The European Commission has outlined a long-anticipated plan it says could unlock up to €340 billion for new solar and wind projects over the next decade. The 30-year strategy envisages up to €470 billion being spent on electrolyzer capacity.
“With 75 per cent of the EU’s greenhouse gas emissions coming from energy, we need a paradigm shift to reach our 2030 and 2050 targets,” said commissioner for energy Kadri Simson at the launch of both documents yesterday. “The EU’s energy system has to become better integrated, more flexible and able to accommodate the cleanest and most cost-effective solutions. Hydrogen will play a key role in this as falling renewable energy prices and continuous innovation make it a viable solution for a climate-neutral economy.”
Under the terms of the hydrogen plan, the preference is for a clean energy version of the fuel – generated by renewables-powered electrolysis – rather than creating it by separating carbon from natural gas.
The strategy requires EU legislative bodies to ensure hydrogen policy is anchored in the bloc’s climate and energy laws; that a uniform taxonomy and terminology be used; and that common certification and standards, based on life-cycle carbon emissions, are applied.
The commission pledged to ensure clean hydrogen is included in all green investment and recovery instruments the EU has to offer. However, the strategy admitted some ‘blue hydrogen’ – generated from natural gas and with emissions offset by carbon capture, reuse, and storage – would be necessary to establish an initial market.
EU policymakers will hope the spending and generation capacity figures announced yesterday will soothe fears a role for blue hydrogen will enable gas majors to continue supplying the fossil fuel into the energy system.
In its first four years alone, the strategy envisions the deployment of around 6 GW of new electrolyzer capacity to produce a million tons of green hydrogen. That figure would be ramped up to 40 GW of electrolyzer capacity and ten million tons of hydrogen from 2025-30. From 2030 on, the strategy anticipates green hydrogen would be a mature technology to be used in ‘hard-to-decarbonize’ sectors.
European funding pots, including the Next Generation EU Covid-19 recovery plan and the European Investment Bank, would have to stump up some of the substantial investment required to kick-start the hydrogen economy at a sufficient pace. The Next Generation EU fund, for example, has doubled the budget of the bloc’s InvestEU private-sector-facing organization.
Other sources of funding include the European Regional Development Fund; the Cohesion Fund – which channels investment to member states where gross national income is less than 90 per cent of the bloc average; the Covid-recovery-focused REACT-EU instrument established to further cohesion aims; and the Just Transition Fund set up to help fossil fuel-dependent regions transition to clean energy.
Staff at such EU bodies would work with member state national and regional authorities to roll out hydrogen projects and enable knowledge transfer and public-private partnerships. Policymakers would apply the regulation required to establish sufficient certainty to attract private-sector investors and to adapt infrastructure and logistics networks to enable hydrogen consumption.
The European Clean Hydrogen Alliance launched by the commission yesterday – featuring industry leaders, civil society, policy makers and the European Investment Bank – will be tasked with building a hydrogen investment pipeline and demand for the energy source.
“The strategies adopted today will bolster the European Green Deal and the green recovery and put us firmly on the path of decarbonizing our economy by 2050,” said Frans Timmermans, executive VP of the commission.