10-Day Countdown to #Unshackle #EU #Cleantech: The #Hydrogen #RealityCheck

Day 8:?The countdown continues! For those catching up, each day until the European Council on 9-10 February, I’ll be sharing one actionable?#idea ?a day that can help accelerate the?#energytransition ?and make Europe a global leader in?#cleantech ?#innovation ?and?#deployment .

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Renewable Hydrogen Reality Check: Announcing Projects isn’t Enough – We Need to Build Them

Yesterday, I spoke about Europe's mixed messages in the prioritization of clean technologies. Today, I want to zero in on the one technology where Europe has made an unmistakable bet: the much-hyped renewable hydrogen (#RH2 ). On paper, it looks like an industry on steroids: the European Commission is targeting 10 million tons of domestically produced #greenhydrogen by 2030 as governments are looking to bolster their energy security by reducing and replacing natural gas.

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Yet, in 2022, barely any RH2 was produced. Why?

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First, the famous Delegated Act on Additionality which will set the rules for producing RH2. It was supposed to come out more than a year ago… yet, it is still pending. Eagerly awaited by everyone who has a stake in RH2 – from investors to companies – this delay has placed countless projects in limbo. Without knowing the rules of the game and the cost of RH2 production, it is utterly unrealistic to expect investments to take place. Even worse, many accompanying pieces of EU legislation aimed at setting the framework to launch an H2 economy have also not been adopted. This includes targets for the uptake of RH2 in sectors like hard-to-electrify heavy industry and transportation (for aviation and shipping). The negative spillover effects of these delays are adding up. For example, the delay on the Delegated Act is now affecting broader negotiations on the #RenewableEnergy #Directive : Markus Pieper, a German Member of Parliament, and Rapporteur for the negotiations on the Renewable Energy Directive cancelled the trilogue (negotiations between Commission, Council and Parliament) expected today (7 February) because of it.

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The second reason RH2 is stalling is because of financing. Investments will naturally flow where profits can be maximized – if that’s not in Europe, capital will go elsewhere. Have no doubts about it: attracting investment into RH2 is now a global competition. Companies and project developers have choices. Partly to put itself back in the game, it was wise that the European Commission announced the creation of a Hydrogen Bank. But it will only be able to match the ambition of the #inflationreductionact if there’s real money on the table. For example, applying the same incentive for RH2 as the IRA (roughly €3 per kilogram ), colleagues at the Renewable Hydrogen Coalition estimate that decarbonising at least half of Europe’s industrial H2 demand would require €12 billion per year. That’s not pocket change.

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The third stumbling block is infrastructure. For RH2 to really take off, it needs a lot of additional #renewable capacity and stronger and more resilient #electricgrids – not to mention thousands of #electrolysers and the rapid development of pure H2 transportation and distribution networks across Europe. For this we need pipes, cables and import infrastructure, for instance in ports. Some recent announcements go in the right direction, but are years away from being a reality.

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Renewable hydrogen will be a first critical test case whether EU plans for cleantech are rooted in reality. I have always felt that it was a big, bold bet to so squarely focus on green hydrogen as the emerging technology of choice – all the more important to now really make it happen. For that, I recommend three urgent steps for the European Commission to take:

a) Continuously monitor market dynamics, i.e. how much renewable hydrogen is produced and/or imported, how much demand exists, and in which sectors? If we don't do that on a regular basis - and an unabashedly rigorous, honest fashion - we may wake up in 2030 and realize we're far off our very ambitious goals. It wouldn't be the first time that happens.

b) Host regular focus groups of stakeholders that are independent of funding and/or needs for access. Too many individuals or groups don't speak openly because they are either financially dependent or reliant on the access to policymakers. It could be very clarifying to hear from project developers that have a global remit whether or not Europe is an attractive geography for investments in renewable hydrogen. The answer may very well be yes - but that 'yes' will be all the more reassuring if one knows it could have been an honest 'no'.

c) Benchmark with the most ambitious geographies. Renewable hydrogen may well be advancing in Europe - but it may roll out significantly faster elsewhere. There are now many places that have equally ambitious strategies: from Australia and India to Saudi-Arabia and – now finally joining the fray – the United States, not to mention China. While the development of new technologies is never a zero-sum game, we’ll need to ensure that Europe is moving forward in par with - or even faster - than others.

That’s a wrap for Day 8 of?#unshackle ?#eu ?#cleantech

#greendealindustrialplan ?#netzeroindustryact