High energy prices and fossil fuel price volatility have put the reduction of fossil fuel dependence centre stage to achieving a resilient and competitive EU economy. Direct electrification will play the leading role, but hydrogen produced from renewable energy will be needed in key sectors.
Despite ambitious targets, the EU’s framework does not adequately plan for nor prioritise the uptake of hydrogen in the applications that will need it most. Only by clearly and effectively prioritising and independently planning hydrogen’s role in the economy can the EU seize the opportunities of hydrogen to support decarbonisation and industrial competitiveness, while avoiding the waste of time, resources and public funds.
To take full advantage of the opportunities of hydrogen for a clean, competitive economy, the EU should:
- Set out priority use cases for hydrogen to ensure the strategic development of a hydrogen market where infrastructure needs are right-sized and public funds are used most effectively to deliver the greatest value to the European economy. This could be done via EU level guidance for member states to include clear prioritisation of end uses in national hydrogen strategies and update national demand figures accordingly.
- Embed hydrogen in an independent, holistic and integrated energy system planning approach that plans across the changing needs of the electricity and fossil gas systems, and better targets infrastructure and funding towards the identified priority uses. Ensure that hydrogen planning processes such as European Network of Network Operators for Hydrogen (ENNOH)’s Ten-Year Network Development Plans (TYNDPs) align with national and EU energy and climate objectives, and involve independent climate bodies, such as the European Scientific Advisory Board on Climate Change (ESABCC), to provide guidance on these aspects.
- Maintain the definition of renewable hydrogen and adopt a robust definition of low-carbon hydrogen that ensures strong emissions reductions to ensure predictability and clarity for hydrogen market stakeholders. Clear and ambitious definitions will support development of a market which can capture the full decarbonisation benefits of hydrogen and support the competitiveness of industry and the EU’s economy.
Hydrogen must be targeted where it is needed most
Although the role of direct electrification in industry is increasing rapidly with the ramp up of renewable energy and with costs and availability improving, there is still a share of industry that will be dependent on indirect electrification, including hydrogen produced with energy from renewable sources (green hydrogen or renewable hydrogen). A misallocation of hydrogen deployment in inefficient use cases or where alternative technologies offer a better solution risk wasting time and resources and slowing down the energy transition for a competitive EU economy.
State of play of EU hydrogen framework
In recent years, the EU has put in place ambitous policies and regulations to support the uptake of hydrogen in its economy and achieve its decarbonisation objectives. While strong targets, definitions and funding mechanisms have been put in place, this framework now needs focussing to best address the EU’s competitiveness challenge – and key gaps must be filled for it to be effective and make the most of hydrogen’s decarbonisation impacts.
An assessment of the EU hydrogen framework shows that while some policies are supportive of hydrogen market development, others require improvements to make the most of their impact, and some have yet to be released or lack impact, highlighting areas where further action is needed from the EU. These missing pieces in the current European hydrogen framework result in a missed opportunity to leverage hydrogen’s decarbonisation impacts.
Read the full briefing here.
