Leading the way
Ambitious binding renewable hydrogen targets in priority sectors are key for Europe to become global leader
Ambitious renewable hydrogen targets will provide the impetus and confidence the market needs to take off. Now, it’s up to Member States and the Parliament to make it happen.
Ambitious binding renewable hydrogen targets in priority sectors are key for Europe to become global leader
By 2030 half of all hydrogen consumed by European industry as energy source or feedstock will have to be renewable hydrogen. The transport sector will also have to use 2,6% of renewable fuels of non-biological origin, so called e-fuels. These are the ambitious targets the European Commission has proposed for the fast and large-scale deployment of renewable hydrogen in hard-to-electrify sectors as part of the ongoing revision of the Renewable Energy Directive (RED). This game-changing proposal will transform the European hydrogen market which has been massively relying on polluting fossil fuel hydrogen and comes as part of the EU’s efforts to become the first climate neutral continent. Crucially, such highly ambitious targets will provide the impetus and confidence the market needs to take off.
Starting with the sectors that need it the most such as steel making, refineries or ammonia plants testifies to the bloc’s pragmatic and focused approached to fighting climate change, as well as its understanding that we need targeted policies to decarbonise these sectors that cannot be directly electrified with renewables.
Ambitious binding renewable hydrogen targets in priority sectors will secure the demand for renewable hydrogen, accelerating private investment and support upstream value chain development and the associated job creation. This is particularly true with the proposed renewable hydrogen target for industry. Recent studies show that there is about 540 TWh of potential demand for renewable hydrogen that could be unlocked in the near-term including in sectors such as ammonia production and steel for buildings, infrastructure and transport which are currently produced with fossil-based hydrogen.
As EU Member States and the European Parliament prepare their positions to enter inter-institutional negotiations, we must bear in mind the importance of prioritising renewable hydrogen uses in those sectors that are already using hydrogen or have no decarbonisation alternative. The focused approach proposed by the European Commission ensures achievable demand in this early phase and avoids creating demand in sectors that would otherwise not exist and risk being fed with polluting hydrogen.
Below, 7 MEPs stress the importance of why we need the most ambitious renewable hydrogen for industry by 2030.
But how does Europe turn its ambition into reality and foster a cost-competitive renewable hydrogen market?
Solely relying on market pull instruments isn’t enough. Industrial and energy frontrunners are ready to invest but need a clear legislative framework that de-risks projects and brings down the ‘green premium’ cost of renewable hydrogen. The proposed targets will not only reduce the capital expenditure (CAPEX) by securing mass deployment of renewable hydrogen technologies, they will also be the starting point for Member States to streamline dedicated national support instruments for renewable hydrogen until it reaches cost parity with alternatives. Part of these schemes should focus on reducing operating expenses (OPEX) of renewable hydrogen projects (mainly electricity). This will ensure off takers can invest in a cost-effective way.
What’s more is that such targets will enable these sectors to secure first-mover advantage in Europe, setting the course for the next industrial revolution with zero-emission manufacturing and securing leadership positions in the markets of the future. This will disrupt the status-quo on a global scale and set the course for the greening of key products such as fertilisers in agriculture or steel in cars, trucks and other goods.
Seeing this tremendous opportunity, international competitors are catching up fast. These targets will also be crucial to bolster Europe’s technological edge through innovation and security of supply in electrolyser technologies and applications.
Having Europe act now with ambition is pivotal to turn a unique opportunity into a true success story of the European Green Deal. This will not only help Europe become the global leader in renewable hydrogen and achieve the green transition of its economy, it will also strengthen its competitiveness, energy independence and resilience and create jobs for the generations to come.
