EU will miss its ‘green’ hydrogen targets, executives say

Energy executives have said the EU’s targets for renewable hydrogen, a zero-carbon fuel deemed critical for heavy industries to emit fewer greenhouse gases, will not be achieved because of the bloc’s complex regulations.

The targets, set by the European Commission last year, aim for 10mn tonnes of “green” hydrogen to be produced in the EU by 2030 and for another 10mn tonnes to be imported. Brussels sees hydrogen as essential to the bloc’s efforts to meet its goal of cutting greenhouse gas emissions by 55 per cent by 2030 and to wean itself off Russian fossil fuel imports.

But executives gathered at the World Hydrogen Summit in Rotterdam poured cold water on the idea that the bloc would come close to achieving those goals.

Maarten Wetselaar, chief executive of the Spanish energy company Cepsa, told the Financial Times that the EU was expecting “phenomenal amounts” of hydrogen but achieving that “in the real world” would only happen if national governments rapidly sped up permitting processes and allowed “subsidies to flow”.

Daryl Wilson, executive director of the Hydrogen Council, said the bloc would need to “significantly accelerate if there’s any chance of coming close to [the EU’s target]”.

Another executive from a multinational energy major said. “The reality is we are very far off those targets. Maybe half but not even.”

Renewable hydrogen use is in its infancy but will be crucial for steelmakers and fertiliser producers who require huge amounts of energy to meet net zero goals. The fuel is created by splitting hydrogen molecules from oxygen molecules in water through the electrolysis process.

Frans Timmermans, the EU’s climate commissioner, told journalists on Thursday that he expected the bloc to go “way beyond” the goals set for 2030. “Right now there is enough confidence both on the side of the public authorities but also inside the industry that the regulatory framework we’re delivering is going to help them get to where we need to get.”

Despite the push to subsidise and speed up hydrogen projects, executives say final investment decisions are being held up both by the lack of regulatory clarity and uncertain demand.

“There’s too much complexity and uncertainty,” Wilson said. “Companies can’t make final investment decisions because they don’t know what environment they’re working with.”

Part of the uncertainty has stemmed from the EU only publishing a definition for green hydrogen in March after a two year delay because of technical disagreements over how to prevent hydrogen sucking up renewable energy that could otherwise go straight into the electricity grid.

Brussels will run its first auction for green hydrogen production in the autumn with €800mn of subsidies on offer.

In the Netherlands, just one out of 25 companies with plans to develop hydrogen infrastructure in the Port of Rotterdam have started the construction phase: Shell is building a 200MW electrolyser due to be finished in 2025.

Allard Castelein, chief executive of the Port of Rotterdam, said he had told the commission that the port could deliver almost half of the EU’s import target but that the domestic production goals would be “more challenging”.

Competition has also been heightened by the generous incentives on offer through the US’s $369bn Inflation Reduction Act, which reduces costs by allowing companies to claim $3 in tax credits per kg of green hydrogen produced.