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Europe’s relationship with hydrogen will need to change over time

Europe’s history with oil offers clues to how its affair with hydrogen may develop

 

Looking back, almost any development in our private and business lives looks like a logical chain of events that we could have anticipated earlier. What if we turn this around and look at trends to explain the present and anticipate the future?

For several years, green hydrogen produced from water using green electricity with the help of electrolysers, has been seen as a long-term option to tackle almost all difficult to decarbonise areas. This specifically relates to applications that technically are very challenging to be addressed by other options, like heavy transportation, high temperature applications, seasonal storage or chemical feedstock, where decarbonised gas or its derivatives facilitate solutions.

However so far, any application has lacked financial viability compared to fossil fuel-based alternatives. But there is always the hope that prices could come down. In the old days, you would sit and wait to see if, and when, green electricity and electrolysers became cheap enough for green hydrogen to compete with fossil alternatives.

Now, green hydrogen is mentioned everywhere. Did green electricity substantially drop in price? Did electrolysers get a lot cheaper? Did oil or gas get more expensive? It was none of that.

 

HUNGER FOR A “COMPLETE” SUSTAINABLE PICTURE

The push on the topic that has lingered for some years, happened with the developments around Greta Thunberg’s Fridays for Future initiative and the success of green parties in the EU parliament elections in 2019. Green alternatives, particularly more innovative ones, gained support. The covid-19 pandemic has accelerated the sustainability trend with a green element being central to the EUs and national recovery programmes.

At the same time, there is now a big appetite in politics for solutions that do not only address a partial problem. It has become increasingly obvious that each part of the energy transition is interrelated. This is a change from ten years ago where—in the Brussels “energy arena”—solutions for parts of the problem were well received.

To win support, any solution needs to prove it fits into all other developments, forming a “complete” picture. The versatility of green hydrogen is very alluring in that sense, it provides answers to a lot of the different challenges. While it has as many obstacles that other new technologies or infrastructure has, there is a determination and confidence among lawmakers and within the sector to overcome these barriers. Its envisaged benefits outweigh the difficulties.

 

MIND THE GAP

Beyond the view on specific applications, a macroeconomic view also kicked in: it seems likely that we will have more demand for renewable energy in the future than we can produce in Europe.

Such a gap needs to be closed by international imports of renewable energy. The most credible way to do this is by producing hydrogen and its derivatives in areas where renewable electricity can be produced at the lowest possible price and shipping it to Europe.

 

RESILIENCE SHAPING THE COURSE

If sustainability is the driver, resilience will influence the direction. To be resilient towards future developments, the new value-chains need to avoid being too dependent on hydrogen. A future energy system needs as few dependencies as possible.

We will therefore probably see trade agreements with many different countries. Meanwhile, Europe needs to limit these dependencies by continuing to strategically develop other solutions like energy efficiency, electrification with renewable energy or district heating/cooling.

This leads us to the policies of governments that will strive to secure sustainability and resilience at acceptable costs. At the same time, companies will establish their own strategies on how they can address these developments for the benefit of their clients, playing on their strengths or boldly going into new or adjacent areas. This is where innovation around hydrogen will take place.

This points to a future picture of international hydrogen trade produced elsewhere on the globe and used in Europe. Europe should build and learn from the current pilot hydrogen projects, but we must also prepare for a future where production of green hydrogen will be outside Europe, with a variety of solutions for distribution and application in Europe.

This would not be a completely new thing. The first commercial drilling for oil, the fuel that powered the victory march of the automobile, took place in July 1858 in Germany. In the end, Germany became famous for its highways and cars, not for its oil.


Do you have a thoughtful response to the opinion expressed here? Do you have an opinion regarding an aspect of the global energy transition you would like to share with other FORESIGHT readers? If so, please send a short pitch of 200 words and a sentence explaining why you are the right person to deliver this opinion to opinion@foresightdk.com.

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