Yahoo Finance Auditors Call EU Hydrogen Production Goals ‘Overly Ambitious’
A group that assesses the effectiveness of actions by the European Union (EU), including how energy initiatives impact the economies of EU member states, said the current goals for EU hydrogen production are "overly ambitious" and not realistic. The European Court of Auditors (ECA) in a report published July 16 said targets to produce as much as 10 million tonnes of renewable hydrogen by 2030, and import another 10 million tonnes, are likely based more on “political will” rather than an actual market analysis. The EU established its current goals as part of the group’s plan to produce more of its own fuel for the energy sector, and eventually end a reliance on imports of fuel from Russia. “The EU’s industrial policy on renewable hydrogen needs a reality check,” said Stef Blok, the ECA Member in charge of the audit. “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.”
Implications for European Industries
The report said that renewable hydrogen, also known as “green” hydrogen and produced using renewable energy resources, “carries significant implications for the future of key EU industries, as it can help to decarbonize especially hard-to-electrify sectors such as steel production, petrochemicals, cement, and fertilizers. It can also help the EU to meet its 2050 climate goals of zero carbon emissions and further reduce the EU’s reliance on Russian fossil fuels.” The auditors said that investment in hydrogen production should be more targeted, rather than spread among several programs. The group also said the EU “does not have a full overview of needs or of the public funding available.” Funding for hydrogen production from the EU is estimated by the auditors at 18.8 billion euros ($20.5 billion) for the 2021-2027 period. The report noted, though, that funds are “scattered between several programs, thus making it difficult for companies to determine the type of funding best suited for a given project. The bulk of EU funding is used by those member states with a high share of hard-to-decarbonize industry, and which are also more advanced in terms of planned projects, i.e. Germany, Spain, France, and the Netherlands. However, there is still no guarantee that the EU’s hydrogen production potential can be fully harnessed, or that public funding will allow the EU to transport green hydrogen across the bloc from countries with good production potential to those with high industrial demand.”
Skeptical About Targets
The auditors also said they found that another target set by EU members, calling for installation of at least 40 GW of renewable hydrogen electrolyzers by 2030, was actually an idea suggested by a lobbying group for the hydrogen industry. The ECA said it found that despite the money spent so far, projects adding less than 5 GW of production capacity by 2030 are in an advanced stage. It noted, though, that projects that could provide about 50 GW of capacity are currently being assessed. “The auditors call on the [European] Commission to update its hydrogen strategy, based on a careful assessment of three important areas: how to calibrate market incentives for renewable hydrogen production and use; how to prioritize scarce EU funding and which parts of the value chain to focus on; and which industries the EU wants to keep and at what price, given the geopolitical implications of EU production compared to imports from non-EU countries,” the report said. The report said hydrogen accounted for less than 2% of European energy consumption in 2022, with most of that demand from refinery operations. The ECA said it does not expect demand will reach even 10 million tonnes by 2030, or less than half of what the European Commission has suggested. —Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).
