Thon Hotel EU, Rue de la Loi 75 – 5 December 2022
Today, together with our European Clean Hydrogen Alliance members, we gathered for the 5th European Hydrogen Forum.
Our alliance has been delivering on its objectives to accelerate large-scale clean hydrogen deployment, and this is first and foremost thanks to its almost 1700 members.
During today’s panels we touched upon a wide range of issues, spanning through infrastructure, imports, standards, IPCEIs, Contracts for Difference and regulatory clarity.
Of course, we are all well aware that we are living in a decisive moment for EU industry.
The pandemic first, followed by the Russian aggression against Ukraine, have created a state of ‘perma-crisis’ that is felt by our companies and citizens on many levels, above all energy prices.
But there is one certainty I take away from the discussions I witnessed today: the business case for clean hydrogen in Europe is stronger than ever, and we are working to make it stronger.
Let me explain why I say this, looking 1) at the supply of hydrogen, 2) at the clean technology aspect, 3) at the demand side and 4) at financing.
Reason 1: Production and supply
First, let’s talk about what the alliance does to bring together clean hydrogen supply and demand.
What we are doing in Europe is ensuring that off-takers in industry have access to the hydrogen they need to decarbonise and to increase Europe’s energy independence.
One year ago, we published our project pipeline that included more than 750 hydrogen production and off-take projects.
Following the update to the project pipeline that we undertook recently, we now have 67GW of hydrogen production expected by 2030.
This is almost a 30% increase in planned hydrogen production from the pipeline published one year ago.
This demonstrates that hydrogen producers believe that the business case exists to invest in clean hydrogen production in Europe.
It equally demonstrates that producers believe that there is ample demand from off-takers in industries such as fertilisers, steel, cement, and transport to make these types of major business decisions.
Next to this, we are strengthening the business case for hydrogen in Europe by bringing down barriers.
We are in a race to develop hydrogen standards vis-à-vis other global players.
The alliance’s standards working group has included stakeholders from the entire hydrogen value chain.
This ensures our standards development process is inclusive and prioritises the most urgent needs for industry, and that our standards will become global standards.
Reason 2: Clean technologies made in the EU
Coming to the second, related aspect, clean hydrogen requires clean energy, and clean energy requires clean technologies.
That is why our efforts to pursue our green goals at EU level are accompanied by measures to make sure we scale up EU production of these technologies.
To start with, we are strengthening the business case for the manufacturing of electrolysers in Europe.
Last May, 20 European electrolyser manufacturers signed a Joint Declaration with Commissioner Breton.
They committed to increasing manufacturing capacity ten-fold in three years.
The European Commission committed to a number of actions, including securing a dedicated window of €700 million in the Innovation Fund for clean energy technologies such as electrolysers.
Thanks to this, we have strengthened the business case for hydrogen in Europe by ensuring that our most vital technology in hydrogen production—electrolysers—can become even more cost-competitive.
In parallel, we are also strengthening the business case for renewable energy sources.
At the end of this week, we will launch the new Solar Photovoltaic Industry Alliance.
This alliance will focus on scaling-up the manufacturing of solar panels in Europe, thereby making them more widely available and more cost-competitive.
This will bring down the input prices for clean hydrogen in Europe, again strengthening our business case.
Reason 3: Off-taking and demand
Coming to the third aspect, many may be wondering what all the buzz on clean hydrogen is about on the demand side.
Or off-takers may be wondering how they can take advantage of the fact that we will soon have large quantities of EU-produced green hydrogen.
To start, I would like to recall that over 500 of the projects in the alliance’s project pipeline are focused on industry applications such as steel, fertilisers, cement.
But as well on applications in transport, such as maritime, rail, aviation, and heavy-duty trucks.
And there are also projects dealing with building applications.
To give an example, some of the projects in the alliance’s pipeline involve new ways of making steel.
For instance, the GravitHy project in France focuses on using clean hydrogen to replace the most energy-intensive part of the steel production process, the direct reduced iron.
If the business case were not already strong for investing in clean hydrogen, the cost of green compared to grey hydrogen has only strengthened it.
With ever-more investment going into green hydrogen and renewable energy sources, this price is only expected to fall, and as we mentioned, in the EU we are working for that to happen.
On the other side, we want to make sure that we can get hydrogen from where it is produced to where it is needed.
As you know, the alliance launched a call for infrastructure projects in early November to that end.
We are still accepting projects and I want to emphasise that this work is essential to connect clean hydrogen supply and demand in Europe, and we are giving it the priority it deserves.
Reason 4: The importance of financing
Coming to the fourth and last aspect of our business case for clean hydrogen in Europe, of course financing is essential to connect the dots and make it happen.
And here again we are not starting from scratch.
The two Important Projects of Common European Interest approved so far will provide €10 billion in public support.
This support will go to large-scale, integrated hydrogen projects, many of which combine supply and demand, thus bringing the price of green hydrogen down in the long run.
In addition, because these projects cross Member States’ borders, they are the building blocks of the EU’s future internal market for hydrogen.
They demonstrate that we are building a clean hydrogen ecosystem that will cross borders, instead of just focusing on subsidies for hydrogen production.
This comes on top of the funding available under the Innovation Fund.
The Fund will dedicate €2.3 million to clean hydrogen decarbonisation projects.
In addition, still within the Innovation Fund, we have succeeded in reserving €700 million to clean energy technologies including electrolysers.
Europe’s emissions trading system, the gold standard for greenhouse gas emissions abatement, has made this possible.
Last, the contracts for difference schemes for hydrogen that the European Commission is designing will further increase the business case for hydrogen in Europe.
The first auctions are scheduled to take place in the third quarter of next year.
These auctions will add a significant boost to hydrogen production and demonstrate to industry and stakeholders that we are serious about making clean hydrogen affordable and accessible in large quantities.
All in all, the Commission and the Clean Hydrogen Alliance are working around the clock to strengthen the business case for clean hydrogen in Europe.
On the production side, we are identifying barriers to the ramp-up of the clean hydrogen economy. We are also incentivising European and international standards-making bodies to accelerate their work, and we are focusing on clean technologies scale up.
On the supply side, through our alliance project pipeline we are seeing more and more projects on clean hydrogen application in industry, transport and construction.
And we are strengthening our financial support to accompany the creation of a clean hydrogen economy in the EU.
I strongly believe we have a business case for clean hydrogen here in the EU, and thanks to the alliance and its members we are making it a reality!
- Publication date
- 6 December 2022
- Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs