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15 April
2023
By Julie Campbell
The US has a notable green hydrogen advantage over
Europe
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The EU struggles with high energy prices that can’t
compete with subsidies in the United States.
Green hydrogen has a great deal of appeal, and while the European
Union had been leading the way in the race for a while, it appears
that the subsidies in the United States are sending it ahead.
Energy investors are keeping a close eye on both
markets to see where the next advances will occur.
The EU recently announced new
plans to set up a European Hydrogen Bank as a component of its
response to the US Inflation
Reduction Act’s $369 billion in clean energy funding. The European
Hydrogen Bank is expected to launch before the close of 2023. It is
intended to raise the green hydrogen supply through the use of an
auction process connecting sellers to buyers. It will also provide
subsidies for the cost of producing the H2 when compared to the cost
of equivalent fossil fuels.
Still, with the subsidies in the
United States through the climate bill, EU leaders are concerned that
investors will find the US more attractive. The race is most
certainly on. Governments in both the US and the EU are hoping that
low-carbon and zero-carbon H2 will play an important role in
decarbonizing industries such as shipping and steel manufacturing.
Domestic production means improved energy security and less reliance
on imported fossil fuels, particularly for Europe.
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Companies are struggling to determine what support is
available for green hydrogen production in Europe.
“The real charm of the IRA is its
simplicity. To sum up the overall amount of available funding in
Europe is very difficult,” said Tyssenkrupp Nucera business
development manager Leif Christian Kröger.
The truth is that there are EU
subsidies. That said, they aren’t as easy to find as they are in the
US, because they’re spread across many different places. Funding as
high as €5.2 billion (about $5.6 billion) was approved last September
for H2 projects. Moreover, there remain nearly €270 billion in unused
EU COVID-19 recovery funds that can change purposes as funding for
clean energy projects. There are also grants worth €1.5 billion for
companies focused on clean energy infrastructure, such as H2 fueling
stations. Beyond that, each of the EU national governments has their
own support available within their borders.
United States Process is More Transparent
In the US, the process has been
streamlined mainly to a single place, making the path for green
hydrogen fuel project funding more obvious and straightforward. This
may also make it more appealing for investors uninterested in wading
through complex funding processes.
The Inflation Reduction Act
offers a production
tax credit of as much as $3 per kilogram of green hydrogen. The
amount is based on the carbon intensity of the H2, meaning that it
could help to make renewable H2 competitive with grey H2, which is
produced using processes powered by natural gas with unabated
emissions.
Green Play Ammonia™, Yielder® NFuel Energy.
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