Incentives crucial to avoid green, blue, and even purple hydrogen fading to grey

Researchers from institutes in Germany and the U.K. have cast an eye over the hydrogen strategies of six European nations and cast doubt on the merits of the pure-green approach of nations such as the former.

The Contrasting European Hydrogen Pathways report produced by the Institute of Energy Economics of the University of Cologne and the Oxford Institute for Energy Studies, has suggested the willingness to embrace natural gas-fired, ‘blue' hydrogen production demonstrated by the U.K. and the Netherlands may be a wiser approach than the zero-carbon route planned by Germany.

The report's authors explain there is little point ramping up electrolyzer capacity if it would eat into the electricity supply from solar and wind power projects and thus, potentially, drive more fossil fuel power generation. A better alternative, the authors suggested, may be to use natural-gas fired hydrogen–with carbon capture, usage and storage (CCUS)–or nuclear electricity, as a bridge solution until sufficient solar and wind generation capacity has been installed to be able to meet both domestic electricity demand and hydrogen production.

Blue

Although the U.K. government is yet to publish the hydrogen strategy it has promised this year, the outline of its net zero plans released in December hints at an enthusiasm to embrace blue hydrogen and CCUS, perhaps not surprisingly given the extensive gas operations of domestic energy companies such as Shell and BP.

The most ambitious zero-carbon future energy scenario prepared by U.K. electricity transmission system operator National Grid posited 188 TWh of electrolysis-driven hydrogen in mid century, a figure which would require 100 GW of methane reformation and CCUS capacity, or 60 GW of new wind farms, by that stage.

Germany, by contrast, wants purely green hydrogen–generated from solar and wind power–to power 5 GW of hydrogen electrolyzer capacity by 2030, with that ambition to double between 2035 and 2040. However, the German plan hinges on huge volumes of renewable hydrogen imports, chiefly from the solar farms of Southern Europe and offshore wind farms to the north. As the authors of the hydrogen study point out, it is by no means certain the nations Germany wishes to import hydrogen from will have enough clean energy capacity to satisfy their own needs and feed an export industry.

Exports

Spain, at least, hopes to be able to deliver, with plans for an €8.9 billion Renewable Hydrogen Roadmap towards 300-600 MW of electrolyzer capacity by 2024 and 4 GW-plus by 2030. The output of such a scale of production would more than meet domestic demand, the authors pointed out, even if Spain's electricity demand trebles by that point. Spain's hydrogen-fueled industries are much smaller than those of regional neighbors such as Germany, France and the Netherlands and the “huge” solar–and wind–potential of the resurgent PV nation means green hydrogen is being considered as a potential seasonal storage solution for clean power.

Elsewhere in potentially renewables-rich Southern Europe, the picture is less clear in Italy. While the authorities have hinted at a 5 GW electrolyzer ambition, by 2030, there are no clear targets in the National Energy and Climate Plan (NECP) and the green hydrogen industry may have to wait until a net-zero-carbon strategy emerges this year, or even until next year, when the NECP is expected to be revised. Until then, there are just sketchy ambitions about electrolysis driven by clean energy, probably in the sunny south of the nation, although hydrogen-driven PV project announcements have yet to materialize.

Similarly, talk of importing hydrogen from North Africa is little more than an undefined longer-term idea in a nation which has just been forced to elect another new government, this one led by finance technocrat Mario Draghi.

While the Netherlands does not suffer from such political chaos, its politicians are still trying to catch up with EU peers in decarbonizing their power sector. As the hydrogen pathways study states: “Climate policy in the Netherlands will focus initially on the promotion of renewable power generation, so it is less clear the extent to which hydrogen will be a priority for policymakers.”

Electrolyzer target

The Climate Agreement finalized in June 2019 established an electrolyzer capacity target of 800 MW by 2025 and 3-4 GW by 2030 and that national ambition is eclipsed by the 6 GW the northern Netherlands region is gunning for by the latter date–three-quarters of it green and the balance blue.

One key advantage held by the Northern European nation, which will look to northern waters to power any clean electricity, is the unusual dual nature of its natural gas infrastructure. The report explained the nation has two networks, one for the low-calorific gas mostly drawn from the Groningen field and another to transport higher calorific fuel from other gas suppliers. That set-up means one of the two pipelines could be devoted to hydrogen transport to ease the transition from natural gas.

The outlier among the six nations studied is France, thanks to its high dependency on nuclear-powered electricity. The option of using nuclear energy to power hydrogen production at times of low domestic electric demand has enabled policymakers to set the EU's most ambitious electrolyzer target–6.5 GW by 2030.

Purple

With the French government having committed to spend €3.5 billion on hydrogen to 2023, and the same amount thereafter to 2030, nuclear-fired ‘purple' hydrogen could be a significant factor in the European industry, at least initially.

With such a varied approach to national hydrogen strategies considered, the authors of the paper found little commonality other than the fact policy support will be crucial to hydrogen production, particularly given the cost premium of the green form of the gas over fossil-fuel-powered, ‘grey' hydrogen. Hydrogen-consuming industry will have to be incentivized away from the conventional form of the energy storage medium and, the authors of the study suggest, it may be wise for governments to already mandate new gas-fired power plants–and even household boilers–should be installed ‘hydrogen ready' for the anticipated transition.