When European energy experts consider the future of hydrogen as an energy source, assessments sound remarkably like the comments made about wind or solar power in the late 1990s. Yes, it’s a great idea, but it would help if production and processing were less expensive.

Those assessments were reflected in a European Investment Bank (EIB) report released in April 2022. ‘The main barrier to the hydrogen market’s development is the fact that low-carbon hydrogen and its applications are currently relatively expensive compared to existing alternatives. Without compensating mechanisms, the current cost gap (or green premium) of low-carbon hydrogen limits investors’ ability and willingness to invest in projects,’ the report noted.

Despite that, the hydrogen strategy of the EU is targeting installation of 6 GW of electrolyser capacity by 2024, scaling up to 40 GW by 2030, which will require €24–42bn in electrolyser investment alone by 2030.

Similarly, in the EU’s REPowerEU plan released in May 2022, the European Commission (EC) targeted the deployment of renewable hydrogen (not using fossil fuels) to help decarbonise the EU’s energy system. The goal is to produce 10mn tonnes of green hydrogen and import 10mn tonnes of renewable hydrogen into the EU by 2030, up from the 5.6mn tonnes planned under the EU’s revised Renewable Energy Directive.

Another important instrument is the proposed Alternative Fuels Infrastructure Regulation (AFIR) which, if approved, sets national binding targets for a minimum number of hydrogen refuelling stations and electric charging points. Though proposed in July 2021, industry association Hydrogen Europe says: ‘There are still large divergences between the Commission, European Parliament and the EU Council of Ministers, with an agreement likely to be adopted in spring 2023.’

If the regulation succeeds, hydrogen refuelling stations will be established every 100–150 km along all core and comprehensive networks. ‘These measures will drive deployment of more hydrogen production and solve the “chicken and egg” problem by providing assurances to manufacturers (and buyers) of hydrogen fuel cell vehicles,’ according to Hydrogen Europe.

The Association also notes that the EU-authorised national government subsidies are designed to boost the hydrogen ecosystem, for production, storage, transport, end-use and component manufacture. ‘There have been two waves of state-aid approval categorised as Important Projects of Common European Interest (IPCEIs),’ it says. For IPCEI Hy2Tech, up to €5.4bn in member state payments was agreed by the EC in July 2022 for 41 projects and, for IPCEI Hy2Use, up to €5.2bn was approved in September 2022 for 35 projects. Some €10bn in national hydrogen-development spending has been cleared by European institutions and are now receiving financial support from governments.

Hydrogen Valley initiative 
Hydrogen Europe claims that many other European projects using hydrogen are to be announced shortly. Another set of green hydrogen projects fall under the ‘Hydrogen Valley’ concept, introduced by the International Energy Agency (IEA) and the EC in 2019. This partnership spawned the Hydrogen Valley Platform (H2V) set of initiatives, run by the Clean Hydrogen Partnership and Mission Innovation groups, where hydrogen serves more than one end-sector.

The H2V initiative currently has 38 projects in 20 countries, receiving sponsorship from big energy companies such as France’s Engie and the Netherlands’ Gasunie that developed the HyNetherlands project in Eemshaven, Netherlands, linking a hydrogen power plant with bio-chemical production. There are plans to expand the number of projects to 100 worldwide by 2030.

On the auto side 
Hydrogen Europe also highlights hydrogen initiatives involving auto manufacturers. These include Italian company IVECO’s hydrogen fuel cell systems for buses, BMW’s iX5 hydrogen car and Toyota’s Mirai fuel cell car, which all launched this year.

Hydrogen Europe operates a Clean Hydrogen Monitor report which is tracking several hundred projects with more than 130 GW capacity. Another programme is the Hydrogen Europe Lighthouse Initiative, whose goal is to speed up and implement large-scale hydrogen projects supported by the EU Clean Hydrogen Alliance and IPCEIs. The Lighthouse Initiative supports several highly ambitious projects, such as HyDeal Espana, which aims to cut heavy industry CO₂ emissions in northern Spain.

Marieke Reijalt, Executive Director of the Energy and Hydrogen Alliance (formerly the European Hydrogen Association), says renewable hydrogen production and use will be driven by the REPowerEU announcements. Hydrogen will become essential, she notes, as ‘without hydrogen it will be difficult to green major heavy industries like refineries, cement and steel and heavy transport like trucks and shipping’.

Hydrogen Europe agrees: ‘If we are serious about decarbonisation, hydrogen will have to play a major role. It is indispensable for sectors where it is used as feedstock like fertilisers and ammonia; and in hard-to-abate sectors like steel and the maritime and aviation sectors.’

The Association maintains: ‘The sector is on the cusp of major player status in the sense that industry and investors are ready to go.’ An example is the €3bn European Hydrogen Bank proposed by EC President Ursula von der Leyen in September 2022, which is designed to act as a market maker by guaranteeing the purchase of hydrogen in the EU. Meanwhile, the Commission’s third and latest call, on 3 November 2022, from its climate technology supporter Innovation Fund ‘should see grants awarded to many hydrogen projects’, predicts Hydrogen Europe. The fund is expected to spend €38bn between 2020 and 2030 on climate mitigation projects.

Frans Timmermans, Vice President of the EC, said at this year’s European Hydrogen Week, that 30% of renewable hydrogen projects worldwide are in Europe. These include Mallorca’s Green Hysland, Spain’s first renewable hydrogen industrial plant launched in March 2022 and led by Enagás and ACCIONA Energía. Meanwhile, Shell Nederland and Shell Overseas Investments have announced plans to build Europe’s largest renewable hydrogen plant in Rotterdam, producing up to 60,000 kg/d of renewable hydrogen.

Elsewhere, Australia-based Fortescue Future Industries and Belgium-based Tree Energy Solutions plan to build the world’s largest green hydrogen project in Wilhelmshaven, Germany.

However, Timmermans expressed concern that while ‘30% of renewable hydrogen projects planned globally in renewable hydrogen production are in Europe, less than 10% of [European] project leaders have taken final investment decisions’. At member state level, only Germany and France have set aside significant funding for hydrogen. Although Timmermans’ announcements on the Innovation Fund include funding for other sustainable solutions including hydrogen projects.

EHA boss Reijalt notes that funding levels for some hydrogen sectors like inland shipping are absent or still too low. ‘The Connecting Europe Facility funding maxes at 30% of costs,’ she says, claiming this is not generous enough. She adds that the main challenges of using hydrogen technology remain the development of enough hydrogen applications in transport to justify refuelling station infrastructure, while noting that support for fossil fuel financing continues, including public subsidies.

Hydrogen Europe says high renewable hydrogen costs are still a challenge, but what constitutes ‘high cost’ varies sector by sector. ‘In the case of industry – using grey [non-renewable feedstock and energy] hydrogen as chemical feedstock or for oil refining – all industrial sectors using renewable hydrogen would require subsidies to break even,’ it notes.

Sheffield-based electrolyser manufacturer ITM Power produces scaleable, modular polymer electrolyte membrane systems for green hydrogen production
Photo: Bubble60

Road mobility and costs 
In the road mobility sector however, if conditions are right – with enough scale – cost parity can be reached with fossil fuels, as shown by the Switzerland-based Hydrospider project run by H₂ Energy and the Lausanne, Switzerland, Alpiq Group. This project’s mission is to produce and distribute green, climate-friendly hydrogen. ‘For different sectors the required break-even cost of hydrogen is different and can vary between €1–4/kg hydrogen,’ according to Hydrogen Europe.

‘We are confident the sector will be able to reduce costs in the coming years. The biggest cost towards producing renewable hydrogen is the cost of the renewable electricity used to make it and as those costs continue to fall, so will the renewable hydrogen price,’ it adds.

The high price of electrolysis equipment is also important. But significant scale-up of the electrolyser industry is anticipated, with announcement of an Electrolyser Partnership by the EC in May 2022 bringing together electrolyser manufacturers and component suppliers within the European Clean Hydrogen Alliance.

‘We are confident that the EU targets, which will stimulate market scale up, will lead to a reduction of renewable hydrogen costs to the point of being able to reach cost parity with fossil fuels.’ – Hydrogen Europe

Infrastructure

One important future focus is the construction of pipelines to transport green hydrogen from where it is cheap to produce (like Spain, which utilises plentiful sun and wind power to make hydrogen) to buyers in industrial north-west Europe. Also, storage infrastructure is needed to balance out variable supply, along with more refuelling infrastructure for cars and lorries.

Work is underway to boost the number of hydrogen cars on the EU market, according to the European Automobile Manufacturers’ Association (Association des Constructeurs Européens d’Automobiles – ACEA).

‘Many European manufacturers are planning to produce hydrogen fuel cell vehicles in the near future – specifically by 2025,’ notes Hydrogen Europe. ‘The discontinued Honda Clarity is planned to be renewed, and BMW is working on a hydrogen-powered iX5. Hyundai is planning a second generation of [H-car] Nexo and announced another hydrogen-powered vehicle. Kia, Volkswagen and Range Rover are following this example, with Range Rover announcing a Land Rover Defender Fuel Cell vehicle.’

ACEA and Hydrogen Europe say a main challenge remains refuelling: ‘Hydrogen refuelling infrastructure is severely lacking in Europe today – with only 136 hydrogen filling stations available across 10 EU countries in 2021 – putting at risk the development of this innovative zero-emission solution,’ reports ACEA. Today, the largest number of refuelling stations are in Germany (89), which also has the highest sales volumes (464 units sold in 2021). While Shell closed its three hydrogen refuelling stations in the UK, due to lack of demand from motorists.

That said, Hydrogen Europe argues that with increased infrastructure capacities, most analysts and even manufacturers now say the first widespread use of hydrogen fuel cell technology will be in commercial vehicles, which travel a defined route each day and can return to a depot for refuelling.