The European Union has endorsed the Paris Agreement and has committed to climate neutrality by 2050. As hydrogen produced through electrolysis from a renewable energy source is a clean alternative to fossil fuels and can be used for various purposes, including feedstock for industrial processes, it can make an important contribution to this economic and energy transition.
However, hydrogen represents only a small part of the European energy mix and renewable hydrogen is not yet competitive. Hence, its use should be concentrated on those sectors that operate close to the competitiveness of hydrogen or that currently cannot be decarbonised by other means.
For me, it is clear that the EU needs a strategy that aims to develop a sustainable hydrogen economy and to make renewable hydrogen competitive as quickly as possible. The strategy needs to cover the whole hydrogen value chain, including supply and demand sectors, and should be coordinated with national efforts.
The European Commission has taken a first step in this direction, by adopting “A hydrogen strategy for a climate-neutral Europe.” The strategy should be based on renewable hydrogen, as only this type of production is sustainable in the long term.
To ramp up renewable hydrogen production fast enough to achieve our climate goals, low-carbon hydrogen can play a transitional role. The Commission should assess how much low-carbon hydrogen is needed and for how long.
“To scale up the production of renewable hydrogen and establish a functioning and predictable market for it, a comprehensive regulatory framework for hydrogen needs to be put in place”
I am also convinced that fossil-based hydrogen must be phased out as early as possible. Hydrogen is not a unique solution to decarbonisation; instead, direct electrification should be considered as the preferable option wherever possible.
In my opinion, we need a single European classification for hydrogen, and I support the Commission’s classification based on the carbon content, stepping away from the colour-coded approach. We also need to be able to clearly identify renewable hydrogen.
For this, I suggest developing of standards and a European certification and labelling system based on the lifecycle emissions of hydrogen production. We also need guarantees of origin for hydrogen production - these elements are important for consumers to be able to invest consciously in renewable options. To scale up the production of renewable hydrogen and establish a functioning and predictable market for it, a comprehensive regulatory framework for hydrogen needs to be put in place.
The EU gas market regulatory framework, together with the Clean Energy Package, could serve as blueprints. The EU also needs to create additional renewable energy to be able to produce sufficient renewable hydrogen. This goes hand-in-hand with providing the necessary infrastructure for renewable energy.
The Commission and Member States should ensure that the infrastructure required is provided as quickly as possible. In addition, as renewable electricity is responsible for a significant part of renewable hydrogen production costs, it is important to reduce costs by abolishing taxes and levies on renewables. We need to develop infrastructure, demand and production facilities from the outset.
The EU should incentivise infrastructure development. I support the Commission’s approach to start planning the medium range and backbone transmission infrastructure from the beginning to develop a fully-fledged internal hydrogen market as soon as possible. To optimise cost efficiency, the existing gas infrastructure could be retrofitted for pure hydrogen use.
This possibility should be assessed at European and national levels. Renewable hydrogen needs to become an attractive business case for hard-to-abate sectors - this would enable the EU to prevent carbon lock-ins and to achieve decarbonisation by 2050.
For this, we need to put in place targeted demand-side policies such as quotas for the use of renewable hydrogen in the focus sectors. Innovative measures such as carbon contracts for difference should also be taken into account. The Commission needs to detail, however, how such measures could be financed and implemented.
Development and innovation along the whole value chain of renewable hydrogen is of the utmost importance. We need demonstration projects of industrial scale applications to be able to successfully implement hydrogen solutions in demand sectors.
In order to meet the high investment, innovation, research and development needs of establishing a renewable hydrogen economy, European programmes can play an important role. Next- GenerationEU, Horizon Europe, the Connecting Europe Facility, InvestEU and the ETS Innovation Fund can all help in financing renewable hydrogen projects and attract additional public and private investments The European Parliament will continue to push to provide these programmes with sufficient financial resources in the annual budget cycle.
“Renewable hydrogen needs to become an attractive business case for hard-to-abate sectors - this would enable the EU to prevent carbon lock-ins and to achieve decarbonisation by 2050”
I would also like to underline the importance of an integrated energy system for promoting renewable energy. The gas, electricity and hydrogen grids should be coordinated. I, therefore, welcome the alignment of the hydrogen and the energy system integration strategies.
Hydrogen can also play a key role as energy storage to balance intermittent renewable energy supply and demand. This solution is not yet competitive, however, and the EU needs further investments here.
I now look forward to the Commission’s legislative proposals and revisions to relevant existing legislation to set the regulatory framework for a competitive and renewable hydrogen market. I believe that the European Parliament’s own initiative report on the European hydrogen strategy can provide valuable input.