Hydrogen Talk: Can the RED II deliver the EU's hydrogen ambitions?

On 02.02.2022, Hydrogen Europe organised its first Hydrogen Talk dedicated to renewable hydrogen, its role in the revision of the Renewable Energy Directive and the power of Delegated Acts. This is a make-or-break moment: A lot is at stake and to achieve climate ambitions and 2030 targets the time to act is now. Decarbonising the EU’s economy is a complex endeavour, one that requires decreasing emissions in the power and in the industry sectors simultaneously whilst not leaving other sectors and, most importantly, consumers behind.

MEP Markus Pieper, Rapporteur on RED, clearly stated that hydrogen is here to stay, being integral to our energy future. Europe can be an innovation leader and reach net zero only by placing industry in the centre, removing bottlenecks and regulatory burdens, while increasing renewables and electrolyser capacity. Listening to the hydrogen industry and the principles of a market economy is instrumental.

The RED II and the Delegated Act must be accelerators, not a fence standing in the way of developments. MEP Pieper raised the concern that the current restrictions make hydrogen production in Europe less attractive and restrict future imports. Entrepreneurship, pragmatism, and affordability are necessary to ensure that the EU continues to lead in hydrogen technologies.

MEP Jens Geier, Rapporteur on the Hydrogen Strategy, shared his colleague’s concern and highlighted the discriminatory treatment against renewable hydrogen. MEP Geier referred to the heterogeneity across Member States in terms of geographical conditions, energy mix, and hydrogen ambitions, but underlined that all are united on the commitment to the Paris Agreement. Europe cannot miss the chance of enterprises immediately investing in green energy and green hydrogen now. ?Building up unnecessary obstacles instead of opening opportunities for renewable energy is counterproductive.

Ruud Kempener joined the discussion on behalf of the European Commission and put into context their RED II revision strategy: (1) Setting up targets for end-use sectors by 2030 to ramp volumes up; (2) Focusing on industry and transport where specific applications require investments in this decade; (3) Ensuring use of adequate funding through recovery funds.

Dr Sopna Suri from RWE Generation SE joined the debate to explain the angle of a giant investor into clean hydrogen technologies. Dr Suri clearly stated this is a make-or-break point for Europe. The reality is that the industry needs to take massive investment decisions today to cater to industries’ needs and deliver necessary volumes to decarbonise tomorrow. The strict rules on additionality, temporal and geographic correlation need to undergo a reality check as the lead time for investments into some renewable electricity generation assets (e.g., offshore wind – up to 10 years) does not coincide with the time needed to construct an electrolyser (less than 2 years). She called on the European Commission to stick to climate ambitions and renewable hydrogen objectives and ensure industry can ramp up.

Guillaume Rivron representing the Marguerite Fund Luxembourg indicated that setting high ambitions is important, however he reminded the audience that the hydrogen sector is part of a global market for which interconnection is key. The global race for scaling hydrogen technologies is on, the world is watching and Europe should not run with weight on the shoulders. The train has departed and if it will not be Europe, it will be someone else who will take the lead. Mr Rivron encouraged a focus on enabling intermittent renewables, supporting grid operators so they can connect faster, rolling out hydrogen technologies and set up a framework that will ensure investor certainty.

This discussion didn’t run short on academia’s input as Prof Ad van Wijk of the Technical University of Delft also joined the discussion. Prof van Wijk presented a concrete example of discriminatory treatment which disincentivises investment in hydrogen. In simple terms, for certain industrial use converting machines to battery electric is not possible but would be considered ‘green’ if grid electricity was used. At the same time, converting the same machines to hydrogen fuel cell is possible, but would not be considered ‘green’ even if hydrogen was produced with solar because of the way the Delegated Act is currently designed. ?

The interactive and lively discussion was very interesting, and I take this opportunity to thank the speakers who participated as well as provide a few take aways from Hydrogen Europe's latest Hydrogen Talk:

1.??????The global element cannot be underestimated. This is a run for the first prize and the EU has the opportunity to lead the 4th industrial revolution.

2.??????Investors and project developers are diverging resources to projects outside of Europe for the sole reason that there is no certainty in what will qualify as renewable hydrogen, or whether the requirements will be technically possible to comply with.

3.??????Around 50 GW of renewable hydrogen production capacity has been announced to be deployed in the EU by 2030, 25% more than the EU’s 40 GW installed capacity target. Announced projects will equal to zero unless backed up with an ambitious RED II and a workable Delegated Act.

4.??????On one hand, the Commission designs a regulatory framework for hydrogen and sets the pace for ramping up volumes and end-uses, the so-called Golden Age for the hydrogen sector. On the other hand, there are draft versions of a Delegated Act that could become a major showstopper for an industry ramp up.