The energy transition and energy sovereignty go hand-in-hand. Nowhere have we seen the urgency of these dual objectives than in REPowerEU, the European Union’s commitment to gain independence from Russian fossil fuels by producing 10 million tons (Mt) of green hydrogen within the EU territory by 2030 and importing 10 million more from the outside.
Green Hydrogen and derivatives are increasingly seen as a crucial piece of the energy transition, valued for their storability and versatility in production, uses, and transportability across borders. In order to meet the ambitious REPowerEU objectives and to keep security of supply, Europe will need to tap into each side of the equation: by both incentivizing and enforcing decarbonization of end-uses, while scaling up its local hydrogen production and increasing its foreign imports.
Striking the right balance between local production and the potential for importing hydrogen is a multi-faceted calculation that encompasses such factors as natural resources, advances in technology, infrastructure development, government regulations and cost structures.
Producing the 10 Mt of green hydrogen projected by the EU represents supply of at least 500 TWh of renewable electricity — meaning Europe would have to double its total solar and wind production, all in the span of just seven years, and this on top of the increasing renewable electricity demand of all other sectors.
Will local production be enough? And if so, would it be the most cost-effective option? 40 countries worldwide have already released hydrogen roadmaps, adopting different strategies, which offer a taste of how many factors are in play — but also highlight the urgency to take the smart decisions now.
From grey to green
Currently, Europe is the fourth-largest consumer with demand of more than 8 Mt of hydrogen across a range of industries: In refining, for instance, hydrogen is used to desulfurize and further refine oil products, while in the chemical industry, hydrogen is a feedstock to produce methanol and ammonia, which are both key molecules used in day-to-day products and industry, such as in fertilizers, detergents and adhesives.
In the past, so-called “grey hydrogen,” generated from natural gas, has been the most commonly used form of H₂. Part of REPowerEU aims to replace that with its green counterpart, which is produced by using renewable electricity to split water into hydrogen and oxygen.
In order to reach Net Zero by 2050, green hydrogen must be used in current industrial applications like production of steel (coal and/or natural gas used to treat iron ore would be replaced by green hydrogen); and also be introduced in new applications, including the production of e-fuels like e-methanol for a low-emission shipping and e-kerosene for aviation. Furthermore, the use of fuel cells will help decarbonize several markets, notably rail transportation to make it more time efficient, as hydrogen trains are quicker to refuel than battery electric trains. Green hydrogen will also be introduced in road transport, replacing gasoline and diesel, notably for heavy duty and intensive fleets (trucks, taxis, buses etc.). And on top of that e-fuels (gasoline, e-diesel) to be used in the existing ICE car fleet will immediately help to reduce the CO2 emissions of transportation.
Estimates are that these current and future applications will require an additional 12 Mt of green hydrogen. In Europe, some countries don’t have sufficient renewable power to achieve their energy transition, notably to produce locally the necessary quantities of clean hydrogen, as well as countries like Japan that are also highly dependent on energy imports. This contrasts with North America for example that is mostly self-reliant with domestic production.
Imports to compensate renewable local production
Belgium, the Netherlands and Germany are at least three examples of countries that know they’ll need to import. “Germany does not currently have enough renewable energy to produce all the climate-neutral liquid fuel and fuel gas it will need in future,” the country's ministry for economic cooperation and development said recently.
Two years ago, the country had set green hydrogen production goals of 14 TWh, but its consumption is now estimated to reach 100 TWh in 2030. Having been particularly reliant on coal and Russian natural gas, Germany now is committed to a shift in strategy that includes importing large volumes of hydrogen/green fuels from a variety of more stable regions that produce low-priced renewable energy.
Transporting H₂ has until now been achieved through two basic processes: via pipelines when relatively nearby, much like natural gas; or as a chemical form (mainly ammonia and methanol) aboard large tanker ships for longer distances. Germany is looking at both options, signing energy partnerships, e.g. with where hydrogen is generated locally and sent through pipelines, while also looking to import ammonia and methanol from Canada, South America, the Middle East, and Namibia.
Northern Europe and the Mediterranean (The Iberian Peninsula, Maghreb) are strategic regions to import hydrogen from, but Europe could also turn towards the Middle East, South (Brazil, Chile) and North America, Australia and Africa (Namibia, DRC and South Africa). The European Union has recently unveiled the H2 Med project. The ambitious underwater pipeline will connect Barcelona and Marseille to deliver 2 Mt/year of renewable hydrogen from the Iberian Peninsula to the rest of Europe. The project, set to be completed by 2030, will cost some €2.5 billion. Spain and Portugal’s abundant sun and wind will allow Central Europe to benefit from competitive hydrogen production while bolstering sustainable alternative sources.
Scaling up transport
For these trade routes to be successful, the scaling up of hydrogen’s means of transport will be critical. Multiple new solutions have already been designed and developed, but they need to be expanded and placed in strategic areas. Liquid Hydrogen is already used in the aerospace industry, and hydrogen transport in California and South Korea. But for the moment, large-scale transport by sea is not yet mature: liquid hydrogen needs to be transported at approx. -252 °C temperature and large-scale containment technology for ships is not yet mature. This is why hydrogen in different forms — such as ammonia, which already widely circulates — is preferred in sea transportation. Ammonia is a stable transportation carrier for hydrogen, facilitating the transport of electricity over long distances for countries like Korea, Germany, and Japan which was one of the first countries to take an interest in ammonia as a hydrogen storage medium. The "Green Ammonia" program, which brings together a consortium of academia and industry, including Tokyo Gas, and is financed by public funds, aims to build a low-CO2 ammonia value chain for fuel & power applications.
“The scaling up of hydrogen’s means of transport will be critical.”
While this will require investment in infrastructure works in the coming years, FiveT Hydrogen founding team member and Hy24 Investment Director Pierre-Germain Marlier notes: “We don’t need a technological breakthrough to transport green hydrogen, the know-how already exists.”
Legislation for the future
Facilitating imports will also require Europe to support industrial companies and investors through clear legislation. Laws keep changing every three to six months (concerning, for example, the percentage of renewable H₂ demanded by 2030 or its CO2 footprint in Europe or the regulation of pipelines), which slows development and . As the industrial sector needs stability to adapt — at least five years of runway — the decisions of the European Commission need to be firm and perennial to allow them to be widely applied by countries.
The short deadline of seven years set by REPowerEU makes this a pressing matter, even more so as the national legislations are not yet fit to oversee projects to produce green hydrogen in such a short time. For example, in France, getting a permit to build solar panels or wind turbines can prove quite long — three to five years. With construction, it easily adds up to six years. Despite that, France is mainly focusing on local production rather than import, in order to maintain sovereignty over production and employment. The country’s National Assembly has approved a bill to accelerate the deployment of projects to produce renewable energy, with French Economy Minister Bruno Le Maire detailing that the law would help “create a strong green industry on national territory with production of hydrogen, electrolysis, nuclear and renewables.” On the longer-term, France could also put in place routes for importing clean hydrogen from neighboring countries like Spain or Maghreb countries to preserve competitiveness of its industry. A step has been done in that direction recently with the H2 Med project bringing together Portugal, Spain, France. The approval of this pipeline project, which will bring to Europe low-carbon hydrogen produced from renewable energies in Spain, or even tomorrow by the countries around the Mediterranean, is a first stone in the European edifice for reindustrialization and renewed energy sovereignty, and for the possible diversity of low-carbon energy supplies.
In its latest report, the Hydrogen Council insists on the crucial role of hydrogen imports, particularly for Western Europe. The organization says the bloc will not be able to locally produce the volume it needs due to capacity limitations but will likely become the second largest market for clean hydrogen by 2050 after China, with a demand for 100 Mt of green H₂.
The gap between demand for hydrogen and optimal locations for hydrogen (and renewable electricity) production will prove critical in the coming years. Europe is among the world’s densely populated regions, like Japan and South Korea, where domestically produced hydrogen will be significantly more expensive, because of lack of land availability and constraints to develop additional renewable power infrastructure.
This would make it more cost-efficient for the continent to turn to imports: The report finds that the price difference between the lowest and highest-cost production locations is around 2.5 times, meaning some areas require lower efforts to produce the same output. For example, solar panels built in countries with exceptional solar radiation such as Chile and in the Middle East can be scarcer yet yield great amounts of power — making the hydrogen production more competitive (less than $1 per kg by 2050, according to the report).
“Optimizing global hydrogen trade flows will accelerate the energy transition and reduce investment costs.”
Globally, of the 660 Mt of green hydrogen required to achieve carbon neutrality by 2050, 400 Mt will have to be transported across long distances. The report highlights that an extensive web of H₂-related trade links could connect the globe, with more than 40 different trade routes and a capacity of more than one Mt per annum that includes the largest reaching at more than 20 Mt per annum.
The report also finds that enabling trade of hydrogen and its derivatives will reduce total capital expenditures and operational expenses by 25%, saving $460 billion by 2050. Optimizing global hydrogen trade flows will accelerate the energy transition and reduce investment costs by $6 trillion across the entire supply chain.
Pierre-Germain Marlier estimates that this might take more time than planned, since the first large European projects for green hydrogen production, and the backbone of the industry upscaling, won’t start before 2027-28 — while most of the large projects announced would start only after 2030. “We have to be realistic about timelines,” Marlier notes. ”Switching to green isn’t as easy as flipping a switch.”
Hydrogen imports from different sources across the globe represent an opportunity for Europe to replace its natural gas, avoiding a new dependency on the United States while sticking to its 2050 carbon neutrality goals. “Importing renewable energy such as hydrogen is not synonymous with a loss of sovereignty,” says Chairman of FiveT Hydrogen and CEO of Hy24 Pierre-Etienne Franc. “On the contrary, it’s developing a sovereignty of access. It’s not about importing from two or three producers but from a multitude of countries and a diversity of forms.”