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EU Approves
Another $5.2 Billion For Green Hydrogen Projects
By
Felicity Bradstock - Sep 30, 2022
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Europe
is quickly establishing itself as a leader in the green hydrogen
race.
-
The
European Commission has approved another $5.2 billion in public
funding for green hydrogen projects.
-
The new
investment would contribute to the EC target of an 80 GW renewable
hydrogen electrolyser capacity in Europe by 2030.
![](images/images_10_03_2022/pic3.jpg)
Europe’s
already highly competitive green hydrogen industry just got another
boost thanks to new E.U. funding. The region has been making a name
for itself by establishing several major green hydrogen plants and
developing the market for the renewable energy source as other regions
battle to get green hydrogen projects off the ground. Improved
policies for green hydrogen production are expected to support
sectoral development even further, although the International Energy
Agency (IEA) remains sceptical over ambitious E.U. 2030 targets.
This
month, the European Commission (EC) approved
$5.2 billion in public
funding for hydrogen
projects across the region. This investment is expected to attract a
further $6.8 billion in private funding. The organisation said that 13
member states will be providing the funds for a project entitled IPCEI
Hy2Use, which will support 29 businesses across 35 projects. It will
help develop “large-scale electrolysers and transport infrastructure,
for the production, storage and transport of renewable and low-carbon
hydrogen,” according to the EC.
While the
investment includes all types of hydrogen – from
grey and brown to green
– it will encourage greater renewable (or green) hydrogen
production across the region. One executive vice president at the EC,
Margrethe Vestager, expects the funding to add 3.5 GW of electrolysis
capacity. This would mean “an output of approximately 340,000 tons of
renewable and low-carbon hydrogen per year,” Vestager
stated.
The new
investment would contribute to the EC target of an
80 GW renewable
hydrogen electrolyser capacity in Europe by 2030.
The European Commission President Ursula von der Leyen also
highlighted the EC’s “2030 target to produce ten million tons of
renewable hydrogen in the EU, each year,” in her State of the Union
address earlier this month. “To achieve this, we must create a market
maker for hydrogen, in order to bridge the investment gap and connect
future supply and demand,” she added. Several green hydrogen projects
are already underway in the region, with some large-scale
electrolysers commencing operations between 2024-2026, and more to
come in the 2026-2027 period. The IPCEI Hy2Use scheme will end if
2036.
In
addition to approving greater funding for hydrogen projects, the E.U.
has also begun to introduce more favourable regulations to support
production. Earlier this month, the European Parliament (EP) voted an
amendment into action for the Renewable Energy Directive II (RED II),
getting rid of “additionality” requirements at the E.U. level. It also
introduced binding targets for green hydrogen production.
The
target for renewable hydrogen to make up 5.7 percent of all fuels by
the end of the decade is introduced in RED II. It also outlines
targets for industry, stating that industrial fuels should consist of
50 percent renewable fuels of non-biological origin (RFNBOs) by 2030,
and 75 percent by 2035. For this to be achieved, Europe will have to
deliver between nine and 10 tonnes of green hydrogen.
The EP
scrapped a controversial part of RED II – the Delegated Act – that
would have required all green hydrogen producers within the E.U. to
source their electricity from dedicated renewable energy projects. It
would also have meant that projects could only access grid-sourced
electricity when offset with a dedicated supply within the hour. Now,
producers will be permitted to use electricity from the grid so long
as they can verify it as green electricity through a power-purchase
agreement (PPA).
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The
change comes following hard lobbying by Hydrogen Europe for the
amendment who suggested that previous rules would have been
detrimental to green hydrogen production, threatening private firms to
move to other regions with more lenient regulations. The recent
introduction of green hydrogen tax credits in the U.S., under Biden’s
IRA legislation,
is already threatening private development in Europe as America is
looking increasingly attractive to producers. Hydrogen Europe
stated
of the move, “These binding targets on renewable hydrogen, and the
creation of a simpler framework, are strong signals from the EU
institutions to ensure the scale-up of a hydrogen economy and reduce
our dependency on fossil fuels.”
However,
even following recent policy changes and the increase in funding, the
IEA is concerned that the E.U. may not be able to meet its 2030 green
hydrogen targets. The current project for installed green hydrogen
capacity for the end of the decade is 39 GW, missing the 80 GW target
by around a half. Europe is expected to be close to meeting its Fit
for 55 targets but will likely miss the more ambitious aim unless it
increases its electrolyser capacity even further.
Europe is
already a major green hydrogen hub, with the region set to provide
one-third of the total global electrolyser capacity for green hydrogen
this year, followed by China – a figure that is set to remain stable
until 2030. But to scale up green hydrogen operations in Europe the
E.U. would have to dedicate funds to the development of
larger-capacity hydrogen plants – aiming for
260 MW facilities by
2025,
reduce green hydrogen prices through technological innovation, and
repurpose gas pipelines to transport hydrogen.
As the
E.U. provides higher levels of funding to green hydrogen projects,
together with favourable hydrogen policies, Europe will likely become
the biggest green hydrogen hub in the world by the end of the decade.
However, to meet more ambitious targets, the E.U. will have to attract
greater funding and drive forward several major green hydrogen
projects.
By
Felicity Bradstock for Oilprice.com
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