24 février 2023

Hydrogen: Energy source of the future

According to the European Commission, hydrogen should play a central role in the European energy market by 2030 at the latest. Learn more from our comprehensive insight.

  • In-depth analysis
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1. Hydrogen

2. The EU Green Deal: Strategies on hydrogen at EU level

3. Hydrogen infrastructure – construction and operation of production facilities

4. Economic Aspects

5. Legal Aspects

The energy demand of our globalized world is constantly expanding, not least due to increasing mobility, data processing and industrial production. Climate change poses a major challenge. Most of the fuels used for the mobility of the world population, in an industrial context or for energy supply are usually neither renewable nor environmentally friendly. For the long-term success of the energy turnaround and for climate protection, alternatives to fossil fuels are needed. The same applies to achieving the ambitious climate targets of the European Union and respective national targets based on them. Hydrogen will play a key role here. According to the European Commission, hydrogen should play a central role in the European energy market by 2030 at the latest.

1. Hydrogen

Depending on the origin and type of production, different categories of hydrogen can be distinguished:

  • Green Hydrogen

Green hydrogen is produced by the electrolysis of water. This type of production is completely emission-free if renewable energies are exclusively used during the process. This type of production currently accounts for a very small proportion of hydrogen production.

  • Blue / Turquoise Hydrogen

Blue hydrogen is produced like black / grey hydrogen, but combined with carbon capture and storage (CCS). This type of production also accounts for only a very small proportion of current hydrogen production. In the case of turquoise hydrogen, methane is thermally split to produce solid carbon. In order to achieve CO2 neutrality of this process, it is necessary to use CO2-neutral energy sources and to bind the resulting carbon permanently.

  • Black / Grey Hydrogen

This type of hydrogen is obtained from fossil fuels and accounts for about 98 % of current hydrogen production. During the production process natural gas is converted into hydrogen under the influence of heat. This process produces CO2 which is released unused into the atmosphere.

Hydrogen is suitable as an energy source, as a starting material for greenhouse gas neutral applications, as a link between the heating, mobility, electricity and industrial sectors, and for storage and transport. Particularly promising is its use for storing electricity from fluctuating renewable energies and as an energy source in industry, heavy duty traffic or in shipping and aviation. A whole range of different feasibility studies, real laboratories and hydrogen grid or electrolyser projects are already being planned and implemented throughout Europe.

2. The EU Green Deal: Strategies on hydrogen at EU level

The target set in the EU Green Deal to reduce net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels was transposed into binding law with the European Climate Law, which came into force in July 2021. At the same time, the EU Commission adopted the initiative package known as Fit for 55. The package also contains proposals for legislation to implement the measures provided for in the European Climate Law. Already in July 2020, the European Commission presented ”A Hydrogen Strategy for a Climate-Neutral Europe” as part of the Green Deal. The goal is the widespread use of hydrogen by 2050. The focus is on the extensive expansion of green hydrogen; however, other production processes are also to be promoted on a transitional basis. For example, the EU wants an electrolysis capacity of at least six gigawatts to be reached in the Member States by 2024. By 2030, this capacity is to grow to 40 gigawatts. This would correspond to 10 million tonnes of hydrogen. In the period from 2030 to 2050, green hydrogen is to be produced on a system-relevant scale. According to the EU, the decarbonisation of hydrogen production is possible due to the falling costs in the expansion of renewable energies and due to technological advances.

Phase I
2020 - 2024
  • Installation of electrolysers in the EU with an electrolysis capacity of at least 6 GW.
  • Target: production of up to 1 million tonnes of green hydrogen.
  • In this way, hydrogen production in industry, which is harmful to the climate, is to be partially replaced.
  • Planning of a long-distance pipeline structure for the transport of hydrogen over longer distances.
Phase II
2025 - 2030
  • Installation of electrolysers in the EU with an electrolysis capacity of at least 40 GW.
  • Target: production of up to 10 million tonnes of green hydrogen.
  • Green hydrogen becomes relatively more competitive.
  • Opening up of areas of application in industry and mobility.
  • Emergence of regional hydrogen systems with locally produced hydrogen.
  • Planning of a Europe-wide pipeline network.
Phase III
2030 - 2050
  • Use of around 25% of the EU’s renewable electricity to produce green hydrogen.
  • Necessary technologies will have reached market maturity.

In order to achieve the European targets and to considerably increase the production of green hydrogen, the Commission announced the creation of appropriate political framework conditions, such as the setting of new thresholds for CO2 emissions to promote hydrogen production plants. In order to promote a European hydrogen market, Europe wide criteria for the certification of renewable and low CO2 hydrogen are to be introduced. Competitive disadvantages which exist in the production of green hydrogen are to be compensated for by so-called carbon contracts for difference. Central to the successful realisation of a European hydrogen market is above all the implementation of a comprehensive hydrogen infrastructure (cf. section 3). In June 2022, the European Commission has presented a draft delegated act to specify the requirements for the production of green hydrogen in the EU. The draft delegated act aims to define the criteria that hydrogen produced in the EU must meet in order to be classified as “green” or “renewable”. The draft delegated act is to be adopted on the basis of the Directive on the promotion of the use of energy from renewable sources (Renewable Energy Directive II/RED II). Article 27(3) of RED II stipulates that electricity from the electricity grid can be used for the operation of hydrogen plants. The draft delegated act describes in more detail the exact requirements that must be met by the electricity needed for operation so that hydrogen produced thereof can be classified as green.

The European Union is also addressing the European expansion of the hydrogen industry within the framework of a so-called Important Project of Common European Interest (IPCEI). IPCEIs are instruments under state aid law that enable the promotion of transnational cooperation and the mapping of the value chain from applied research to industrial implementation and corresponding infrastructure projects. Selected companies from participating Member States are allowed to participate after notification by the European Commission and are supported with state aid approved by the Commission. The IPCEI Hydrogen is the largest European project of its kind to date. In Germany, 62 major projects have been selected for the IPCEI Hydrogen, which will be funded with a total of more than eight billion euros in federal and state funds.

As already mentioned, hydrogen plays a decisive role within the framework of the ”Fit for 55” packages of measures. In this context, the European Commission presented a proposal at the end of 2021 for a legislative package for the decarbonisation of the gas market. It proposes, for example, rules on the operation and financing of hydrogen networks, on the transparency of gas quality parameters and hydrogen blends, on the reallocation of existing natural gas networks for the transport of hydrogen, and on decentralisation and non-discriminatory network access. To facilitate cross-border trade and supply of hydrogen, it is also envisaged to establish a European Network of Hydrogen Network Operators (ENNOH).

3. Hydrogen infrastructure - construction and operation of production facilities

In principle, production plants for green hydrogen can be built both on land and at sea. In addition to potentially larger space capacities, production at sea would also offer the advantage that offshore wind farms can generate more electricity with greater regularity than onshore wind farms. Moreover, if the generated energy is completely converted into hydrogen, costly grid connections are no longer necessary. Especially in connection with floating foundations, this opens up completely new possibilities, as both water depth and distance to the coast are no longer limiting factors. Hydrogen could be transported from the offshore wind farms all over the world by ship. In addition, solutions for existing wind farms are also conceivable, e.g. as so-called energy islands or production plants where the electricity generated at sea arrives on land and cannot be fed into the grid. In this way, the now common short-term (partial) shutdowns of offshore wind farms when the electricity grids are under heavy load could be significantly reduced and the amount of usable energy increased without building additional generation plants.

Experience, especially in chemical plant construction, shows that a particular focus will be on the commissioning of the plants, especially how performance parameters, e.g. degree of effectiveness and purity, can be proven within the framework of trial operation and performance testing, and which legal consequences are associated with this. In the case of construction on the high seas, there are also the familiar issues of the offshore industry, such as complex construction logistics including weather, but also increased demands on materials and maintenance. Here, however, it is possible to draw on existing experience from the various offshore industries, above all, of course, offshore wind and oil and gas production.

Hydrogen enables the transport of (renewable) energy without electricity grids. In addition to pipelines, transport by ship, rail and road is also conceivable. For this, corresponding terminals and transhipment points would have to be expanded on a large scale. In the wake of the Ukraine crisis, the construction of terminals for the import of liquefied natural gas (LNG), for example, is currently being accelerated in order to maintain supply security in Germany. At the same time, the prospective changeover to the import of hydrogen is also being planned in order to be able to convert the terminals accordingly in the long term. For example, the transport of hydrogen from the United Arab Emirates could be made possible. In order to establish such a supply chain, cooperation agreements were already concluded in March 2022 between German companies and companies from the United Arab Emirates for initial test deliveries. According to the German Association of Energy and Water Industries (Bundesverband der Energie- und Wasserwirtschaft e.V.). (BDEW), the existing natural gas infrastructure, including storage caverns, can also be used for hydrogen transport on a national scale. Germany has the largest gas storage capacities in the European Union. Hydrogen could thus be stored and transported via the existing gas networks. Even if it remains to be seen which possibilities for global transport will emerge and become established in the ongoing research projects, considerable new or conversion projects are anticipated. Plant and infrastructure construction companies are already gearing themselves up for this.

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