EU announces ‘Clean Hydrogen Alliance’ for launch in the summer

Plans for an EU-wide hydrogen alliance were confirmed on Tuesday (10 March) when the European Commission unveiled its new industrial strategy.

“The Alliance will build on existing work to identify technology needs, investment opportunities and regulatory barriers and enablers,” the Commission said in a statement today, outlining “a new industrial strategy for Europe“.

Hydrogen is “a clear candidate” for an EU-wide initiative aimed at promoting home-grown production of clean gases in support of the bloc’s objective of becoming the first climate-neutral continent in the world by 2050, an EU official told EURACTIV.

The new “Clean Hydrogen Alliance” is set to see the light in the summer, the official said, explaining the initiative enjoys broad backing from EU member states and companies involved in the hydrogen value chain.

The initiative will be modelled on the European Battery Alliance, which brought together more than 200 companies, national governments and research organisations around battery manufacturing.

“We should be ready before or just after the summer break,” the official told EURACTIV, saying the alliance has generated great interest from many EU member states as well as a wider “community” of industries and research organisations.

Germany and the Netherlands are among the EU countries that have signalled the strongest interest in hydrogen, seen as a potential silver bullet to cut emissions from heavy industries such as steelmaking, cement and chemicals.

Last month, Germany floated a draft hydrogen strategy, announcing plans to promote the clean gas in transportation, and pour millions of euros into research to develop the technology. Berlin is expected to unveil its final strategy on 18 March, just months before it takes over the EU’s six-month rotating presidency, on 1 July.

A novel approach to industrial policy

The European Commission has already tried pushing an industrial policy but previous attempts have failed because of diverging national interests.

While France and Germany are keen to promote national “champions”, smaller countries have resisted those attempts, insisting that strict enforcement of EU competition and state aid rules is crucial to protect smaller players and prevent big companies from taking dominant positions on the EU market.

The EU’s novel approach to industrial policy, already successfully tested with batteries, aims to break the impasse by considering an entire product value chain – from raw materials extraction to manufacturing – in a few strategic sectors.

The hydrogen alliance will be “similar to what we did with batteries,” an EU official told EURACTIV, citing electrolysers as an obvious area of interest for EU manufacturers. “We also need an infrastructure” to produce, transport and store the hydrogen, the official pointed out.

But that doesn’t mean EU competition rules will be thrown out of the window, another official explained, saying strong European champions will not emerge if we protect them from competition.

Rather, the  Commission intends to adapt the rules on a case-by-case basis, when the situation requires, looking at the “geostrategic” environment in which European companies operate.

“The single market is key. This is the domestic market that you offer” to big and small companies to expand in some strategic industries, the official said.

Important Projects of Common European Interest (IPCEI)

EU officials pitched a “very practical” approach to industrial policy based on a detailed analysis, “ecosystem by ecosystem”, in order to promote the emergence of European champions in strategic sectors and help them compete on the global stage.

“Each of those ecosystems faces very different challenges,” a senior EU official explained, saying the Commission will mobilise all its regulatory arsenal in support of strategic sectors like hydrogen. “We need to adjust our tools and their use depending on the reality of the specific ecosystem,” he said.

The arsenal is wide-ranging, officials continued, citing regulations, competition rules, standards, intellectual property rights, EU funds, and screening of foreign direct investments as elements of the EU “toolbox”.

Among the key new instruments in the Commission’s “toolbox” are so-called Important Projects of Common European Interest (IPCEI). Normal EU state aid rules won’t apply to projects benefiting from IPCEI status, meaning national governments will be able to subsidise them without having to observe strict state aid limits.

“The Commission will put in place revised state aid rules for IPCEIs,” the Commission confirmed in a statement, saying they will “allow member states to fund large-scale innovation projects across borders which could otherwise not be funded because of market failure”.

The revised state aid rules are expected to be in place in 2021, the Commission said in its  industrial policy communication.

Hydrogen and energy-intensive industries

Hydrogen is among the strategic industries expected to benefit from the new IPCEI status.

In November, an EU Commission expert group made recommendations on how to develop IPCEIs in six strategic and future-oriented industrial sectors: Connected, clean and autonomous vehicles; Hydrogen technologies and systems; Smart health; Industrial Internet of Things; Low-carbon industry; and Cybersecurity.

“We have made a good start in areas such as batteries, plastic recycling and high-performance computing,” said Elżbieta Bieńkowska, the EU Commissioner in charge of the internal market, industry, entrepreneurship and SMEs. “And we can do more,” she added in a statement back in November, citing hydrogen as one of the industries set to benefit from IPCEI status.

The Commission sees hydrogen as key to cut emissions from process industries such as steelmaking, cement or chemicals, which are considered “hard-to-abate” because they require high-temperature heat and cannot easily be electrified.

The Commission’s principal adviser on energy, Tudor Constantinescu, says “hydrogen may be a missing link in the energy transition” because it can help decarbonise process industries and heavy-duty transport: aviation, maritime and long-haul trucking.

But trade unions say it will take time before hydrogen can be rolled out on a commercial scale.

“The technologies will be ready for commercialisation only after 2030, for example on low-carbon steel, which is only at pilot stage,” said Luc Triangle, secretary-general of IndustriaAll, a trade union federation.

And before these technologies become competitive, they will need support, he said. “In order to help them develop viable business models, you could loosen state aid rules in order to allow direct subsidies for these kinds of products or by subsidising the consumers of these products,” Triangle said in reference to the steel sector.

“The European Commission has already done this with the Battery Alliance and will now do it for hydrogen,” Triangle told EURACTIV. “And the same model could be replicated in other areas as well under the IPCEI label. There is huge potential there.”

Industry groups enthusiastic

Industry associations were enthusiastic about the Commission’s announcement.

“One of the most strategic technologies in the field of hydrogen are electrolysers” which split water into oxygen and hydrogen using renewable electricity, said Hydrogen Europe, a group representing more than 200 companies and research institutions involved in the technology.

“We are still leading as Europeans. But especially China is challenging that position. A Hydrogen Alliance would definitely help to boost the European industries,” said Jorgo Chatimarakis, the Secretary General of Hydrogen Europe, announcing the forthcoming launch of a “2×40 Gigawatt Green Hydrogen Initiative” to underpin this target until 2030.

Eurogas, a trade group, also welcomed the Commission’s initiative, saying the EU hydrogen strategy is “a great opportunity to deliver Europe’s commitment to developing renewable and decarbonised gas”.

“The launch of an alliance on clean hydrogen should be the catalyst for the needed investment in hydrogen technology and its manufacturing, which Europe leads on today,” said James Watson, secretary-general of Eurogas.

“The hydrogen alliance must be about maintaining EU leadership in clean technologies as we are the pioneers in manufacturing electrolysers, CCS equipment and pyrolysis,” Watson said.

Oil and gas companies on board

The oil and gas industry is among the most fervent supporters of hydrogen because it offers oil and gas firms a segway into cleaner fuels, while drawing on their existing gas production, transport and storage facilities.

“Today, 70% of hydrogen production comes from natural gas. If we decarbonise it with CCS, we can create hydrogen value chains and a market that will reduce costs and help integrate hydrogen from renewable electricity,” said François-Régis Mouton, Europe director at the International Association of Oil and Gas Producers (IOGP).

“Hydrogen and CCUS are the two faces the same coin,” Mouton continued. “This is why we co-signed a call for the recognition of CCS in the EU’s Industrial Strategy, and why we commissioned along with 17 other organisations the ‘Hydrogen for Europe’ study which will identify the potential, costs, barriers, and necessary policies to scale up hydrogen in Europe”.

The results of the study are expected by the end of 2020, and will inform the debate across Europe, Mouton said.

The big challenge now will be to ramp up production, in order to create a market for hydrogen, which is currently almost entirely produced from natural gas, a fossil fuel.

“This is what the platform should focus on: supporting the deployment of such processes with the aim to increase the volumes of hydrogen,” said GasNaturally, an industry campaign group.

Some concrete projects are already underway. Last month, oil and gas major Royal Dutch Shell and gas company Gasunie revealed plans to build a massive green hydrogen plant in the northern Netherlands in the next decade.

Fuelled by a large new wind farm off the coast of Groningen province, the plant would ultimately be able to produce 800,000 tonnes of hydrogen by 2040, the companies said, cutting the Netherlands’ CO2 emissions by about 7 megatons per year.

“Wind is the playmaker of the Green Deal,” said Giles Dickson, the CEO of WindEurope, a trade association. “It’ll power the decarbonisation of the energy system.  It’ll drive delivery of strategic EU initiatives such as hydrogen production and smart mobility.

“So wind has to be recognised as one of Europe’s top strategic value chains.”

Source: euractiv.com

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