European auditors question EU’s hydrogen ambitions

The European Court of Auditors considers the European Union's 2030 targets for renewable hydrogen to be too ambitious, and calls for a strategic readjustment.
Réajustement stratégique hydrogène renouvelable

Partagez:

The European Union has had mixed success in laying the foundations for a renewable hydrogen market, according to a recent report by the European Court of Auditors (ECA). Although the European Commission has taken several positive steps, challenges remain along the hydrogen value chain. The auditors estimate that the EU is unlikely to meet its 2030 targets for the production and import of renewable hydrogen. They call for a readjustment to ensure that these objectives are realistic, and that strategic choices do not compromise the competitiveness of key industries or create new dependencies.
Renewable, or “green”, hydrogen is of significant importance to the future of key EU industries, as it can help decarbonize hard-to-electrify sectors such as steel production, petrochemicals, cement and fertilizers. It can also help meet the EU’s 2050 climate targets of zero carbon emissions, and further reduce the EU’s dependence on Russian fossil fuels.

Ambitious goals and persistent challenges

The Commission has set very ambitious targets for the production and import of renewable hydrogen: 10 million tonnes each by 2030. These objectives, motivated more by political will than by robust analysis, have got off to a rocky start. The divergent ambitions of member states were not always aligned with these objectives, and coordination between member states and industry failed to ensure that all parties were moving in the same direction.
On the other hand, the auditors recognize the Commission’s efforts to propose most legislative acts within a short timeframe. The legal framework is almost complete, which is essential for establishing a new market. However, defining the rules for renewable hydrogen has taken time, delaying many investment decisions. Project developers are also reluctant to invest, as supply depends on demand and vice versa.

Financial and Strategic Challenges

Creating a hydrogen industry in the EU requires massive public and private investment, but the Commission does not have a complete picture of what is needed or what public funding is available. EU funding, estimated by the auditors at €18.8 billion for the period 2021-2027, is scattered across several programs, making it difficult for companies to determine which type of funding is best suited to a given project. The most advanced member states in terms of planned projects, such as Germany, Spain, France and the Netherlands, use the bulk of EU funds.
The auditors call on the Commission to update its hydrogen strategy, based on a careful assessment of three important areas: how to calibrate market incentives for the production and use of renewable hydrogen; how to prioritize scarce EU funding and which parts of the value chain to focus on; and which industries the EU wants to retain and at what price, given the geopolitical implications of EU production versus non-EU imports.
The production of renewable hydrogen, using either renewable electricity or biomass, is one way of making the EU’s heavy industries more climate-friendly. However, it comes with its own challenges, not least the cost of production, and the need for renewable electricity and water. In 2022, hydrogen will account for less than 2% of Europe’s energy consumption, with most of the demand coming from refineries. According to the report, demand is unlikely to reach 10 million tonnes by 2030, let alone the 20 million tonnes initially envisaged by the Commission.
The future outlook for the hydrogen industry in Europe is uncertain, and requires a strategic readjustment to ensure sustainable, competitive growth. The EU needs to assess its objectives pragmatically, to avoid compromising its key industries or creating new strategic dependencies.

The European Commission grants €3.5mn to support preparatory work for a Franco-German cross-border network aimed at transporting hydrogen between the Grand Est region and Baden-Württemberg starting in 2029.
French company McPhy Energy awaits a court decision regarding offers submitted during its judicial reorganization, paving the way for probable liquidation and potential delisting of its shares.
The majority-Indigenous-owned Canadian manufacturer HyVera Distributed Energy is introducing an eCat pellet that instantly produces ultra-pure green hydrogen without external electricity and is counting on two pilot plants to simplify industrial supply.
Underground hydrogen storage, essential to support its growth, continues to face significantly higher costs than natural gas storage, along with major technical challenges hindering its competitiveness against conventional energies.
Singapore-based hydrogen specialist Hydrexia seals a protocol with Indonesian gas giant Samator to deploy purification, transport and storage of hydrogen, betting on rapidly growing local demand and export outlets to the Asia-Pacific region.
Cadiz Inc. signs a memorandum of understanding with British company Hoku Energy for a large-scale energy project including green hydrogen, solar power, and digital infrastructure in the Californian desert, projecting annual revenues of up to $10mn.
BP indefinitely halts its blue hydrogen project at the Whiting refinery in Indiana, raising questions about the future of federal funding and the impact on regional plans for a decarbonized hydrogen sector in the United States.
The Polish energy group ORLEN receives a non-repayable grant of €382 million from the National Recovery Plan to finance its renewable and low-emission hydrogen production initiatives.
Georgia Power and Mitsubishi Power announce successful completion of an unprecedented test incorporating 50% hydrogen into an advanced gas turbine, reducing CO2 emissions by 22% compared to natural gas alone.
Neoenergia has begun construction of one of Brazil's first green hydrogen plants, aimed at supplying heavy and light vehicles, with an investment exceeding 30 million Brazilian reais ($5.99mn).
The SA-H2 fund, supported by international partnerships and local institutional backing, mobilises 37 million USD to develop export-oriented green hydrogen from South Africa, with an initial concrete project announced.
Turbotech reports successful combustion testing of a hydrogen turboprop, developed through digital simulation with Ansys, marking an industrial milestone in light aircraft using alternative fuel.
France Hydrogène responds to the Cour des Comptes report published on June 5, criticising an incomplete reading of updated targets and the economic impacts of decarbonised hydrogen development.
The Belfort Commercial Court has opened a judicial reorganisation procedure for McPhy, while a renewed call for tenders for its asset sale is now set to close on 13 June.
Plug Power CFO Paul Middleton acquired 650,000 shares on the market, affirming his support for the long-term strategy of the hydrogen-focused company.
The Canadian government is funding an initiative to support 40 SMEs in British Columbia’s hydrogen sector, aiming to increase foreign investment and expand international market share.
Developer CWP Global has paused its $40 billion AMAN project in Mauritania due to a lack of buyers for green ammonia despite favourable local conditions.
A study reveals that the profitability of African green hydrogen exports to the European Union depends on political support from Europe, despite the abundance of ongoing projects on the continent.
Plug Power expands its partnership with Allied Green through a new 2 GW electrolyzer deal tied to a $5.5bn chemical plant in Uzbekistan.
Stargate Hydrogen launches 140 MW factory in Estonia with modular expansion model amid cautious hydrogen investment climate.