Hydrogen at the tipping point

19 August 2020

The concept of the hydrogen economy has been around for many decades, but real momentum is now building, in Europe with the launch of the EU Hydrogen Strategy, and in Saudi Arabia, with announcement of plans for the world’s largest green hydrogen project to date.

The EU Hydrogen Strategy was launched on 8 July 2020, along with the related EU Strategy for Energy System Integration. The two strategies are described as presenting “a new clean energy investment agenda” for Europe, in line with the European Commission’s Next Generation EU recovery package and the European Green Deal, which “sets out how to make Europe the first climate-neutral continent by 2050.”

The Strategy for Energy System Integration aims to address shortfalls of the “current model where energy consumption in transport, industry, gas and buildings is happening in ‘silos’ - each with separate value chains, rules, infrastructure, planning and operations.” This “cannot deliver climate neutrality by 2050 in a cost efficient way.” Instead, “new links between sectors must be created”, with renewable hydrogen seen as the enabling technology.

The EU Hydrogen Strategy aims to transform the potential into reality, through investments, regulation, market creation and research and innovation.

A gradual transition is envisaged, requiring a phased approach:

  • From 2020 to 2024, the European Commission says it will support the installation of at least 6 GW of renewable hydrogen electrolysers in the EU, and the production of up to one million tonnes of renewable hydrogen.
  • From 2025 to 2030, hydrogen needs to become an intrinsic part of the EU’s integrated energy system, with at least 40 GW of renewable hydrogen electrolysers and the production of up to ten million tonnes of renewable hydrogen in the EU.
  • From 2030 to 2050, renewable hydrogen technologies should reach maturity and be deployed at large scale across all hard-to-decarbonise sectors.

To help deliver on the strategy, 8 July also saw the launch by the European Commission of the European Clean Hydrogen Alliance, bringing together industry leaders, civil society, national and regional ministers and the European Investment Bank. The plan is that “the Alliance will build up an investment pipeline of concrete projects for scaled-up production and will support demand for clean hydrogen in the EU.” It will build on “the success of the European Battery Alliance.”

Renewed attention

In its 8 July communication setting out the hydrogen strategy, the Commission notes that hydrogen is enjoying “renewed and rapidly growing attention in Europe and around the world.”

Hydrogen can be used as a feedstock, a fuel, an energy carrier and for storage, and it emits no CO2 and creates almost no air pollution when used. It offers a way to decarbonise industrial processes and economic sectors where reducing carbon emissions is both urgent and hard to achieve. “This makes hydrogen essential to support the EU’s commitment to reach carbon neutrality by 2050 and for the global effort to implement the Paris Agreement while working towards zero pollution”, says the Commission. “Yet, today, hydrogen represents a modest fraction of the global and EU energy mix, and is still largely produced from fossil fuels, notably from natural gas or from coal, resulting in the release of 70 to 100 million tonnes CO2 annually in the EU. For hydrogen to contribute to climate neutrality, it needs to achieve a far larger scale and its production must become fully decarbonised.”

“In the past, there have been peaks of interest in hydrogen, but it did not take off. Today, the rapid cost decline of renewable energy, technological developments and the urgency to drastically reduce greenhouse emissions, are opening up new possibilities”, the Commission suggests.

“Many indicators signal that we are now close to a tipping point. Every week new investment plans are announced, often at a gigawatt scale. Between November 2019 and March 2020, market analysts increased the list of planned global investments from 3.2 GW to 8.2 GW of electrolysers by 2030 (of which 57% are in Europe) and the number of companies joining the International Hydrogen Council has grown from 13 in 2017 to 81 today.

There are many reasons why H2 is a key priority in achieving the European Green Deal and clean energy transition, the Commission argues. Renewable electricity is expected to decarbonise a large share of EU energy consumption by 2050, but not all of it. Hydrogen has a strong potential to bridge some of this gap, as a vector for renewable energy storage, alongside batteries, and transport, ensuring back up for seasonal variations and connecting production locations to more distant demand centres. In its strategic vision for a climate-neutral EU published in November 2018, the share of hydrogen in Europe’s energy mix is projected to grow from the current less than 2% to 13-14% by 2050.

Hydrogen can replace fossil fuels in some carbon intensive industrial processes, such as in the steel or chemical sectors, lowering greenhouse gas emissions and further strengthening global competitiveness for those industries. It can offer solutions for hard to abate parts of the transport system, in addition to what can be achieved through electrification and other renewable and low-carbon fuels. A progressive uptake of hydrogen solutions can also lead to repurposing or re-using parts of the existing natural gas infrastructure, helping to avoid stranded assets in pipelines.

Investment in hydrogen will also foster sustainable growth and jobs, which will be critical in the context of recovery from the COVID-19 crisis, the Commission argues, and its EU recovery plan highlights the need to unlock investment in key clean technologies and value chains, and stresses clean hydrogen.

Europe is highly competitive in clean hydrogen technology manufacturing, the Commission argues and is well positioned to benefit from the global development of clean hydrogen as an energy carrier. Cumulative investments in renewable hydrogen in Europe could be up to EUR 180-470 billion by 2050, and in the range of €3-18 billion for low-carbon fossil-based hydrogen, while analysts estimate that clean hydrogen could meet 24% of world energy demand by 2050, with annual sales in the range of €630 billion.

However, today renewable and low-carbon hydrogen are not yet cost competitive compared to fossil-based hydrogen. To harness all the opportunities associated with hydrogen, the EU needs a strategic approach, the Commission says.

EU industry is rising to the challenge and, under the auspices of Hydrogen Europe, has developed an ambitious plan to reach “2x40 GW” of electrolysers by 2030, ie 40 GW in Europe and 40 GW in neighbouring countries (including north Africa and Ukraine) for export to the EU (see Ad van Wijk (TU Delft) and Jorgo Chatzimarkakis (Hydrogen Europe), Green hydrogen for a European Green Deal: a 2x40 GW initiative).

Almost all EU member states have included plans for clean hydrogen in their national energy and climate plans, 26 have signed up to the “Hydrogen Initiative”, and 14 member states have included hydrogen in the context of their alternative fuels infrastructure national policy frameworks. Some have already adopted national strategies or are in the process of adopting them.

However, the Commission cautions that deploying hydrogen in Europe faces important challenges that neither the private sector nor member states can address alone. Driving hydrogen development past the tipping point needs critical mass in investment, an enabling regulatory framework, new lead markets, sustained research and innovation and a large- scale infrastructure network that “only the EU and the single market can offer”, in co-operation with “third-country” partners.

As investment cycles in the clean energy sector run for about 25 years, “the time to act is now”, urges the Commission.

Saudi mega project

Green hydrogen is also very much on the agenda in Saudi Arabia with the signing by Air Products, ACWA Power and NEOM of an agreement to construct a $5 billion green-hydrogen-based ammonia production facility powered by renewable energy, with the aim of exporting green ammonia to global markets.

The project, which will be equally owned by the three partners, will be part of NEOM, a ‘living laboratory’ and hub for sustainable technology under development in the north west corner of Saudi Arabia.

It is seen as a cornerstone of NEOM’s strategy of becoming a major player in the global hydrogen market and will include: the integration of over 4 GW of power from solar, wind and storage; production of 650 tons per day of hydrogen by electrolysis using thyssenkrupp electrolysers; production of nitrogen by air separation using Air Products equipment; and production of 1.2 million tons per year of green ammonia using Haldor Topsoe technology. The project is scheduled to be onstream in 2025.

Air Products will be the exclusive off-taker of the green ammonia and intends to transport it around the world to be dissociated to produce green hydrogen for the transportation market.

“This is a pivotal moment for the development of NEOM”, said NEOM CEO, Nadhmi Al Nasr, “and a key element in Saudi Vision 2030.”

Air Products and thyssenkrupp Uhde Chlorine Engineers have recently signed a strategic co- operation agreement to “collaborate exclusively in key regions, using their complementary technology, engineering and project execution strengths to develop projects supplying green hydrogen.”

Under the agreement, thyssenkrupp will “deliver its technology and supply specific engineering, equipment and technical services for water electrolysis plants to be built, owned and operated by Air Products.”

“The SCA with thyssenkrupp is an important element of our value chain in developing, building, owning and operating world-scale projects and supplying green hydrogen for mobility, energy and industrial applications”, said Samir J. Serhan, chief operating officer, Air Products, while Denis Krude, CEO, thyssenkrupp Uhde Chlorine Engineers, said his company was already “set to supply 1 GW of water electrolysis plants per year” and was “prepared to ramp up the capacity in this rapidly evolving market.”

thyssenkrupp has developed alkaline water electrolysis technology and has realised more than “600 projects and electrochemical plants worldwide with a total rating of over 10 GW.”

To meet “the need for low-CAPEX, low-OPEX, reliable technology and solid project execution to make world-scale green hydrogen projects feasible”, Air Products and thyssenkrupp say they are “committed to deploying economic green hydrogen plants in the gigawatt size.”

European Commission’s hydrogen strategy: the path towards a European hydrogen eco-system step-by-step
Thyssenkrupp alkaline electrolysis
Examples of European electrolyser technology (source: Green hydrogen for a European Green Deal: a 2x40 GW initiative, Ad van Wijk and Jorgo Chatzimarkakis)
Siemens Silyzer PEM based electrolysis

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