The EU green deal renders green hydrogen hot

Photo: Nana Amoasi VII, Executive Director-IES. Credit: IES

Not so long ago, the energy transition was an idealistic concept-driven largely by researchers and environmentalists. The most important drawback was the high cost associated with the deployment of clean technologies. However, today and even more in the very near future, renewable energies (RE) will be accepted as the only reasonable and feasible power source for both industrialized and developing countries.

Now the “Green energy race” is on. The race is about transitioning into a green economy to help reboot local economies as they emerge from Covid-19 crisis. Energy sourced from renewables, be it for power generation, transportation or whatever; is expected to chart the path to recovery. It is viewed as the most sustainable recovery strategy by countries around the world because of the immense benefits it comes from its deployment.

As we know today, renewables were the only source that posted growth in demand in the first half of the year 2020, driven by larger installed capacity and priority dispatch. Records indicate that with the lowering cost of renewable energy sources, renewables have demonstrated their robustness, stability, sustainability, and cost-effectiveness over this malignant Covid-19 period, unlike fossil fuels, coal and gas. As a result, there is a widespread, ambitious and genuine commitment to advancing comprehensive renewable energy towards achieving resilient economies with long-term growth, new jobs, cleaner and healthier environments, increased Gross Domestic Product (GDP), improved agriculture yields, and affordable and sustainable energy for all in the long term. Therefore, developing renewable energy is a must-have, a make-or-break commodity.

In the International Energy Agency’s (IEA’s) report, “World Energy Investment” published in May 2020, is a description of drastically changed energy markets in the wake of the coronavirus pandemic. The report reveals the largest fall in energy sector investment ever and uncovers historic shift along the way. It shows that for the first time ever, there will be more spending on electricity than on oil. Most importantly, the report asserts that it is in the power sector where the possibilities of transition to a low-carbon energy sector are most apparent.

…to Green Hydrogen

The drastically reduced price of PVs and wind turbines for example, has ensured global attention for “Green” hydrogen, a virtually inexhaustible source of clean energy with zero carbon emissions. Hydrogen is today enjoying unprecedented momentum because of the falling cost of electricity produced from renewables. Supplying hydrogen to industrial users is now a major business around the world. Demand for hydrogen according to the International Energy Agency (IEA), has grown more than threefold since 1975 and continues to rise.

The world is, of course, transitioning from the traditional “hydrocarbon economy” where heating is fueled primarily by natural gas and transportation by the burning of petroleum, to a “hydrogen economy”. The new hydrogen economy is developing as part of the low carbon economy, phasing out fossil fuels and limiting global warming.

Hydrogen power is not a novelty; it is already widely used in commonplace industrial processes such as ammonia production, in refineries as a feedstock for chemicals. It is also used as a fuel, an energy carrier, or an energy storage solution. The standard hydrogen used in these production processes, however, is not “green” as you may think. It is created with fossil fuels, primarily coal and natural gas. This form of hydrogen is known as “grey” hydrogen and is essentially useless in terms of reducing greenhouse gas emissions.

The production of “Green” Hydrogen through a process called electrolysis whereby hydrogen is separated from oxygen in water, is gaining traction in the new Green economy. The best bit is that there are no emissions from this process, compared to the traditional way of producing hydrogen from natural gas and coal. Once produced through electrolysis, the hydrogen can be stored, transported and processed for a growing range of applications. “Green” hydrogen is a perfectly green cycle; its production can be made everywhere and can be used everywhere.

Currently, 8 million tons per year of “grey” hydrogen are produced in the European Union (EU) through steam reforming which emits a significant amount of carbon dioxide (CO2). In theory, these facilities can be enhanced with carbon capture and storage (CCS) technology to limit environmental damage and produce blue hydrogen as a bridging method. Further along the road, however, electrolysis capacity needs to be expanded to produce “Green” hydrogen, meaning only using renewables.

Because of its immense economic and environmental benefits, most governments have already planned and are deploying strategies to achieve sustainable energy supply, via renewable electricity and “Green hydrogen”. By the adoption of policies and pursuance of targets, countries like China, United States (USA), Germany, Norway, Denmark, United Kingdom (UK), Saudi Arabia, and the United Arab Emirates (UAE) are working to become world leaders in renewable energy, and are therefore investing heavily into renewable energy technologies (RETs).

The EU Green Deal

Today, “Green” hydrogen is red hot, thanks to European Union (EU) “Green” deal. Europe’s most powerful supranational organization, the European Commission, has earmarked the transition from the traditional “hydrocarbon economy” where heating is fueled primarily by natural gas and transportation by the burning of petroleum, to a “hydrogen economy” as one of the most important topics for the coming years.

The EU “Green Deal” is one of its most ambitious plans to mobilize at least €1 trillion in public-private investment over the next decade. The biggest contribution to the €1 trillion budget of €503 billion is expected to come from the EU budget, unleashing a further €114 billion from national governments. The next €279 billion contributions is to come mostly from the private sector: the idea is that companies would be encouraged to make risky green investments by loan guarantees from the European Investment Bank, the EU lender, which recently pledged to phase out loans to fossil fuel projects.

The deal aims to transform the 27-member country block from a high to a low-carbon economy, without reducing prosperity and while improving people’s quality of life, through cleaner air and water, better health and a thriving natural world.

The unveiling of its hydrogen strategy reveals how Europe’s top policymakers intend to expand the fuel’s value chain from production to transportation, storage and consumption. The strategy gives a good overall picture of what an emerging hydrogen economy will look like. It will be a much more integrated energy system; one that moves energy among the sectors of transport, industry, and buildings. The strategy gives the example of cars powered by solar panels on roofs, while buildings are warmed with heat from nearby factories, which is fueled by clean hydrogen produced from offshore wind energy.

The EU “Green Deal” is partly dedicated to kick-starting a continental zero-emissions economy. The strategy contains a three-step plan that starts with the implementation of Green hydrogen production and consumption in industries such as steel, cement, chemicals, and refineries by 2024 through the development of large electrolysers of up to 100MW in the vicinity of existing industrial centers of demand. It also emphasizes the development of refueling stations of hydrogen fuel cell buses and trucks. In the meantime, planning of transmission infrastructure will continue.

In the second phase, facilities will be connected to create “Hydrogen Valleys” by 2030. Hydrogen will expand beyond the industrial base and begin to play an important role in power system flexibility and storage. This will be made possible with 40GW of hydrogen electrolysers installed in Europe, supplied by renewable energy, producing 10 million metric tonnes of renewable hydrogen annually. The long-range transport of hydrogen will need to occur and the strategy document discusses a “pan-European grid” with the existing, partially repurposed, natural gas grid and the development of large hydrogen storage facilities. This will link the areas with large renewable energy potential to major demand centers in the EU countries.

In the last phase, the hot spot will be joined and a large European hydrogen infrastructure created by 2050. This requires large expansion of numbers of electrolysers, upgrading of distribution networks and the building of hydrogen transmission pipeline infrastructure. Producing vast quantities of hydrogen will also require a significant expansion of solar and wind power capacity. This phase assumes that zero-carbon hydrogen will become widespread in shipping, aviation, and other hard-to-decarbonize sectors such as commercial buildings. A large market for hydrogen-derived synthetic fuels will also exist.

The EU hopes to produce 1 million tonnes from 6GW of electrolysis capacity by 2024. By 2030, this should have grown towards 10 million tonnes from 40GW capacity. Germany alone is expected to contribute 5GW by 2030. EU’s 2030 leap to 40GW of renewable energy hydrogen electrolysers will be matched by 40GW of electrolyser capacity outside of the EU producing hydrogen for imports into the EU. Having 2 x 40GW of electrolyser capacity installed by 2030 would be more than what the Hydrogen Council has proposed for the entire world for 2030.

To help scale up production of green hydrogen in Europe, the EU has launched a Clean Hydrogen Alliance of companies, industry experts, national governments and the European Investment Bank. At the same time, the EU will support the development of a market for green hydrogen by creating standard classification systems of types of hydrogen and a certification system to support its trade.

Other countries such as the Netherlands, also intend to contribute and profit from the new hydrogen economy. The Dutch are uniquely positioned with access to the North Sea for the installment of wind turbines and an existing gas network that could be reused for export purposes. North Africa, with its abundant renewable energy resources, are anticipated to become major suppliers in cross-border trade and export of hydrogen to Europe.

Written by Paa Kwasi Anamua Sakyi (aka Nana Amoasi VII), Institute for Energy Security (IES) ©2020

Email: [email protected]

The writer has over 23 years of experience in the technical and management areas of Oil and Gas Management, Banking and Finance, and Mechanical Engineering; working in both the Gold Mining and Oil sector. He is currently working as an Oil Trader, Consultant, and Policy Analyst in the global energy sector. He serves as a resource to many global energy research firms, including Argus Media and CNBC Africa

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