the global initiative to accelerate efforts in renewable energy innovation.

Through Green Hydrogen Partnerships, the Commission will promote the import of renewable hydrogen from third countries while incentivising decarbonisation and the development of renewable energy production for domestic use. These partnerships and the facility will deliver a framework to provide a level-playing field between EU production and third-country imports. At COP27, the European Commission signed partnerships with Egypt, Kazakhstan and Namibia on the development, deployment, use and undistorted trade of renewable hydrogen and its derivatives.

The European Hydrogen Bank will also have an international leg aiming to support renewable hydrogen partnerships, and coordination, to facilitate investments and the development of the necessary regulatory framework. This will include the activities proposed under the Global European Hydrogen Facility and will be developed in close cooperation with EU countries, the EU Energy Platform and international energy partners.

Innovation across the whole value chain
Renewable hydrogen projects serve both the long-term EU energy security strategy and the decarbonisation pathway.

The Clean Hydrogen Partnership, which is the successor of the Fuel Cells and Hydrogen Joint Undertaking, was established in November 2021 to accelerate the development of advanced clean hydrogen applications through enhanced scientific capacity. Its main focus is renewable hydrogen production, transmission, distribution and storage, as well as selected fuel cell end-use technologies in transport, buildings and industry.

The Commission also supports renewable hydrogen investments in the context of the EU ETS Innovation Fund by mobilising increased financial resources focusing on priority areas. A dedicated call for renewable hydrogen-based applications in industry as well as clean-tech manufacturing of electrolysers was launched in November 2022.

Cross-border projects will play a key role in the development and integration of innovative hydrogen technologies in the EU’s energy infrastructure. In July 2022, the first Important Project of Common European Interest (IPCEI), IPCEI Hy2Tech, was approved. It aims to develop innovative technologies for the hydrogen value chain to decarbonise industrial processes and the mobility sector, with a focus on end-users. A second project, IPCEI Hy2Use, was approved in September 2022, and complements IPCEI Hy2Tech with a focus on construction of hydrogen-related infrastructure and the development of innovative and more sustainable technologies for the integration of hydrogen into the industrial sector.

The European Clean Hydrogen Alliance, which supports the large-scale deployment of clean hydrogen technologies by 2030, presented at the end of 2021 a pipeline of over 750 projects from all parts of the hydrogen value chain, including application in industry, transport, energy systems and buildings. Many of these projects are set to enter into operation by the end of 2025.

Despite remaining challenges, mainly linked to its cost-competitiveness and its infrastructure needs, renewable hydrogen is expected to play a key role in enabling emission-free transport, in decarbonising industrial processes and to provide inter-seasonal energy storage and buffering in the EU in the near future.