A technology-inclusive approach to unlocking hydrogen’s full potential
Carbon-Free Europe (CFE) welcomes the ongoing work in the Council and European Parliament on the review and revision of the Hydrogen and Decarbonised Gas package (Directive 2009/73/EC, Regulation (EC) 715/2009), which aims to enable the market to decarbonise gas consumption. In particular, CFE fully supports the recent developments in the Council, namely the Czech Presidency’s proposal to include in Directive 2009/73/EU the possibility for EU Member States to use low-carbon hydrogen and low-carbon fuels to complement the calculation of industrial and transport binding targets under the currently proceeded revision of the Renewable Energy Directive 2018/2001.
CFE’s research shows that hydrogen has the potential to develop into an entirely new EU industry, becoming the backbone of the decarbonisation of shipping, industry, freight, and aviation. Our report “Analysis of net-zero pathways for the EU and UK”, which compares five different decarbonisation pathways for the EU, confirms that the chances of reaching emissions goals for the EU increase as more low-carbon technology and fuel options, such as low-carbon hydrogen, are included in this transition. Moreover, focusing on all low-carbon technologies rather than solely on renewables reduces risk and makes it more likely that clean energy will be cost-effective and net-zero goals can be achieved on schedule.
For instance, our analysis shows that the amount of electricity generation in the EU will more than triple over the next 30 years as electrification of transport, heat, and hydrogen will drive new demands for clean electricity. However, the analysed 100% renewables pathway, which allows only renewable hydrogen, costs over €80 billion a year more by 2050 compared to the Core pathway and requires a quadrupling, rather than a tripling, of electricity generation to satisfy additional renewable hydrogen production. And while our model still sees over half of hydrogen produced by renewables in most scenarios, other clean power sources make up a significant portion of hydrogen production. For example, by 2050, in the Core pathway, our model anticipates 51% of the EU’s hydrogen to be produced by renewables (low-temperature electrolysis), 4% by bioenergy with carbon capture and storage, and 45% by low-carbon technologies capable of producing hydrogen through high-temperature electrolysis (Figure 1). Additionally, CFE’s model optimizes sector coupling and balances hourly variations of renewable generation to make the energy systems more efficient and flexible during hourly and seasonal variability. These features allow carbon-free sources, such as nuclear power, to supply additional electricity to the grid during periods of low renewable generation and supply hydrogen when renewable generation is higher and there is less demand for electricity from other sources.
A Competitive Advantage
Producing hydrogen from renewables and low-carbon sources can provide the EU with an opportunity to remain competitive in a €4 Trillion+ global industry1. If the EU does not consider a technology-inclusive approach for hydrogen production, it risks isolating its industry from other nations, like the US and UK, that will have more opportunities to ramp up their supply and export potential. This is of particular relevance and has direct implications for EU Member States that will have difficulties producing large enough volumes of renewable hydrogen due to different geographical resource conditions and land availability.
Recommendations
Taking into account the results of the CFE modelling and in the context of the ongoing negotiations on the Hydrogen and Decarbonised Gas package, Carbon-Free Europe recommends:
- the Council consider the role low-carbon hydrogen can play in decarbonising the EU’s economy in line with the bloc’s climate objectives. This can be achieved by ensuring that the Czech Presidency’s proposal (new Article 8a in Directive 2009/73/EU) is included in the Council’s General Approach.
- the European Parliament support this inclusion as it mirrors its position (Recital 22a) on the Renewable Energy Directive (EU) 2018/2001, recognising the importance of low-carbon hydrogen in the energy transition to reduce emissions of existing fuels (complementary provisions on the role of low-carbon fuels and low-carbon hydrogen to achieve carbon neutrality by 2050).
Conclusion
These recommendations will allow the EU to unlock the full potential of low-carbon hydrogen, which in consequence, can help the bloc achieve net-zero emissions by 2050 while also lowering risks and costs. Furthermore, the accelerated deployment of low-carbon energy sources in tandem with renewables is essential for the European Union to phase out its reliance on Russia and build up its competitiveness in emerging clean energy markets.
