Wish you were green: Is the EU's Hydrogen Strategy really sustainable?

7 October, 2020

In July, the European Commission presented the Hydrogen and Energy System Integration strategies, two roadmaps that contribute towards achieving climate and environmental goals under both the European Green Deal (EGD) and Paris Agreement.

The energy transition is crucial to deliver on these goals and nowadays, the process is easier than ever, thanks to cheaper and more advanced renewable energy technologies – especially hydrogen – and the progressive digitalisation of our economy.

In fact, hydrogen arguably plays a key role in building a climate-neutral economy based on an integrated energy system, featured with an ever-growing share of geographically distributed renewable energies and integrates different energy carriers flexibly. Nonetheless, several environmental organisations and NGOs warn of intrinsic shortcomings featuring such strategies and more specifically, the Hydrogen strategy.

The main argument is that the Communication on Hydrogen merely pays lip service with respect to the transition to a sustainable economy (as it still allows the production of so-called blue hydrogen) and hence, continues to legitimise heavily polluting business models. This could be explained by the fact that the European Clean Hydrogen Alliance, the body responsible for the implementation of an investment portfolio for clean hydrogen, is almost exclusively driven by the gas industry lobby’s interests.

On the other hand, the Commission defends the current position, as illustrated in their roadmap, by invoking technical considerations – a stance that, at this point of the legislative procedure, constitutes a strong determining factor.

By analysing the alleged shortcomings of the recently presented Hydrogen Strategy, it is clear that the Commission should still seek to address these points to deliver the climate-neutral goals of an integrated energy system.

The strategy’s features

The Communication commences with the acknowledgement that hydrogen can be a protagonist in the transition to a carbon-neutral Europe, with an admission that only marginal attention has been given so far. Regarding this first point, hydrogen can be employed either as feedstock, fuel, or as an energy carrier – making it extremely versatile for industrial, power, and transport application purposes.

Furthermore, certain factors currently make the deployment of hydrogen across several sectors and all stages of the value chains easier and more convenient than ever. Notably, ‘the rapid cost decline of renewable energy, technological developments, and the urgency to drastically reduce greenhouse gas emissions’. The rationale for the Hydrogen Strategy is hence, to provide a clear roadmap that harnesses the full potential of this element to achieve the environmental objectives set out in the EGD.

One pillar of this strategy focuses on the progressive abandonment of fossil-based hydrogen in favour of the renewable, or so-called green, hydrogen. This is because the latter ‘has the biggest decarbonisation potential and is therefore the most compatible option with the EU’s climate neutrality goal’.

To this end, five key actions were identified: defining an investment agenda; boosting demand and production; designing an enabling, supportive framework; promoting research and innovation; and becoming a leader on the international scene. These reflect the main challenges faced by the introduction of hydrogen on the market and their corresponding action plans in response.

Reasons for concerns are mainly linked to the first two key actions: specifically, the continued acceptance and subsidisation of a low-carbon (‘blue’) hydrogen-based production – although only in the interim – and in parallel, with the initial establishment of green hydrogen infrastructures. This is particularly problematic since low-carbon hydrogen-based production (despite emitting less than other fossil fuel-based systems as it is matched with a carbon capture and storage [CCS] mechanism) still perpetuates harmful emissions of greenhouse gases.

Thus, three phases to implement the strategy were identified. The first phase is dedicated to establishing the infrastructure necessary to produce renewable hydrogen on a larger scale. The second phase is developing cost-effective green hydrogen production to make it more competitive on the market. And, in the last phase, green hydrogen is expected to reach the required maturity to make it a leading resource for production processes in Europe.

Therefore, so-called blue hydrogen will only be used for production purposes on a large-scale during the first two phases. Consequently, according to the Commission’s projections, greenhouse gas emissions will continue for at least ten years. Unfortunately, this is in sharp contrast with mounting scientific evidence on climate change recommending a significant decrease in harmful emissions that should already start now.

However, whether the European Commission is aware of the true dangers that result from a continuation of this type of hydrogen production process is debatable. The Commission currently justifies the coexistence of the two hydrogen production pathways – at least in the short-term – on the basis of a two-fold consideration. First, this still leads to rapid reduction of emissions from existing hydrogen production (thanks to the carbon capture and storage mechanisms devised to prevent large amounts of emissions from being released directly in the atmosphere); and second, it supports the parallel and future uptake of renewable hydrogen, which will only be progressively introduced into the market.

Even so, according to several NGOs and specialised think tanks, this explanation is fallacious, not only because this process still continues the reliance on fossil fuels, but also because the CCS technology is not yet mature and does not fully prevent leaking. Another troublesome aspect is that continuing to produce fossil-based hydrogen entails reliance on non-EU partners, such as Russia and the United States, and thus, keeping the EU dependent on other World powers.

This then begs the question: if the strategy is fundamentally wrong from an environmental and health point of view, then why has it been designed in such terms?

Behind the scenes of the Strategy

One possible explanation is found in the composition of the European Clean Hydrogen Alliance. This entity was formed with the intent of addressing the first key action: defining the investment agenda. To quote from the Strategy itself: it ‘will help build up a robust pipeline of investments…to scale up production and demand for renewable and low-carbon hydrogen’. To this end, ‘it will bring together the industry, national, regional and local public authorities and the civil society. Through interlinked, sector-based CEO round tables and a policy-makers’ platform, the Alliance will provide a broad forum to coordinate investment by all stakeholders and engage civil society.’

However, as of now, hardly any members of the civil society or local authorities are sitting at the Alliance’s discussion table. Alarmingly and quite the contrary: the group currently consists of only representatives from the gas industry, who continue to pursue their own corporate interests undisturbed.

Consequently, the European Greens have complained about this inconsistency, explaining that there is solely ‘strong representation of gas and heavy industry companies’ within the Alliance. Indeed, the EUObserver reports that although many meetings were held between Commissioners and fossil fuel representatives in the past few months, no official minutes or reports thereof have followed. Moreover, the COVID-19 crisis makes the situation all the more dire; to buffer the economic shock, part of the InvestEU financial share that was originally intended for the green transition will now be diverted to help fossil-based hydrogen production (and all the employees and companies working within the sector) to survive.

To complement this explanation, one might argue that it is the revolutionary character of the Strategy itself that demands a sort of initial compromise to make the transition happen. In other words, an immediate, radical abandonment of either low-carbon or blue hydrogen production pathways would have been extremely difficult to agree upon due to different realities faced by distinct regions and industries across Europe. In fact, many regions’ economies are still largely dependent on fossil fuels, with renewables still a seemingly far-away reality.

Hence, in line with the principle that ‘no one is left behind’, the European Commission might have decided to opt for a temporary maintenance of blue hydrogen production on the basis of ‘political realism’ – because otherwise, the strategy would not have survived even the very first phase of the legislative process.

Conclusions and recommendations

Overall, by virtue of its forward-looking perspective and ambitious targets, the Hydrogen Strategy is a powerful instrument for the achievement of Europe’s climate goals, and to support the Energy System Integration. At the same time, while it is true that several critiques were highlighted, there is still an opportunity for improvement and to address these issues.

For instance, it is highly advisable that the Clean Hydrogen Alliance welcomes more representatives from local authorities, NGOs, and civil society, so as to eliminate any potential conflicts of interests generated by the gas industry. Additionally, a timetable indicating when the production of blue hydrogen will come to an end is desirable, not only in reaching climate goals, but also for the sake of investors’ certainty.

An instrument that may be helpful for legislators is the Committee of the Regions’ Opinion, ‘Towards a Roadmap on Clean Hydrogen – the contribution of local and regional authorities to a climate neutral Europe’. This document is a combination of identified legislative and non-legislative actions that should be implemented in order to develop an efficient Hydrogen Strategy. Among the Opinion’s crucial points are the need to focus on research and innovation; to enable regions to participate in initiatives, such as the European Clean Hydrogen Alliance and the European partnership for clean hydrogen; and to introduce a legal framework for the revision of EU energy taxation, as well as targets for green hydrogen generation capacity in the EU.

In these recommendations, some of the issues within the Hydrogen Strategy may be ameliorated. However, only time will tell whether the EU legislator will approve the Commission’s proposal as it now stands, or, if they will follow the suggestions of NGOs and think tanks.

Share this: