- “About one quarter of global hydrogen demand will be traded globally. So this is a new development because today hydrogen demand is so far very local. So it's locally produced and locally consumed. But this is going to develop in the international field. And the transport is expected to be about 55% by pipelines and 45% by ships. So this is also an important development to see. Um, we expect globally three major importing regions. So the EU, Japan and South Korea. Um, and so these important regions of course are engaging with those regions that can cover their domestic demand and will also be looking to export to these regions. So when it comes to our international engagement on hydrogen, for us there are important objectives. The first objective is competitiveness. So we want to develop a rule based global market for hydrogen, in which there is a level playing field for the EU and international partners. Um, a second very important objective for us is to ensure security of supply. So as you already said, chair, no new over dependencies. So we really need to make sure that there is diversification and development of reliable supply chains at competitive prices. And of course sustainability. So hydrogen is a tool to support decarbonisation and to reach climate neutrality. So in the level playing field discussions, it is very important that domestic production and imports are treated in the same way, and this is ensured under the carbon border adjustment mechanism pilot mechanism, which tries to create this level playing field, but also when it comes to what Tom already mentioned.”
Low-carbon hydrogen · Carbon Border Adjustment Mechanism (CBAM)
- “Both technologies can have a place in the market. Um, I think one more element on this, um, this renewable and low carbon electric electrolytic, I think the way we see it is that most electrolysers will co-produce both. So very few electrolysers, mostly those that are dedicated to renewable power plants so directly connected they will go for just renewable. But we understand also from several member states that they have the intention to use this new option that we have introduced to use hourly average emissions in order to co-produce both renewable and low carbon electrolytic hydrogen in order to really maximize the running hours. So also on that option we have received, uh, of course, questions. How can it be made in practice. And this is something that we are going to work with industry together to see how it can be made work, work in practice, but that this option is useful for them, for the future, for for the future operations. So, um, and of course, again, as we always have to make a proposal before the market develops in order to help to give, uh, the framework for the market, we will very closely monitor the implementation of it to see how it works, how it doesn't work, and which which potential amendments may be needed. Thank you.”
Green Taxonomy · Low-carbon hydrogen
- “So and the most comprehensive MoUs are with Egypt, Ukraine and Japan. So these are very, very important instruments to move into the same direction. We are also working on infrastructure development. So as I said we need infrastructures to import that hydrogen but also to transport that hydrogen within the EU. And in this field, the important policy we are pursuing is a Trans-European networks policy, which includes also projects of mutual interest. So projects with third countries. And on this first list that was adopted in 2023, um, it figures 65 hydrogen projects, among which 31 are pipelines and ten import terminals. So these are very important, uh, infrastructure projects that need to be developed in order to make it possible to import hydrogen into the EU. And we are now in the next process of revising this list to potentially include new projects on it, and the new list is expected to come out by the end of this year. So to be adopted by the Commission by the end of this year. And lastly, I would like to say a few words on the financing of hydrogen, because of course, for the moment renewable and low carbon hydrogen are quite expensive. So the EU has used its financial instruments to, to to support this development within the EU, with the, with the innovation fund notably. But outside the EU, we are also developing an international leg for the hydrogen bank, for which, however, there is no EU funding yet.”
Low-carbon hydrogen
- “Thank you very much. And it's so. It was very, very good. So thank you for inviting me today and for the occasion to have this debate. It is a very, very important debate because indeed, the hydrogen strategy that the Commission has adopted dates back already to 2020 to July 2020. So it's five years old. So it is really necessary to to look where we stand five years on after that strategy. And I think I would start with a comment on the targets, because it's true that there were communications with higher targets, that 20 million tons target was cited. But ultimately, what has become a binding target, what was included in the various EU legislation. So in the Co legislative procedure. So with the European Parliament of course in the driving seat, and that's the Renewable Energy Directive and the Refuel aviation regulation and the maritime regulations. Those are the ones that include concrete targets for hydrogen consumption in the EU. And those targets are necessary in order to drive the hydrogen development, in order to really pull this new fuel into into the market. And the consumption, of course, targets on on their own are not enough. We all know that hydrogen for the moment is very expensive. And and one of the reasons, of course, is that if we look what makes up the hydrogen cost, a very large part of it is the cost of electricity, because when we do electrolytic hydrogen, be it from low carbon electricity sources or from renewable electricity sources, what is very important is what the producers need to pay for that electricity.”
Low-carbon hydrogen · EU approach to electricity market and prices
- “Also, we have to know that electricity is a fuel that will be more and more needed in the future, so electricity, electricity consumption will grow. There will be new additions for demand to electricity. There will be road transport heating increasingly electrified and this will make it cheaper for consumers. Actually heating with a heat pump once the initial investment cost is done, will be cheaper for consumers than natural gas heating, especially if the if the natural gas prices are fluctuating. So we see it in many, many countries that electricity consumption is increasing as electricity system is decarbonising. Also, the whole energy system is decarbonising and hydrogen production will be decarbonising as well. But we have to also be aware of the volumes that hydrogen will be a great consumer of electricity. And we see that already in several countries where during peak hours, there is already a shortage in the electricity market. Those are the hours when we need to be very careful not to add additional demand to the electricity market demand that could normally be shifted because that would be really detrimental for the electricity system, but also ultimately for all the electricity consumers. So that's why it is important to have the rules, robust rules that respect not only hydrogen producers, but also all the electricity consumers within the market. So thank you very much.”
Low-carbon hydrogen · EU approach to electricity market and prices
- “Thank you very much, and thank you for welcoming me to this committee. It's the first time for me to be in this committee, in the committee we've been normally in touch with, and we on our files, but very happy to be here today. And as Tamara already said, renewable hydrogen and low carbon hydrogen are essential for decarbonization. And it's especially necessary, as the chair already mentioned in high temperature industry processes. So like steelmaking and some areas of transport like maritime and air transport. And that's why we have adopted our hydrogen strategy in 2020 which is by now already almost five years ago. And in order to do so, we have followed up on this with action. So to foster the hydrogen demand. The co-legislators have agreed as part of the Renewable energy Directive or specific hydrogen targets in industry and transport. So 42% in industry and 1% in transport by 2030. And this amounts to about 3 million tons, according to our estimates, by 2030. However, hydrogen quantities, the needs for hydrogen will grow in the longer term. So by 2050, our modelling estimates a consumption of between 60 to 70 million tonnes of hydrogen per year. So it's quite important scaling up and Renewable and low carbon hydrogen is highly produced in the EU and across the world for the moment, so the intention is to really provide the conditions for this to accelerate and this in this sense today, the EU is also not importing any hydrogen and renewable hydrogen or low carbon hydrogen. But the Renew International Renewable energy Agency arena estimates that by 2050 about um.”
Low-carbon hydrogen · Decarbonisation of maritime transport
- “So we need to make sure that those criteria are right. That said, of course, as I said, we had to anticipate the rules, but we are, of course, looking into them to see how they are working. And as the commission already announced in the clean industrial deal, we have started a study in order to see exactly in details how these rules work, if they are hindering, how they are, how they are, um, impacting projects in order to see whether there's any adjustments needed to those rules. So this is the work that we have undertaken now and that we are going to carry out in the coming months, because of course, on the one hand, it's important that we have the right rules in place. But on the other hand, it's also important to keep legal certainty and not to create uncertainty in the market by changing the rules too often. So we need to really do this review in a thorough manner, so that we can step in when it is needed, in a targeted manner. Thank you.”
Energy transition (state support) · EU policy on permitting for renewable energy projects
- “But we are trying to work with member states in a Team Europe approach to pull together funding to organise auctions for international um deliveries. And still, in the context of this hydrogen bank, we are also developing a hydrogen mechanism and this is an IT platform that has the objective to accelerate hydrogen market creation. So to allow future demand and supply to meet. So this will of course include an important international element, and this will be developed as an IT platform for which the registrations will open on June 25th. And hopefully the platform will be launched later, later this year around the autumn. So this is all very, very necessary to scale up this market which is just starting. Um, and of course, let's also remember the European Investment Bank, which is also the financing arm. Um, that can provide and has already provided, uh, through the Green Hydrogen Fund, important funding for hydrogen projects. So this is what we have done. And with just one word that we are also next year planning to adopt a revised, um, hydrogen strategy. So following up on the hydrogen strategy of 2020, uh, in order to see what is still actual and what needs to be adapted to the new market realities, and that hydrogen strategy specifically requires us to look into domestic and imported hydrogen, and this under the mandate of the Renewable Energy Directive. So that's all from my side and looking forward to your questions and comments.”
Low-carbon hydrogen · EU approach to energy security (home-made vs import sources)
- “Thank you very much. And maybe I would like to start really to by acknowledging the challenge, I think we we start from zero, and this is something that we have laid out in the strategy that we are trying to upscale at the same time, demand production and infrastructure. So this all needs to be coordinated. And and that's the reason why we are putting in place those instruments that can help us. But it is a massive coordination challenge. And I think we need to start by acknowledging this. Now just one word on the volumes. So it's true that in the repower EU plan, the EU has put forward an objective or a or an ambition of producing 10 million tons within the EU and importing 10 million tons from outside the EU. However, of course, what drives today's hydrogen developments are are targets for the moment because as you rightly said, for the moment hydrogen is very expensive. So it only comes into the market if there are financing targets or obligations. So there need to be some instruments to pull this into the market. And today what we and the targets that have been adopted under EU legislation so that we can consider really binding and driving the markets, those are under the Renewable Energy Directive, the refuel EU, um aviation and the fuel EU maritime proposals.”
Low-carbon hydrogen · Energy transition (state support)
- “So we are we are working on elaborating those criteria that will be appropriate for for nuclear power to allow them also to, to be integrated into delegated acts. So in that sense, yes, we are planning a revision of this specific delegated act on the low carbon, um, hydrogen. We are planning to launch consultation on the methodology by mid next year. So end of June next year. And of course our objective is to conclude that by the end of next year. But of course, that depends very much on what kind of input we get. The very good cooperation that we had with industry on this delegated act. We hope that this will continue, and then we can include this pathway also into that. And as a last point, and I'm concluding then that we are also we have launched a study to really monitor the ramp up of the hydrogen market. And within that, also to look at the the rules and the legal framework to get that reply, whether these rules are hampering or not hampering the hydrogen production. So this is the study that will be a continuous study. So we will get reports every regular intervals. And this is the study that should give us objective answers to whether any fine tuning to the rules is necessary. And what exactly could that be? Thank you.”
Nuclear energy · Green Taxonomy · Low-carbon hydrogen
- “And the new terms of reference for the third auction of hydrogen Bank have been published for, for public consultation for comments. So this is the right occasion to comment on that. But coming back to the uses of hydrogen, I think, um, we are looking into it how the markets evolved. So five years ago there was there were some very clear areas where hydrogen was likely to be the only solution or the main solution. And these have been cited. It's industry. It's I mean, some areas of industry, it's um, aviation. It's um, it's maritime fuels potentially. And already then there were competitions in other areas, like for example, for heavy duty transport, whether it's battery electric or hydrogen, that's going to be the winner. And that's not something that any institution should be predicting, but we should be enabling the frameworks so that the various solutions can compete. And we hope that this is what we have done with the framework that we have put in place. And of course, yes, we are absolutely reviewing this framework. Um, both this delegated act. Of course, we hope that hope that it will it will now pass, because that will allow us to immediately start working on the pathway that we announced in the delegated act as well, to come up with dedicated pathways for low carbon energy such as nuclear power. So direct connections and power purchase agreements, potentially in order to include these pathways in this delegated act.”
Nuclear energy · Energy (green transition) · Low-carbon hydrogen
- “And it makes a huge difference for for hydrogen production. If the electricity is bought at €20 per per kilowatt per megawatt hour, or if it's bought at 100 or €200 per megawatt hour, prices that we are seeing in some moments in our markets. Because €100 electricity price translates into almost €5 of per kilo hydrogen price. So this is important to remember that as long as we don't have competitive electricity prices in some areas, we need to really invest in more renewables. We need to really invest in more nuclear power, in clean power sources so that this hydrogen production can become competitive. Um, so these are the physics and the economies of, of of hydrogen as it is. And we need to make sure that we overcome this with more investments into electricity. Coming back now to the to the fossil hydrogen production. So the low carbon natural gas based hydrogen, we feel that what we have introduced in, in, in the, in the delegated act and clearly some industry I mean industries, we have gotten feedback that can work with these rules and have welcomed these rules. For example, the possibility to be able to progressively decarbonize existing production so that they don't have to immediately meet all the thresholds, but they can go and decarbonize part of the production as they ramp up.”
Energy (green transition) · Low-carbon hydrogen · EU approach to electricity market and prices
- “And they add up to 3 million tonnes today. So we need to also be um, clear about what, what is the the legally binding targets that they are going to result to. We do not have specific, um, import targets because we believe that these are consumption targets. So they can be fulfilled by both by EU production but also by imports. And we feel that, uh, that that open and transparent competition and competitive hydrogen production will, will be, uh, well placed to contribute to this, to this target. So in that sense, as I said, today is the biggest challenge is actually offtake. Securing offtake. So there are hydrogen projects that have been in the pipeline. And what we understand from discussions with market players that the greatest challenge today is, is that they are having difficulties to securing long term offtake commitments. So we need to work more on definitely on the offtake side as well. And of course, an important point in that is the transposition of those targets into national law, because the Renewable Energy Directive has a transposition deadline of May this year. So by that time, we expect member states to to really transpose those targets into clear obligations for operators, which hopefully can move the markets, the offtake markets, towards engaging in these commitments.”
Biofuels (RED II) · Low-carbon hydrogen
- “But of course, from the commission side, as said, we are using the European Hydrogen Bank and the hydrogen mechanism in order to to help with the coordination and to make sure that this offtake and the producers, they can they can meet. And of course, there's the, the financing from, from various EU instruments, including also from the international financial institutions that can help with the providing the financial security for this. Um, one word also on the, on the criteria and the EU legislative framework. So on the one hand, of course, the rules were trying to make in anticipation because of course this hydrogen development is relatively recent. So we we were trying to do, um, as best as we can in order to come up with a legislative framework that can give certainty for developers so that they know what they are going to encounter in the future. Um, and when it comes specifically now, the, the, the criteria for renewable hydrogen, we also need to take into account the realities of the electricity market, because when we produce hydrogen from electricity, be it renewable or low carbon, of course we need to take into account whether the renewable production is there or not. So the Renewable Hydrogen Delegated Act is there to ensure really, that renewable hydrogen is produced, when that renewable electricity is produced and in the market and not produced at times where there is already shortage of of electricity in the electricity market with high prices, because those high prices also drive the hydrogen costs higher.”
Low-carbon hydrogen · EU approach to electricity market and prices
- “Thank you very much for all the comments and also for the critiques, because of course, only with the debate, we can make sure that the the rules evolve as, as they need. And indeed, I would like to come back on the very, very last or start by the very last remark, because it is true that today the competitiveness of hydrogen production depends extremely on the location, and this is due to the availability of cheap electricity and with the cheap electricity. Then, as Magnolia said, electrolysers can run more hours and this is not yet the case in all parts of Europe. So we have to be also aware of the difficulties that lie in those countries that do not yet have access to cheap electricity, and this is something that can only be tackled with expanding more renewables, which by now become cost competitive. And in those countries that opt for it to expand the nuclear power park. So I think this is clear that as long as we don't have sufficient amounts of clean and affordable and competitive electricity, hydrogen, uh, competitive hydrogen production is going to be extremely challenging. And this is a fact. And this is something that we also see that there are some areas in Europe where hydrogen production today is competitive and renewable. Hydrogen production is competitive, and those are the areas that have over 90% of renewables, that have a good combination of various sources of renewables that can then lead to high load factors of electrolyzers with very cheap electricity.”
Low-carbon hydrogen · EU approach to electricity market and prices
- “So it's so to say, the last step in a process that now needs to happen, and we are looking into ways to hopefully de-risk those projects and provide guarantees. We are also in dialogues with them to understand if there is any risks from the from the legislative side that they can see that we could, that we could adjust, um, in order for them to take those commitments. So we need to sign the contracts for a 15 year period or 10 or 20 year period, whatever it is needed for, for their for their business. And also on the sustainable, sustainable aviation fuels. We are aware of of projects that are being developed on that within the EU and outside the EU, and they are also in now in these discussions with the fuel suppliers, because for, for especially on refuel aviation, the obligation of the CEF mandates is on the fuel suppliers. So there needs to be a contractual relationship established between those developers who are developing those projects and the fuel suppliers that will be off taking those projects and supply them to the airlines. So we are working closely with industry to make sure that those projects can be delivered in time and to understand what are the difficulties that they are encountering and which stops them from the from the from the actual signing of these commitments.”
Biofuels (RED II) · Decarbonisation of aviation sector
- “As regards certification and criteria for what can count as renewable and low carbon hydrogen, where we have for renewable already the EU rules in place and for low carbon, the EU rules are being developed so that everything that's produced within the EU can compete on equal footing with with imports for hydrogen. And we know that imports are going to take place because there is really competitive potential across the globe and especially also in the EU's neighbourhood, for such trade to take place. So the EU is very active in its international engagement on hydrogen. So we are pursuing bilateral and multilateral cooperation on hydrogen. And we are also developing capacity building in third countries in order to to make them familiar with the methodologies and with the criteria in order to put them in a position to be able to develop projects that can then deliver clean hydrogen to the EU. So, um, we are working also, especially under the framework of the EU Global Gateway strategy, in which we work together with member States and international financing institutions on investments in EU partner countries in a Team Europe spirit. And also we have the global Gateway flagship project list for 23 to 25 that include hydrogen production projects, infrastructures in Africa, Latin America, Caribbean. Um and also so including countries like Tunisia, Morocco, South Africa and Namibia, Brazil, Chile, Argentina. And we also have concluded several MoU. So memorandum of understanding um, especially for renewable hydrogen um or such uh renewable hydrogen figures in existing memorandum of understanding including Latin America, Chile, Argentina, Uruguay with Africa, Egypt, Morocco, Namibia, Tunisia, Japan and Norway.”
Low-carbon hydrogen
- “Also, the possibility of carbon capture, because this is something that is not yet there today at scale. So we have to develop these two technologies at the same time. And that's why we have given the possibility for industry to do that progressively in order to be able to make that technology shift. So we are, of course happy to have more workshops with industry. In order to clarify if there are any doubts on the rules. But the feedback that we have received from industry, both on the on this possibility as well as on the possibility of using the default values, they are they have been that it's workable. It's it's not easy. And this is not something that that every industry or every company might be able to do, but they are feasible. And this is what's important, that there can be good projects that can work with these criteria. Um, coming back now, one moment still to the technology and electrolyzers, indeed, depending on the location, one technology might be more convenient than another one, because if you have really a very good renewables potential, very high load hours, then you can go for a cheaper technology that doesn't need to be as flexible. If the electrolyzer is located in a place where the the availability of electricity of cheap electricity is more intermittent, then it is better to go for a more flexible type of technology.”
Low-carbon hydrogen · Carbon capture storage and utilisation
- “And today we know that on average it's around 60%, if not more, in some locations. The cost of electricity for hydrogen. So of course we would like to address this over time. And of course it is also the objective of the whole competitiveness agenda to really make sure that electricity prices can be abated. And for that, the Commission has made proposals and toolboxes and is coming back, coming up with further proposals, the grid package to accelerate permitting, to improve interconnectivity so that electricity can become more competitive within the European market. And that will also, of course, help hydrogen production. But what the Commission has also done, and it was already mentioned, was the hydrogen bank. And it is true that the first two auctions of the European Hydrogen Bank were focusing exclusively on renewable hydrogen. And for that the main reason was because for renewable hydrogen, we had the rules already in place. So with the delegated acts that we have adopted two years ago, those rules are there. And now with this delegated act, if the European Parliament supports, then we can now extend these auctions. So it will be a basis. There will be a legal basis to extend these auctions potentially also to low carbon hydrogen. So this is something that can be considered.”
Low-carbon hydrogen · EU approach to electricity market and prices · EU policy on permitting for renewable energy projects
- “So I didn't say that the demand or the supply are not there. What I said is that today, what hinders projects from going ahead is to contractual ties, their relationships. So to sign very often you need a 10 to 15 or even 20 years binding contracts in order for both sides to take the final steps into that, into that investment. So what we're trying to make sure and working with the with really operators in the market is to, is to see how we can facilitate this last step from plans to actual conclusion of contracts in order to make that development happen. So, um, I on the supply side, what we know from the the developments within the EU through the auctions of the Innovation Fund and the European Hydrogen Bank, um, and various projects, we expect about 2.7GW of electrolyzers already in in a committed stage. So we we we think that there are projects that that are quite advanced on the supply side within the EU. And when it comes to international projects, we also know because of course, it's not the EU that is going to buy the hydrogen, it's going to be market players. And there are also national instruments out there like H2 global for Germany, um, that are providing some financial assistance for those specific projects. And there are there are those projects also under development that now need to move into a stage where also the off takers are ready to sign those long term commitments, um, to, to buy those hydrogen for the longer term.”
Low-carbon hydrogen · Energy transition (state support) · EU policy on permitting for renewable energy projects