The European Hydrogen Backbone (EHB) initiative brings together 33 energy infrastructure operators in the EU to create an adequate pipeline infrastructure and help develop a competitive low-carbon hydrogen market. How would you describe the progress made since its vision was published in 2020?
There is real progress from the side of the gas industry. TSOs have been pushing for more than 40 concrete projects to qualify as PCIs (Projects of Common Interest). This is not the result of modelling analysis or scenarios, but of on-the-ground vendors’ quotes and pre-feasibility studies. Some of these projects have already taken FID in the Netherlands and in France and the other projects are making the necessary progress.
What are the challenges?
The projects’ technical uncertainties and their development expenses, which are still very high, are the primary challenges. According to the latest EHB report[1],[2], for an average project of EUR 5 billion, that typically amounts to about EUR 100-125 million to be invested at risk in pre-feasibility, engineering studies, etc.
What is much needed right now for these projects to progress from planned stage is the public support and funding from the European Commission in order to create positive spillovers in terms of knowledge, of capacity building to develop the entire supply chain, from compressors, valves, materials, etc. There is a lot to be done.
I am only mentioning the midstream pipeline projects that are part of the EHB initiative. But of course, there is a need for support at all stages of the value chain, which includes equipment like electrolysers.
You say that member states are committed to hydrogen infrastructure projects and the support from the EC is there too. Can you explain what is still missing in terms of coordination?
The projects that took FID are funded by national governments at the member state level. If we want to meet our long-term targets, we need cross-border infrastructure that connects producing regions to demand centres. We need to link the cheap wind and solar resources of the North Sea, the Baltic region and southern Europe, with the demand points in central Europe.
For that purpose, we need coordination between all stakeholders and there are many member states involved. This is how we will achieve a more competitive and integrated Europe.
How can the lack of demand for green hydrogen be addressed to fast-track hydrogen projects and incentivise production?
If we question demand, what we’re doing is slowing down progress. We need to understand that industrial consumers will make firm commitments to purchase low-carbon hydrogen when the infrastructure is in place.
The decarbonisation process is a key commitment for Europe as a global player to become the first carbon neutral continent by 2050. We need to create incentives that stimulate demand and generate offtake deals as a result.
Are you worried about the direction that the future Commission will take with regards to hydrogen?
I think there is an opportunity to shape a complete agenda for industrial development and competitiveness around decarbonisation, and to coordinate the market integration that we need to fulfil our climate goals. As stated in the recent Letta report[3], it’s about industrial competitiveness and creating good jobs. The narrative from Brussels has shifted to enhancing industrial competitiveness, in the same way as the US and China are proceeding with regards to clean technologies. Indeed, this is an opportunity for the industry to think big. If we cooperate more in Europe, we can do things cost effectively, cheaper and faster.
How does Europe compare with the US when it comes to boosting the growth of hydrogen?
What should we learn about the US is that it effectively operates as a single market. In Europe we are still not fully leveraging our strengths. Europe’s ‘single’ gas market is largely established and represents a great platform and asset to capitalise on for hydrogen.
There are some technical aspects that still must be overcome. Gas companies have the drive, incentives, capacity and know-how to turn hydrogen goals into reality.
Do you think the 2030 targets for hydrogen can be reached?
For hydrogen, the RED 3 directive target for consumption in industrial and buildings should be met because it is binding. Instead of focusing only on 1st January 2030, we need to remain focused also on the long term. It’s about 2040 and beyond.
What role do you think hydrogen imports can play in the future?
There is already an international trade for ammonia. We need to build all the renewable capacity and the electrolyser capacity that we need to fulfil our domestic target. At the same time, imports will be needed as an option to meet our decarbonisation targets.
EHB is pushing for all ‘colours’ of low carbon-hydrogen. The US has plenty of natural gas so to an extent, it is efficient for them to use their domestic resources to promote blue H2. In Europe, the push on green H2 makes sense because we have to import natural gas while there is plenty of wind and solar resources, especially in Southern Europe. We should be able to turn this into another competitive advantage.
What are the other challenges?
Flexibility and hydrogen storage are becoming a high priority. The main users of renewable and low carbon hydrogen in Europe will be our energy intensive industry.
These consumers need large amounts of baseload hydrogen supplies. The intermittency of renewables also needs to be managed, both on a short-term and seasonal basis.
Was the hype around green hydrogen justified at all?
The full decarbonization of our economy is challenging to achieve. It is important to be concerned about both, the 2030 and the 2040 targets. Whether there is hype or not, without hydrogen, the European long-term decarbonisation goals are out of reach. We need to be much more focused on practical implementation and on-the-ground progress.
Interview by Fatima Sadouki – Independent Energy Specialist – for CEDIGAZ
[1] https://ehb.eu/files/downloads/EHB-2023-Implementation-Roadmap-Part-1.pdf
[2] https://ehb.eu/files/downloads/EHB-2024-Implementation-Roadmap-Part-2.pdf
[3] https://www.consilium.europa.eu/media/ny3j24sm/much-more-than-a-market-report-by-enrico-letta.pdf