Paper looks at green hydrogen’s potential in Europe


Europe could build up a green hydrogen industry faster than many current strategies suggest, according to analysis in a white paper.

Mainstreaming Green Hydrogen in Europe, published by Material Economics and commissioned by Breakthrough Energy, explored what Europe can do to accelerate the growth of hydrogen, with a particular focus on renewable hydrogen. It found renewable hydrogen to be a significant investment opportunity of €550-700bn (£494-629bn) with an abatement potential of 450-550Mt CO2 – equivalent to 10% of Europe’s annual emissions.

The paper outlined current and existing momentum behind green hydrogen in Europe, and other regions, with 100MW of capacity already built and 20GW announced. As well as this, a number of countries have published national hydrogen strategies, while the EU has also released a hydrogen strategy of its own.

There is also significant potential for green hydrogen to play a key role in Europe’s recovery from coronavirus due to having several positive characteristics from a stimulus perspective. These include a requirement for major infrastructure investment projects in developing it, substantial parts of the supply chain could be located in Europe, the economic resources it would make use of could be underused in a post-Covid recession, and how it is highly relevant for countries hit hard by the virus.

While many traditional analyses look at the cost competitiveness of green hydrogen in relation to fossil fuels, the paper noted leading companies are starting to see the sustainability value-add from a carbon-free end-product which outweighs the extra cost from shifting to green hydrogen far back in the value chain. Because of this, it found Europe could commercialise renewable hydrogen far faster than currently suggested by value chain collaborations with end-product producers.

It sought to assess potential demand across sectors through four criteria: whether the end-product cost increase will be less than 1% if green hydrogen is used instead of the incumbent fossil technology; whether end-product manufacturers are large and financially stable enough to engage in green hydrogen investment projects; if the end-product manufacturers have ambitious climate targets; and if green hydrogen is competitive among possible low-carbon technologies.

Based on this, it found that 540TWh of green hydrogen demand in the EU already meets all four criteria. Key sources of potential demand include green fertiliser, shipping fuels, green steel for vehicles, some buildings and infrastructure, and some industrial heating. This demand is set to grow further as costs come down due to the impacts of scale and learning, more companies adopting stricter climate targets, and green hydrogen policies. It found that if hydrogen costs were to reach €1.7-2/ kg (£1.53-1.80/ kg), companies continue setting ambitious climate targets at the same pace as over the last five years, and contracts for difference support schemes were to be put in place, then the potential demand could rise as high as 1,200-1,400TWh.

In a bid to unlock this demand and position Europe as a future global leader in green hydrogen, the paper called for efforts to be accelerated now and set out four action areas to achieve this: establishing lead markets, such as green fertiliser, green shipping and hydrogen for refineries and petrochemicals; mobilising massive investments, with over 280GW of dedicated capacity likely needed in renewables; accelerating innovation from early-stage research through demonstration, deployment and scale-up; and establishing enabling standards and policies.

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