Berlin/Brussels, Monday 13 February 2023: In past decades, the EU has focused on deploying renewable electricity sources and pushing for the electrification of energy-using sectors. Some industry sectors are unable to rely entirely on renewable electricity sources.
This is why the EU is now focusing on clean hydrogen as a key element of its climate strategy to bridge the gap between the partial electrification of the economy and its complete decarbonisation. Clean hydrogen would allow the decarbonisation of many industrial sectors, by replacing the grey hydrogen currently used, or by replacing fossil fuels used in industries that cannot, for economic or technical reasons, electrify their production processes.
The EU will not be capable to produce domestically the hydrogen that it will need (both in terms of physical capacity and cost). It will need to import a significant share of its needs of green hydrogen in the medium- to long-term. Because of the availability of resources (mostly solar and wind power) in third countries, imported hydrogen and its derivates are also more competitive. According to the REPowerEU targets for hydrogen, the European Commission aims to import 10 million tons of renewable hydrogen by 2030. What is missing so far is a coherent European hydrogen import strategy that bundles interests of member states and addresses the funding gaps between the production costs and the offtakers’ willingness to pay as well as investment uncertainties in the absence of a liquid market.
During the State of the Union, European Commission President Ursula von der Leyen announced the intention to establish a European Hydrogen Bank, to be delivered by Q3 2023 as Europe’s flagship initiative to achieve its ambitious hydrogen goals. The European Commission currently intends to establish a two-pillar approach to the European Hydrogen Bank. One pillar should incentivise domestic EU-wide production of hydrogen, and the other pillar focuses on securing sufficient and secure imports of hydrogen or its derivatives.
As the initially devoted 3 € bn are relatively low, the support of the European Hydrogen Bank should provide effective, market-oriented incentives to maximize the volumes of green hydrogen and its derivatives. Our newest report “Design Options for a European Hydrogen Bank”, in cooperation with Konrad-Adenauer-Stiftung and Guidehouse, provides an in-depth analysis of, and insights on, the key design choices for the European Hydrogen Bank.
Download our Report.