Green hydrogen in the (energy) mix
03/04/23
Hydrogen is a key element in decarbonising the global energy system as a versatile energy carrier (not an energy source). Through electrolysis renewable electricity can be converted to hydrogen, which in turn can be used as a fuel with no greenhouse gas emissions and with a high energy density.
There are still some challenges when it comes to using hydrogen today in terms of cost-competitiveness, scale of production, infrastructure needs and perceived safety. However, in the future, hydrogen should enable emission-free transport, heating and industrial processes as well as inter-seasonal energy storage.
According to the EU’s vision, hydrogen’s share in the EU energy mix is projected to grow from less than 2% to 13-14% by 2050. Therefore, it’s high time for us to develop our European and Belgian initiatives to help achieve this switch.
1. Regulatory initiatives on hydrogen in the EU
There are numerous EU hydrogen initiatives. This newsflash offers a brief overview, feel free to contact us for a more in-depth analysis.
a. EU hydrogen strategy
The European Union’s first strategy on hydrogen dates from 2020. The strategy is part of the European Green Deal. It aims to boost the production and use of renewable-based hydrogen and to contribute to the decarbonisation of the EU economy in a cost-effective way.
The strategy includes action points on the following four main categories:
● developing an investment agenda
● boosting demand for and scaling up production of hydrogen
● designing an enabling and supportive framework
● providing an international dimension
Most action points are still ongoing.
b. The hydrogen and decarbonised gas market package
In late 2021, the European Commission (EC) published a hydrogen and decarbonised gas market package containing a regulation and a directive on internal markets for renewable and natural gases and for hydrogen.
The package outlines the market rules for hydrogen. The rules will be implemented in two phases – before and after 2030 – and will notably cover (i) access to hydrogen infrastructures, (ii) separation of hydrogen production and transport activities, and (iii) tariff setting. The legal framework also launches a certification scheme for renewable (green hydrogen) and low-carbon hydrogen ( blue hydrogen).
c. Delegated acts under the Renewable Energy Directive
Very recently, in February 2023, the EC proposed detailed rules to define what constitutes renewable hydrogen in the EU with two Delegated Acts under the Renewable Energy Directive (RED).
The first Delegated Act defines under which conditions hydrogen, hydrogen-based fuels or other energy carriers can be considered as renewable liquid and gaseous fuels of non-biological origin (RFNBO). The second Delegated Act provides a methodology for calculating life-cycle greenhouse gas emissions for RFNBOs. The Acts will now be sent to the European Parliament and the Council for their review.
With these acts, the EC aims to ensure that all RFNBOs are produced from renewable electricity. It hopes that this will provide investors with regulatory certainty. Overall, the EU aims to produce 10 million tonnes of renewable hydrogen domestically and to import another 10 million tonnes in line with the REPowerEU Plan.
d. The REPowerEU plan
Hydrogen plays an important role in the context of ending EU dependency on Russian fuel. The EC published the REPowerEU plan in May 2022 as a result of the war in Ukraine. A key part of the plan is the ‘hydrogen accelerator’. The new concept will help to roll-out new hydrogen technologies more quickly and – as previously mentioned – sets the target of producing 10 million tonnes of renewable hydrogen domestically whilst importing another 10 million.
The REPowerEU plan aims to scale up supply and demand much sooner and to a greater degree than set out in the 2020 strategy. The plan focuses on the uptake of renewable hydrogen in hard-to-decarbonise sectors, on the development of hydrogen infrastructure and on hydrogen investments.
e. The European Clean Hydrogen Alliance
The European Clean Hydrogen Alliance was launched alongside the strategy for hydrogen. The alliance brings industry, national and local authorities, civil society and other stakeholders together. The European Clean Hydrogen Alliance will contribute to the ambitious deployment of hydrogen technologies by 2030 by connecting all sectors related to hydrogen: production, demand, transport, distribution, and others.
f. Important Projects of Common European Interest
In July 2022, the first Important Project of Common European Interest (IPCEI) in the hydrogen sector was approved. IPCEIs are projects that are exempted from State Aid prohibition rules. This allows them to receive public funding (under strict conditions). These projects will be an important part of EU climate law and the REPowerEU plan. The spill-over effect of research and development should allow breakthroughs in innovative applications as well as in the field of hydrogen.
The first IPCEI (Hy2Tech) covers the full clean energy hydrogen value chain: hydrogen generation, transportation, distribution, storage and application. It consists of 41 projects located in 15 EU countries (including Belgium). The IPCEI will receive up to €5.4 billion in public funding, which is expected to unlock an additional €8.8 billion in private investments. In Belgium, John Cockerill and Cummings Inc. have both been selected to receive support within the framework of the IPCEI. John Cockerill's project revolves around research and innovation and is dedicated to designing an alkaline electrolyzer as well as developing the large-scale industrial production of this electrolyzer in Belgium and France. The project led by Cummins Inc. will increase the PEM electrolyzer manufacturing capacity of its factory at Oevel in Belgium to 1 gigawatt.
In September 2022, a second IPCEI (Hy2Use) in the hydrogen sector was approved. This one focuses on industrial deployment and the construction of a hydrogen infrastructure. It consists of 35 projects in 13 EU countries. These projects will receive up to €5.2 billion in public funding, which is expected to attract an additional €7 billion in private investments. The companies selected for Belgium include Engie Belgium (which is participating in two selected projects), Fluxys and Wallonia-based TECforLime. Fluxys and Engie will receive support for their infrastructure project whilst TECforLime and Engie (second project) will receive support for the development of hydrogen industrial processes.
2. Regulatory initiatives on hydrogen in Belgium
In October 2021, the federal government adopted its own hydrogen strategy, as proposed by the Minister of Energy, Tinne Van der Straeten. The strategy was updated a year later. With this strategy Belgium announces its ambitions to be a leading import and transit hub in Europe.
The federal strategy aims to use hydrogen and other renewable molecules in applications where it is not economically feasible or technically viable to achieve climate neutrality using electrification.
The strategy is based on four pillars:
a. Pillar 1: Positioning Belgium as an import and transit hub for renewable molecules in Europe
Belgium has a central position in Europe and has significant ports in the North Sea. Therefore, the Belgian strategy aims to import hydrogen molecules and derivatives on a large scale. Proposed measures include: engaging with key partners to open main import routes and supporting the development of the hydrogen import infrastructure.
b. Pillar 2: Expanding Belgian leadership in hydrogen technologies
Belgium based companies and research institutions are well positioned on the hydrogen technology market. Belgium wants to maintain and strengthen this lead by supporting R&D in its innovation of hydrogen technologies. The support will be offered for research and pilot projects on hydrogen technologies through federal funds (e.g. the Energy Transition Fund and the Clean Hydrogen for Clean Industry) and for the development of test infrastructures and electrolysis capacities (hydrogen production method).
c. Pillar 3: Establishing a robust hydrogen market
The federal government considers that it is essential to have a robust market to make hydrogen attractive. Together with the Belgian Regions, the federal government wants to unlock demand. The measures that come under this pillar are directed at setting up a legal and regulatory framework for the transport of hydrogen. The Belgian market is currently one of the most advanced in the world. While waiting for uniform European rules, the strategy aims to set the minimal necessary provisions to kickstart the market in the short term.
A proposal for a national hydrogen law is currently being reviewed by the Belgian parliament. The intention is to designate a network operator for the transport of hydrogen. This operator will be responsible for free access to the transport network and for guaranteeing the quality of the hydrogen. If adopted, this would be the first hydrogen law in the world.
d. Pillar 4: Investing in cooperation as a key success factor
Cooperation at all levels will be required to achieve the ambitious goals of the hydrogen strategy. The key elements of the fourth pillar are: market consultations, the representation of Belgium in international organisations and forums on hydrogen and continuous interactions with the hydrogen sector.
Hydrogen is a key element when it comes to reaching the ambitious EU environmental objectives. However, many challenges remain. The EU set a common strategy in 2020 to deploy hydrogen. Since then, many other initiatives have been introduced including delegated acts, regulations and directives to complement the pieces of the legislative framework as well as international collaboration and public funding for projects.
On a national level, Belgium aims to maintain and strengthen its position as a pioneer in the hydrogen sector. Companies located in Belgium are among the leaders in this sector. This is something that the federal government wants to capitalise on, which is why it has launched its own agenda.
Hydrogen is expected to play an important role in the energy mix – let’s see if it can live up to expectations.
