Hydrogen for the energy transition in Europe
What is the value of hydrogen for the energy transition in Europe?
The long-term objective of decarbonization implies that we look at a whole range of solutions that will facilitate reaching the EU energy and climate targets in the most cost-effective way. For achieving our targets in a competitive way, we need to focus more on energy efficiency and renewables. Renewables have to move to the centre stage of the energy mix. It is clear that renewables become even more important for the economy and the environment in future.
Currently, the share of renewables in electricity is about 30% and we expect it to be 55% by 2030 looking at the target in the renewables directive. However, in other important sectors such as transport and industry the share of renewables is not as high. In these sectors, hydrogen is a key enabler and playing an important role to facilitate the integration of renewables into the energy system. There are several energy storage technologies supporting the balancing of the electricity grid and integration of variable renewables. But green hydrogen may facilitate the most cost-effective integration from renewables in various sectors such as mobility, industry and also energy networks (electricity, heat, gas).
What are the most promising applications in the view of the European institutions?
In the last years, we have witnessed the versatile applications that hydrogen can offer – compared to a few years ago when the focus was on hydrogen for fuel cell vehicles only. Now we see hydrogen is not only used for road transport, but also for railway or maritime applications. Green and low carbon hydrogen offers a big potential to decarbonise carbon-intensive sectors that otherwise would be difficult to decarbonise. I would say the refining industry, the fertilizer industry and the steel industry are the most important carbon intensive industries where green hydrogen could have a major contribution to decarbonisation and in this way supporting also the integration of renewables into these sectors.
Hydrogen is a sector coupling enabler. Where do you see high potential for sector coupling and what is essential for realising it?
All the sectors I have mentioned offer this potential. Especially important is the mass scale deployment of green hydrogen. For example, linking electricity and gas networks and the gas industry – to decarbonize gas infrastructure and to increase green hydrogen, but also synthetic methane and bio methane injected into the gas network. This would definitely offer big potential for the integration of renewables. The gas network has larger potential of gas storage with a lower cost compared with electricity. We see growing interest in this area across Europe – for example the Netherlands, Germany, France, Denmark, Austria and others, each driven by the particular opportunities they have to integrate renewable electricity and to make better use of the gas infrastructure.
You see a lot of value of green hydrogen in the energy transition. What are the challenges for hydrogen to be part of the energy transition from a policy point of view?
It is important that we develop the regulatory framework in relation to the energy and electricity system. Hydrogen as an energy storage enabler is treated in a non-discriminatory way in the clean energy package. But it is also important to look at the other sectors. We need to develop an adequate regulatory framework also in relation to gas and to create the instruments allowing sectoral integration. We should also invest in R&D to reduce costs and to make more innovative solutions also profitable.
What are the prospects to integrate hydrogen in policy and regulation?
To have hydrogen supporting sectoral integration, we need to adapt the policy and regulatory frameworks, for energy but also for transport and industry. The Alternative Fuels Directive created a first important basis for using hydrogen in transport. In the ”Clean Energy for All Europeans” package we made major steps. First of all, in the recast of the renewables directive, we have put more focus on renewable fuels of non-biological origin. Green Hydrogen can be used to produce e-fuels which have the potential to decarbonise the transport sector by large on the road, but also railway and maritime. Upcoming is a directive and regulation for market design on electricity. We proposed a clear definition of energy storage that does not only refer to Power-to-Power but also Power-to-X (mainly Power-to-Heat and Power-to-Gas). This will be very important for the whole provisions about storage. We try to create a level playing field for a wide range of flexibility and storage technologies where each technology can contribute at the right place based on their main functions. There is growing interest from public authorities and industries (see also the Hydrogen Initiative signed in Linz in September by more than 20 Member States) to develop a regulatory framework with the aim to green the gas infrastructure.
As you mentioned, a supportive policy framework that puts hydrogen on the same level as other technologies is essential to enable hydrogen being part of the energy transition with a business case. Which of the mentioned policy and regulation implementations in regards to hydrogen are the most important ones to support technology and market?
Of course, it depends to which market we refer. While we need to continue to invest in R&D, it is essential to develop an adequate policy and regulatory framework to capture the benefits of technological developments. In terms of electricity markets, it is important how we treat flexibility mechanisms such as energy storage and hydrogen storage in order to reward the benefit it brings to lead stability and eventually deferring additional investment into the grids. For gas, we need to see how we reward the opportunity to decarbonize the gas grid and implicitly also heating and cooling. Heating and cooling represents almost half of our final energy consumption, and half of the heating and cooling installations are obsolete. When we replace them, it is essential to take advantage of the latest technological developments and opportunities. Therefore, the renewables directive includes provisions of the decarbonisation of heating and cooling. On all the mentioned markets, hydrogen has a particular value and can be exploited.
Is there something that you would like to add regarding the vision of hydrogen as part of the energy system of the future?
Following the request of EU leaders and of the European Parliament the Commission is working on a strategy for long-term EU greenhouse gas emissions reduction in accordance with the Paris Agreement. A public consultation is currently under way, being launched this summer at a high level event under the authority of our Commissioner.
It is clear that nobody has a crystal ball. Still, a first study that we launched in spring found that by sectorial integration and by making use of all these storage technologies such as hydrogen we could reduce emissions up to 96% (instead of 84%) by 2050 with an energy system cost which is about 3.5% lower than the basic scenario. These are only preliminary figures and numbers, currently analysed against various decarbonisation scenarios, but it is clear that they point to a very important potential and to a need to work in an integrated way in order to achieve the long-term decarbonisation. All technologies, sectors, actors have to be more integrated and the system efficiency approach has to be anchored in the mind of everyone – including policy makers, citizens and industry – to take advantage of opportunities for a better climate as well as economy