The Hydrogen Stream: What the EU’s Fit for 55 means for hydrogen

The revision of the EU Energy Taxation Directive (ETD) and the Renewable Energy Directive (RED) will also have an impact on the nascent hydrogen economy. The European Commission is currently evaluating options to create a certification system for low-carbon fuels and it may extend the EU-wide certification for renewable fuels to include hydrogen.

The European Commission presented its Fit for 55 package of policy proposals to reduce emissions by at least 55 percent by 2030. Among other documents and strategies published on Wednesday, the EU Commission proposed the revision of key EU directives in the energy field, including the Energy Taxation Directive (ETD) and the Renewable Energy Directive (RED). The Commission also proposed the revision of the Emission Trading System (ETS). All these proposals are somehow related to hydrogen. “The lowest minimum rate of €0.15/GJ applies to electricity – regardless of its use -, advanced sustainable biofuels and biogas, and renewable fuels of non-biological origin such as renewable hydrogen. Low-carbon hydrogen and related fuels will also benefit from that same rate for a transitional period of 10 years,” reads the Commission’s statement on the ETD revision. The proposed RED revision seeks to convert into EU law some of the concepts outlined in the energy system integration and hydrogen strategies published in 2020.

The Commission proposed to raise the overall renewables target from 32% to 40%. “The Commission is … aiming at a more energy-efficient and circular energy system that facilitates renewables-based electrification, and promotes the use of renewable and low-carbon fuels, including hydrogen, in sectors where electrification is not yet a feasible option, such as transport,” the Commission’s website states. It also assessed the options to create a certification system for low-carbon fuels. The idea is to extend the EU-wide certification for renewable fuels to include hydrogen. The Commission is also seeking to create binding sub-targets for the use of renewable hydrogen and its derivatives in the transport sector and called for the production of hydrogen with electrolyzers to be included in the ETS, making renewable and low-carbon facilities eligible for free allowances.

A Carbon Border Adjustment Mechanism is also on the list. The Council and the Parliament will now have to go through the proposals and eventually agree on the final texts of the legislative tools, all meant to deliver on the targets agreed in the European Climate Law.

Europe is the continent contributing the most to global hydrogen developments, but decisions being made in South America and the Middle East, combined with climate commitments announced by China and the United States, bode well for the steep increase in hydrogen investments. Investments are reportedly reaching $1 billion every week. This was one of the key messages of the latest Hydrogen Insights Updates from the Hydrogen Council in collaboration with McKinsey & Company. Hydrogen Council is a global CEO-led coalition working to accelerate the energy transition through hydrogen. “Globally, 131 large-scale projects have been announced since February 2021, taking the total to 359 projects. The total investment into projects and along the whole value chain amounts to an estimated $500 billion through 2030,” said the coalition on Thursday. According to the report, low-carbon hydrogen production capacity “will exceed 10 million tons p.a. by 2030, an increase of over 60% on February reported project level.” The Hydrogen Council and McKinsey & Company underlined that the Chinese government has made $20 billion of public funding available to hydrogen projects. “Europe remains the center of hydrogen development, accounting for more than 50% of announced projects and estimated investments of $130 billion. However, all other regions grew faster proportionally with over 75% increase. Furthermore, trade flows between supply and demand centers are starting to arise.” The majority of the production capacity is expected to come from renewable energy sources, but 30% also depends on carbon capture storage technologies. “Large-scale clean hydrogen projects, amounting to about a third of total hydrogen demand growth expected in the next decade, are materializing in response to the many calls for bold action to address climate change,” commented Daryl Wilson, executive director of the Hydrogen Council.

New Zealand and Singapore signed an arrangement of cooperation on low-carbon hydrogen on Thursday. The arrangement follows in the footsteps of the 2018 memorandum with Japan. “New Zealand has an abundance of renewable energy that could be used to produce hydrogen, potentially for export, so this cooperation between us and Singapore… is significant,” commented Energy and Resources Minister Megan Woods. The two countries want to collaborate on the production, deployment, and research into a new hydrogen economy, focusing on transport and industry applications. New Zealand is also looking into options to export hydrogen to South Korea. “Korea’s interest in producing hydrogen, developing the technology and infrastructure for the storage, transportation and consumption of hydrogen, and securing liquid hydrogen imports from abroad (including New Zealand) is serious, and presents a number of opportunities for New Zealand businesses as we develop our own hydrogen economy and associated technologies,” New Zealand’s Foreign Affairs Ministry wrote in February.

Portuguese power utility Energías de Portugal (EDP), whose main shareholder is the state-owned China Three Gorges Corporation, presented last week to the Andalusian regional government its plans to convert the Puente Nuevo and Los Barrios power plants, currently in the process of closure, with industrial projects worth €1 billion. The Los Barrios coal plant is a potential site for the development of hydrogen projects that would allow the supply of green energy for the entire industrial environment of Campo de Gibraltar and its possible export by sea. Collaboration with the administration could launch a hydrogen pole in the Campo de Gibraltar to supply nearby industries. In a separate development, EDP announced it is cooperating with French-American technology provider TechnipFMC and other research partners, including the University of South-Eastern Norway, to develop a conceptual engineering and economic feasibility study for a new offshore system for green hydrogen production from offshore wind power, called the Behyond project. “The study will include innovative integration of equipment for the production and conditioning of green hydrogen and infrastructure that allows for its transportation to the coast. The goal is to create a unique concept that can be standardized and implemented worldwide, allowing for large-scale hydrogen production,” reads the note released on Monday. According to TechnipFMC, the consortium will strengthen cooperation between Portugal and Norway.

Norway-based consultancy DNV will lead the process safety study to identify environmental, safety, and operational risks for the world’s first offshore hydrogen production facilities. Collaborating with producer and supplier of green hydrogen Lhyfe and the École centrale de Nantes school of engineering, DNV wants to demonstrate the reliability of an offshore electrolyzer. “Located off the coast of Le Croisic, France, the green hydrogen-generating system is intended to be powered by electricity from a floating wind turbine, with a target start-up date in 2022,” reads the note released on Thursday. DNV will investigate several risks, including the ones related to floating barge, fuel cells and hydrogen production. A regulations and standards review will also be included as part of the study. “We believe green hydrogen at scale is the ultimate destination for the future of energy storage,” commented Santiago Blanco, DNV’s executive vice president.

Helsinki-based technology group Wärtsilä has begun testing its thermal balancing engines using pure hydrogen and expects to have an engine and power plant concept capable of running on 100% hydrogen by 2025. Full-scale engine tests have been recently carried out in Wärtsilä’s engine laboratory in Vaasa, Finland, to assess the optimum engine parameters for running on hydrogen and ammonia,” reads a note released on Wednesday. Wärtsilä has installed a total of 74 GW of power plant capacity in 180 countries. Its engines are reportedly capable of ramping up to full load in two minutes. They can currently run on natural gas, biogas, synthetic methane or hydrogen blends, “with a blending possibility of up to 25% hydrogen already proven today.” For the marine market, Wärtsilä said in a separate note that it expects to have an engine running on an ammonia blend already this year. Wärtsilä anticipates having an engine concept with pure ammonia fuel in 2023.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Post