Discussion Paper Launch The role of hydrogen in a future, low-carbon, and secure European energy system

Hydrogen is considered an important component of the decarbonisation of the European economy. Indeed, in the REPowerEU Plan published in May 2022, the European Commission set ambitious targets for the demand and production of green hydrogen by 2030. The short time frame to implement REPowerEU’s targets raises multiple concerns, as it appears to shift attention away from electrification as the most efficient way to decarbonise and ignore scarcity issues within supply chains, space, and infrastructure.

In a discussion paper written in the context of the PAC project, authors Antonella Battaglini and Andrzej Ceglarz argue that the EU’s 2030 hydrogen targets are exceeding expected demand and are dependent on a very fast and unprecedented increase of renewable capacity, grid connections, and electrolysers. The prioritisation of hydrogen production over direct electrification means Europe will have to use significant amounts of electricity based on wind and solar (578 TWh/year) in an inefficient way, which will generate energy loses and will not serve to optimise the system. With missing renewable capacity for green hydrogen production, electricity from fossil sources will have to be used to create hydrogen and subsequently increase overall emissions across the European Union. Moreover, if hydrogen is not channelled towards sectors which can only be decarbonised with green hydrogen, these sectors risk missing their decarbonisation targets.

REPowerEU’s targets for the growth of renewable energy and green hydrogen in the European Union by 2030 are presented as a coherent development path in which generation and demand are fully matched. However, the presented targets, and the division of hydrogen consumption across end-use sectors in particular, do not provide a critical reflection on the expected hydrogen demand by 2030 nor acknowledge the challenges and risks of delivering them.

The feasibility of delivering the REPowerEU hydrogen targets and their implications require a careful consideration of the constraints, which can negatively impact the EU’s pathway to climate neutrality. These constraints include the availability of space, supply chains becoming increasingly insufficient, and global competition intensifying. Similarly, conflicts on the ground, competing interests, public opposition, and access to cheap capital are all aspects that cannot and should not be ignored. Broadening the scope of energy system modelling with these constraints in mind and embedding them in energy scenarios would draw a more realistic picture of the future decarbonised energy system. Similarly, developing energy system models driven by principles aimed at reduction of energy losses and waste would lead to system optimisation, which will deliver benefits across the entire economy. If indeed the EU’s objective is to curb emissions, reach climate neutrality, and guarantee energy security, the given green hydrogen targets should be re-assessed in view of the current and anticipated constraints.

This discussion paper addressed some key points related to hydrogen demand and supply as outlined by REPowerEU and their implications for the power system – learn more by downloading the paper here and exploring the work of the PAC project here.

The authors acknowledge the extensive contribution of the modelling team at Hitachi Energy, in particular Jochen Kreusel and Alexander Oudalov, who have enabled and informed the analysis presented in this paper.

The Paris Agreement Compatible (PAC) project is a collaborative effort of CAN Europe, the European Environmental Bureau (EEB), REN21 and the Renewables Grid Initiative (RGI). RGI is the coordinator of the PAC project which is funded by the Federal Ministry for Economic Affairs and Climate Action. This paper is, however, independent to the PAC project consortium partners and its conclusions are the sole responsibility of the authors.