VINACHEM

Calling for a “reality check,” the European Union's auditors on Wednesday faulted Brussels for being “overly ambitious” in bold but flawed plans for much-hyped “green hydrogen,” a complex and expensive process for making low-carbon hydrogen fuel using renewable energy and water.

Due to various hurdles, the EU is likely to fall far short of goals it laid out in 2020 to produce and import up to 20 million tons of green hydrogen a year by 2030, the European Court of Auditors found in its analysis.

Instead, the auditors estimated that demand for clean hydrogen may not even reach half of the 20 million ton goal envisioned by the European Commission, the EU's executive branch, by 2030.

“The EU’s industrial policy on renewable hydrogen needs a reality check,” said Stef Blok, a Court of Auditors member who oversaw the 106-page report, in a news briefing. “The EU should decide on the strategic way forward towards decarbonization without impairing the competitive situation of key EU industries or creating new strategic dependencies.”

In laying out its targets, the EU projected 10 million tons of renewable hydrogen could be produced within the bloc each year and that another 10 million tons could be imported.

Those targets were developed in 2020 and 2021 amid the EU's grand plans to make Europe the first “net-zero” continent by 2050 by enacting its Green Deal. The EU touted green hydrogen as part of an environmental revolution that would replace fossil fuels used by heavy industry, principally steel, cement, chemical and fertilizer makers.

But Wednesday's report was a fresh reminder of the difficulties the EU is facing in carrying out its Green Deal agenda. Since 2021, the bloc's green policies have run up against widespread protests by farmers, political and societal backlash over the plan's costs and harsh economic and geopolitical headwinds stemming from the coronavirus pandemic and war in Ukraine.

Auditors found a mixed picture of success after the EU allocated 18.8 billion euros, or roughly $20.5 billion, to hydrogen-related projects between 2021 and 2027.

They credited the EU with developing a satisfactory legal framework for its hydrogen strategy, but found the union failed to create the conditions for a robust market in renewable hydrogen and said the EU needs to make better use of scarce funds to back worthwhile projects and get a better grip on what it will take to make green hydrogen an effective fossil fuel alternative.

Obtaining hydrogen by through electrolysis — where electrical currents split water into oxygen and hydrogen — is a promising technology for reducing carbon emissions because it can be done by using renewable energy. But natural gas remains the most affordable way to produce hydrogen. Green hydrogen currently makes up only 0.2 % of the EU's hydrogen production.

Ben McWilliams, an energy and climate expert at the Brussels-based economic think tank Bruegel, said the audit's findings were not a surprise.

“The EU’s hydrogen targets have long been criticized for being overly ambitious and so far, detached from funding reality,” he said in an email.

McWilliams said the EU's investments in green hydrogen have lagged. Industries using hydrogen made with fossil fuels are required by EU rules to use more renewable hydrogen by 2030.

To this end, the EU awarded 720 million euros ($787 million) in April 2024 in subsidies to bolster renewable hydrogen projects, McWilliams said. All the funds went to projects in the Nordic region and the Iberian Peninsula, places leading in the renewable energy race.

The subsidies were handed out at the inaugural auction held by the newly developed European Hydrogen Bank, a financing instrument run by the European Commission to boost the fledgling sector.

Still, it doesn't appear green hydrogen will be taking off any time soon. Bruegel estimated the European Hydrogen Bank's 3 billion euro ($3.3 billion) endowment would translate to only 0.7 million tons of renewable energy production by 2030.

Regardless, McWilliams said hydrogen remains one of the most promising options for heavy industries that “urgently need to decarbonize.”

“Clean hydrogen can certainly contribute to emission reductions,” he said.

He said the development of green hydrogen in both the EU and the United States has been slow.

Environmentalists, meanwhile, worry the EU's hydrogen ambitions will end up extending the use of fossil fuels.

Environmental groups are decrying EU funds going toward new pipelines to carry hydrogen, arguing they may never be used for carrying renewable hydrogen and instead end up being used for the long term to transport gas produced with fossil fuels.

In March, Climate Action Network-Europe warned a slew of new hydrogen-ready pipelines “builds the cornerstones of a fossil hydrogen backbone and provides the fossil fuel industry with yet another lifeline.”

“Hydrogen has been seen as the silver bullet for the EU’s energy transition, largely based on unfounded numbers,” the group said.

The group argued the EU should bolster hydrogen use only in economic sectors where it makes sense, such as in heavy industry, and not for other sectors such as residences.

“Gas distribution system operators, including local utilities associations, have been pushing strongly for local distribution of hydrogen to homes,” it said. “This risks massively increasing consumers’ energy costs if they fall victim to the false promises of the hydrogen industry.”

In a statement, the European Commission said it has “put in place a comprehensive and integrated regulatory framework” to develop a hydrogen market.

In tandem, it said it has provided “funding and investment” to build up the market, adding that financing from the private sector and EU member states also are needed.

Across the EU, it said there are 254 renewable hydrogen projects with 170 in operation and 84 under construction.

“The European hydrogen market is gradually taking shape with industry making significant investments in new projects,” the commission said. “We now have to accelerate the deployment and uptake of renewable and low-carbon hydrogen in Europe and further develop this emerging market.”  – Source: courthousenews.com –