Written by Andrés García Higuera (STOA) with Marlene Arens and Jakob Wachsmuth (Fraunhofer Institute for Systems and Innovation Research ISI),
What are the options for closing the carbon cycle through substitution of fossil fuel use and how can they help to meet the Green Deal objectives? How can the EU hydrogen strategy contribute to this objective?
These questions were addressed at a STOA workshop, chaired by Members of the European Parliament and STOA Panel members Tiemo Wölken (S&D, Germany) and Patrizia Toia (S&D, Italy), and held on 1 March 2021. The event provided a broad view of hydrogen and other solutions for decarbonising European industry for some 390 participants. Policy-makers, scientists, non-governmental organisations (NGOs) and industry representatives highlighted the opportunities and risks of a hydrogen economy. Several speakers discussed the hierarchy of hydrogen use (steel and chemical industry, aviation and shipping are commonly agreed upon), and where it should not be used (household heating and private transport, according to some). Some industry representatives and some scientists called for decarbonisation of the European industry, where hydrogen use is supplemented by technologies that enable closed carbon cycles, while NGOs and other scientists called for a clear phase-out of fossil fuels.
STOA Panel member Timo Wölken opened the workshop and introduced the political context, mentioning key legislation and goals such as the long-term targets of climate neutrality in the EU and the publication of the EU hydrogen strategy. Additionally, he pointed to the proposed legislation on a trans-European energy infrastructure and the Fit for 55 package.
Stressing that private investment is needed to advance, STOA Panel Member Patrizia Toia emphasised the current strong European push for hydrogen and the ongoing technological research.
Birgit Honé, Rapporteur for the European Committee of the Regions’ opinion on clean hydrogen, pointed out that hydrogen could be a great opportunity for regional development, as the production of local green hydrogen might provide €30 billion of added value and 800 000 additional jobs. She concluded that the Fit for 55 package should entail becoming fit-for-green-hydrogen.
Sarah Nelen, Deputy Head of Cabinet of European Commission Executive Vice-President Frans Timmermans, addressed the urgency for climate action in industry, as 2030 is very close in terms of investment cycles, which are typically long in energy-intensive industries, meaning that the EU needs to prepare for a roll-out of hydrogen. Sarah Nelen also highlighted the advantages of the EU as a single market when it comes to the implementation of standards, certification or infrastructure.
Stating that meeting EU sustainability targets requires that we pass to a circular economy for carbon, Gabriele Centi, President of the European Research Institute of Catalysis, sees the need for a long-term vision on how to close the carbon cycles. He also called for a system approach, focusing on replicability and flexibility, and spoke of the need to create an innovation ecosystem with all relevant stakeholders, as well for a radical system change to replace incremental innovations.
Carl de Maré, Head of Technology Strategy at Arcelor Mittal, stated that betting on hydrogen was risky, as hydrogen is not yet available, is expensive, and current synergies would be lost. He saw smart carbon usage as an opportunity, because the emitted carbon could be used for other products, supporting circular carbon concepts. Carl de Maré concluded that taking CO2 as a resource was a ‘no-regret’ option, which should be developed further to achieve carbon neutrality.
Imke Lübbeke, Head of Climate and Energy at the World Wildlife Fund, pointed out that green hydrogen is a scarce resource and should therefore be used in selected sectors only, such as shipping, steel and chemicals, and not for large-scale heating and road transport purposes. Moreover, she stressed that blue and pink hydrogen are not sustainable options. She strongly argued for a clear phase-out of fossil fuels and that hydrogen should be produced only from additional renewable electricity. She also strongly argued for increased efforts on energy efficiency and for the inclusion of the public in decision-making. Imke Lübbeke concluded that hydrogen has a crucial role, but this role needs to be considered carefully.
Presenting the results of an almost finalised STOA study, Frank Meinke‑Hubeny (VITO/EnergyVille) pointed out the implications of a steel production transition to hydrogen. If Europe’s current coal-based steel production switched to green hydrogen, 37‑60 GW of electrolysis capacity would be needed, which is more than the current EU target for 2030 of 40 GW. He also warned that hydrogen based steel-making would not be available on a broad scale in the next five years and that green hydrogen would not be cost-competitive by 2030. However, considering the long-term perspectives, Frank Meinke‑Hubeny found that hydrogen-based steel-making was likely to be cheaper than coal-based steel-making by 2050. He added in this regard that grey and blue hydrogen might be available at lower cost than green hydrogen by 2030. The draft study he presented also analyses infrastructure needs and finds that repurposing of current natural gas grids seems preferable to building new pipelines.
Heiko Reese (IG Metall) stressed the importance of the EU steel industry as an employer of 330 000 people. He also underlined that both companies and employees support the European climate goals. In his view, hydrogen is a technically feasible option for decarbonising the steel industry, but this would imply the need for huge amounts of hydrogen and thus huge investment. Moreover, operational costs would increase, as hydrogen is more expensive than coal. Public support is therefore crucial to enable this steel transition. In addition, cross-border infrastructure is also needed, and not only for hydrogen.
Directing his audience to consider the challenges of switching the steel industry to hydrogen, Carlo Mapelli (Politécnico di Milano) noted that operational costs will increase and that storage and transport of hydrogen is a complex issue. He suggested that a promising future option might be to use the existing gas infrastructure when combining steel production with carbon capture and utilisation. In this context, he added that handling CO2 is not dangerous at all and that carbon could be utilised for products such as carbon nanotubes, graphite, bio-char or bio-methane.
Closing the workshop, Tiemo Wölken stated that, in his view, it is now the task of policy-makers to push for the realisation of cost-effective hydrogen supply and use.
The STOA study ‘Carbon-free steel production. Cost reduction options and usage of existing gas infrastructure’, soon to be published on the STOA website, finds that a hydrogen-based industry may be more profitable than a fossil-based industry in the long term. In that sense, hydrogen offers a technically feasible and promising option for decarbonising European industry. However, there are huge economic implications for the current stock of production technologies and the energy system, in addition to operational costs. An additional, ongoing, STOA study on ‘The potential of hydrogen for decarbonising EU industry’, being developed by Fraunhofer ISI and the Karlsruhe Institute of Technology, will provide guidance for this task by looking at policy options for decarbonising EU industry and realising a hydrogen economy. The final report is expected in October 2021. STOA continues to carry out its mission of providing Parliament’s committees and other parliamentary bodies with independent, high-quality and scientifically impartial studies to support the assessment of the impact of possibly introducing or promoting new technologies and identifying, from the technological point of view, the options for the best courses of action to take.