Tackling 10 prejudices about hydrogen following the Clean Transition Dialogues
When it comes to hydrogen specifically, there are archaic attitudes to this disruptive, high-potential technology that must be overcome. The bottom line is that, while China leads in battery, solar, and e-mobility technology, Europe still maintains a competitive advantage in hydrogen and should exploit this advantage to ensure its global competitive down the line.
Jorgo Chatzimarkakis is Chief Executive Officer at Hydrogen Europe
The European Commission has published its stocktake of the Clean Transition Dialogues, in which the it engages with industry and social partners to support the implementation of the European Green Deal.
It is firstly commendable that the issue of the industrial component of the green transition is being taken seriously by the highest levels of the European Commission. However, Europe will only remain a factor globally if all relevant technologies are allowed to contribute towards increased system efficiency. The exclusion of certain technologies will ultimately increase costs and harm global competitiveness.
Below are 10 prejudices about hydrogen we can hopefully move on from as we enter “crunch time” for the energy transition and for European standing in the global market.
- The hydrogen success story was just a boom
The opposite is the case. Whereas Europeans kicked off the hydrogen revolution with their coherent strategy in 2020, all over the globe countries have started to invest heavily into hydrogen. Europe now lags behind the big players when it comes to a proper derisking strategy.
- Hydrogen cannot deliver on its promise
The hydrogen story is not just one shot that we hope to work within a couple of years. Cleaning up the global economy is a matter of time and patience. It’s also a huge task for humankind which requires unprecedented financial support. The hydrogen story has only begun!
- The regulatory framework is ready and sufficient
The huge and Herculean task to pass the Fit-for-55 package is welcome and appreciated. But it needs to be transposed into national law, and this needs to be done promptly and decisively. Otherwise, the regulatory framework will not do its job. Moreover, extremely important elements are still missing like definitions, certification schemes, and standardisation. This needs to be completed as soon as possible.
- Hydrogen projects are not bankable
It is true that despite the explosion of announced hydrogen projects around the globe and especially in Europe has not coincided with a similar rise in final investment decisions (FIDs). There are several reasons for this but, crucially, many of them have been burdened by inflationary prices and are shackled by regulatory chains. Inflation affects all markets but nascent ones more so, while policymakers can still do a lot to reduce the regulatory burden.
- The price of hydrogen is too high.
The price of hydrogen very much depends on the price of electricity. The energy crisis as a result of the war in Ukraine has deteriorated the situation. Policymakers have to do their utmost to fight this situation. Meanwhile, as the hydrogen industry grows, it will benefit from natural economies of scale – as have all clean technologies of the 21st century.
- The hydrogen backbone is too expensive
Recent numbers show that intermittent renewable energy – which continues to (rightly) grow – will create increasing issues for Europe’s grids. This leads to grid management costs, congestion costs, and high levels of curtailment. Ramping up the power grid is extremely expensive, whereas investments into additional infrastructure like hydrogen could reduce the overall cost, and consequently the taxpayer burden. This goes along with the urgent need of storage capabilities that could be easily covered by hydrogen solutions.
- Hydrogen should be restricted to industry targets
There is no doubt: hydrogen solutions in industry are the easiest and lowest hanging fruit for early applications of green and clean hydrogen. However, once hydrogen is in the system it will also be desirable and usable for other applications. To exclude certain sectors from hydrogen solutions would be a purely ideological decision and would cost us more in the long-term. Hydrogen will not govern all sectors, but it can contribute to reduce costs in all sectors.
- The European Hydrogen Bank is ready
The European Hydrogen Bank is in its very early stage. The first tender has been launched successfully and its massive oversubscription is an important signal to the market. However, without a real derisking strategy for hydrogen in tandem with the bank, Europe will not stay competitive. Other geographies have come up with simple and pragmatic funding schemes that help to crowd in private investment. We need to continue the good work we have started.
- Oil and gas companies are withdrawing from hydrogen investments
Oil and gas companies are major drivers of hydrogen investments on a global scale as they need hydrogen for their technical processes – and they can eventually replace oil and gas with hydrogen solutions. However, the current geopolitical crises have led to a comfortable situation for oil and gas companies as the demand for fossil fuels has only grown. Combined with a plethora of subsidies they continue to receive, there is no incentive to change that path. Policymakers have to understand that continuing subsidies for fossil solutions without redirecting the money for green and clean solutions will not change anything about that situation. It’s in their hands.
- Renewables and electricity should come first
This is obviously true. What is not true, however, is that this course of action comes without major, prohibitive additional costs. The largest of which is the mammoth investment required for the associated infrastructure, as I mentioned earlier. Investing exclusively into the power grid is more expensive and requires more critical raw materials than diversifying our energy needs into a second, hydrogen-based, system. Measures based on green and clean molecules are urgently needed. If renewables come first – and they should – then storage capacity and additional transmission capacity (via pipelines) are part of the package.
Once we understand this, then we understand that hydrogen is an enabler, not a competitor, to the renewable energy revolution.
