Leading the way
More financing needed if Europe wants to stay in the game
The Renewable Hydrogen Coalition recently sat down with Ann Mettler, Vice-President, Europe, at Breakthrough Energy that aims to scale the critical technologies that the world needs to reach net zero emissions. In a resounding call to action, she stressed the need for a bold new vision and to secure additional financing for the European Hydrogen Bank – so that Europe can stay in the global race for renewable hydrogen.
Watch the fireside chat below.
With negotiations on the Fit-for-55 Package drawing to a close, Europe has made big strides in setting groundbreaking policies to scale renewable hydrogen. But despite this, renewable hydrogen still faces a key hurdle – the cost compared to existing technologies.
To overcome this and to accelerate the uptake of renewable hydrogen, Europe needs to bridge the cost gap. In response, the European Commission has announced the creation of the European Hydrogen Bank, a major policy innovation.
Ann Mettler welcomed this first-of-its-kind European-wide support instrument – aimed at scaling up this new emerging clean technology. As the design of the European Hydrogen Bank is being finalised, she stressed the crucial need for it to have a tangible impact. The Bank’s primary focus should be to accelerate the deployment of renewable hydrogen projects. While Europe boasts an impressive pipeline of announced projects, only a handful have reached final investment decision. The bank’s true success will be measured by its ability to help bring these projects to fruition. So while it is important to ensure a level playing field among Member States, Mettler also insisted that the most mature projects – that have likely already applied for national aid – should not be excluded from applying for support.
To maintain its technological edge and become a global leader, Europe cannot afford to only let the market play out. Instead, it should take proactive measures to support and nurture promising companies within its borders.
In this ambitious endeavour, simplicity will be paramount. This means setting simple pre-qualification criteria that are flexible enough to allow industry to cope with changing economic conditions. For instance, bringing in new requirements on renewable electricity sourcing for renewable hydrogen production along with existing rules set out in the – now famous – Delegated Act on renewable hydrogen production will only add unnecessary complexity and impede developer flexibility in building compelling business cases.
A positive step toward simplicity is the proposal to use the bank’s EU Auction Platform “as a service” by EU Member States. By embracing this coordinated approach, national governments can avoid 27 separate renewable hydrogen support schemes that may still prove long to emerge. Fostering a cohesive approach will boost European production.
But for Europe to compete with global players such as China and the United States and attract crucial investments, the European Hydrogen Bank needs to be adequately funded. As it stands this is not the case stated Ann Mettler, adding that securing leadership in renewable hydrogen is now a global race. To match the ambition of the Inflation Reduction Act, the European Hydrogen Bank’s budget must be boosted significantly. Investors need immediate visibility on the bank’s budget and timing of auctions up to 2030.
Applying the same incentive for renewable hydrogen as the Inflation Reduction Act, the Renewable Hydrogen Coalition estimates that an annual investment of €12 billion is needed to decarbonise at least half of Europe’s industrial hydrogen demand. This is pocket change, said Ann Mettler, compared to the €600 billion spent on importing fossil fuels since the beginning of the war in Ukraine. Frontloading the Innovation Fund in the next two years and allocating new structural funds should be seriously considered.
The stakes are high for Europe. This is not just a question of hitting its renewable hydrogen targets by 2030. As Ann Mettler pointed out, it is an industrial competitiveness imperative, an energy security imperative, and a climate change imperative.