Europe’s clean hydrogen industry has delivered a stark message to EU policymakers: We need much more support. And we need it now.
That was the main thrust of a punchy communique issued by industry association Hydrogen Europe at the close of the EU Hydrogen Week event in early October.
It calls for an “urgent” update of the EU’s hydrogen strategy to reflect the “current realities” facing the industry.
Hydrogen Europe made a series of bold demands, ranging from increased public funding, to government intervention to create demand, better enforcement of regulation, simplification of rules and the “urgent” rollout of infrastructure.
“What is clear from this week is that the sector is united around the fact that urgent action is needed from the EU to ensure all our hard work and investment is rewarded,” said Jorgo Chatzimarkakis, CEO of Hydrogen Europe.
The EU should set up an industrial decarbonisation bank and prolong the role of the existing European hydrogen bank, Hydrogen Europe said. The reach of the European Investment Bank should also be expanded to help hydrogen.
Also, revenues from the auctioning of EU ETS CO₂ allowances should be used to deploy hydrogen and derivatives, while governments should commit funding to an eSAF pilot tender.
That is quite a wish list from an industry that is already in line to receive significant funding at both the EU and member-state level. The European Hydrogen Bank’s budget is running at around €1b/yr ($1.16b/yr). However, its role has been questioned by some, as several of the projects to which it had awarded subsidies have decided not to proceed.
Separately, many hydrogen projects have been exempt from EU state aid rules via the Important Projects of Common European Interest process, allowing national governments to grant them significant capital grants.
Law enforcement
Hydrogen Europe also called for new tools to help enforce the implementation of key EU legislation, such as the Renewable Energy Directive and the Alternative Fuels Infrastructure Regulation. “Incomplete transposition and uneven implementation of key legislations… slow down the clean energy transition,” it said.
Other rules around clean hydrogen in the EU are “overly strict and needlessly complex”, and should be simplified, Hydrogen Europe said. Changes to the rules should, however, not harm first-movers in the sector, and appropriate protections should be put in place.
In terms of infrastructure, Europe must “urgently roll out and scale up” the required infrastructure to connect producers and end-users and to enable the production, storage, and transport of hydrogen and its derivatives throughout the continent.
Many of the hydrogen sector’s challenges are rooted in a lack of demand. Hydrogen Europe called for government intervention on this front too. Lead markets, where government’s step in to actively create demand for clean hydrogen, should come into play. “Lead markets should provide predictable demand for clean technologies and basic products such as green steel or green fertilisers, notably through procurement rules,” Hydrogen Europe said. “Doing so will create the demand needed to increase the supply of renewable and low-carbon hydrogen to such quantities as to contribute to Europe’s energy resilience.”
Renewable timelines
Hydrogen Europe’s demands must have left even the EU’s strongest clean hydrogen advocates wondering just how much support and intervention the industry is going to need.
Parallels with the growth trajectory of wind and solar, and the levels of state supported given to these sectors, will inevitably be drawn.
However, the timelines are very different. Renewables have been building momentum for decades, feeding into a ready-made power market where demand is now outpacing supply on the back of electrification and the rise of datacentres.
By contrast, clean hydrogen as a serious industrial decarbonisation option has been around for less than a decade, some would argue only about five years.
The industry is chasing unrealistic targets for 2030 through to 2050, set by policymakers eager to show they are on track to decarbonise their economies. Hydrogen Europe and, indeed, the EU also see hydrogen playing a role in Europe’s energy resilience, in areas such as storage.
Compressing the creation of an entire supply chain into a decade or two will arguably require a significant front-loading of subsidies and policy support, probably above and beyond what is currently on offer. “The EU Commission must take heed,” said Chatzimarkakis.
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