The EU is determined to achieve its goal of net-zero greenhouse gas emissions in all sectors of the economy by 2050
The EU is determined to achieve its goal of net-zero greenhouse gas emissions in all sectors of the economy by 2050.
However, some sectors such as energy-intensive industries and transport can be difficult to directly electrify. This includes steel and cement production, obtaining ammonia for fertilisers, as well as heavy duty vehicles like trucks, airplanes and ships.
This is a challenge that must be addressed to deliver a clean, secure and affordable energy future for Europe.
Renewable and low-carbon hydrogen and its derivatives can help replace the use of fossil fuels in heavy industry and transport. From less than 2% of our consumption in 2022, by 2050, hydrogen is estimated to account for around 10% of the EU’s energy needs.
A decarbonised gas
The word hydrogen comes from the Greek language where it means ‘the maker of water’.
In fuel cell engines, hydrogen combustion produces electric power and water.
When hydrogen is obtained sustainably, for example, through water electrolysis powered by renewable energy, it is considered a decarbonised gas.
We need to produce more clean hydrogen and shift to using electricity from clean sources to do so. Water electrolysis, which splits water into hydrogen and oxygen, is the most mature and promising technology in this regard. What matters is that it uses renewable or low-carbon electricity as input.
Transporting hydrogen and industrial clusters
Depending on the distance and use-case, hydrogen can be transported in a compressed or liquefied form.
Ammonia, a derivative of hydrogen and commodity for producing fertilisers, is popular for long-distance maritime transport. Ammonia however poses other challenges related to safety.
You may sometimes see trucks transporting tubes of hydrogen on the highway, but 10 years from now we expect a network of hydrogen pipelines linking renewable and low carbon hydrogen production sites with industrial clusters, buyers and off-takers. ‘Hydrogen Valleys’ are clusters where hydrogen is produced, consumed and used in different ways. The Commission has supported over 20 Hydrogen Valleys with funding from the Clean Hydrogen Joint Undertaking (and its predecessor) as a policy priority. A Hydrogen Valley Facility has recently been contracted to support project promoters with advisory services.
A feedstock for alternative fuels, such as synthetic fuels
Hydrogen is an energy carrier, which can be used to produce synthetic-fuels (referred to as electricity based fuels) and derivatives such as e-ammonia, which is the primary commodity for producing fertilisers.
When combined with captured CO₂, hydrogen can be converted into liquid or gaseous e-fuels, such as synthetic methane, methanol, or kerosene.
Energy security
Renewable and low carbon hydrogen will also reinforce our energy security. It can provide large-scale storage of electricity, therefore complementing the increasing share of variable renewable energy sources in our energy mix.
Storing hydrogen can help stabilise energy prices and contribute to the flexibility of the EU’s energy system. It can connect and transform multiple sectors, enabling a more integrated energy system.
The EU’s renewable and low-carbon hydrogen will be obtained through a combination of domestic production and diversified imports from our global partners. When it comes to production, robust supply chains are important. More than 40 raw materials and 60 processed materials are required in electrolyser production. Major suppliers of the raw materials include, for example, China (37%) and South Africa (11%). Raw materials that are necessary for certain types of electrolysers include platinum group metals and iridium.
The EU’s share of global electrolyser manufacturing capacity is estimated to reach 20% by 2030.
Challenges to hydrogen roll-out
The Clean Energy Technology Observatory identified 3 key challenges to hydrogen roll-out in its 2024 report
creating a stronger demand for renewable and low carbon hydrogen to improve the business case for investors
strengthening the business case for hydrogen transport and storage networks – if it is to be used, the infrastructure must exist
securing an adequate supply of renewable and affordable electricity to produce clean hydrogen. Electrolysers require electricity and its price plays an important role in the final cost competitiveness of hydrogen
The EU’s answers
EU policy on hydrogen aims to scale-up the renewable and low-carbon hydrogen market and develop infrastructure for its storage and transport. It also sets binding targets for the uptake of renewable hydrogen in industry and transport by 2030. EU funding is key to establishing a hydrogen market in Europe, given the important cost difference between clean hydrogen and its fossil fuel alternatives.
To accelerate the establishment of a full hydrogen value chain in Europe, in 2022 the Commission set up a financing instrument called the Hydrogen Bank. Presently, auctions for renewable hydrogen within the EU, under the Innovation Fund, are an important element of this instrument, while preparatory work is under way to design and implement an import auction for hydrogen from non-EU countries. The European Climate, Infrastructure and Environment Executive Agency supports a diverse portfolio of hydrogen projects across Europe which receive a total of €5.6 billion in EU funding.
Furthermore, the Commission recently launched the Hydrogen mechanism, as part of the Energy and Raw Materials Platform. It aims to accelerate market development for renewable and low carbon hydrogen and its derivatives (ammonia, methanol, eSAF). It will mobilise and connect the demand and supply sides, inform infrastructure development and link with the financing and de-risking instruments.
READ the latest news shaping the hydrogen market at Hydrogen Central
The EU is determined to achieve its goal of net-zero greenhouse gas emissions in all sectors of the economy by 2050, source