On 29th September 2021, the world’s first Renewable Hydrogen Summit (RHS) took place virtually to discuss the future of renewable hydrogen, among others, in the context of the European Commission’s (EC) Fit for 55 Package under the European Green Deal. A year after the EC adopted its Hydrogen Strategy on 8th July 2020, the Fit for 55 Package was introduced and various sources have explained that it will benefit the rapid development of the hydrogen economy. However, as discussions during the RHS have proven, there is still much more need for innovation, cooperation and investment to make green hydrogen an established industry and a vehicle in the combating of climate change.
The RHS at a Glance
Based on the fact that the Fit for 55 Package sets a new pace in the hydrogen industry and on the pathway towards a net-zero, the RHS was organized by the Renewable Hydrogen Coalition in order to bring together EU policy-makers, business leaders in renewable energies, industrial energy consumers and start-ups in the hydrogen field. Whereas the event was sponsored by well-known companies in the hydrogen and renewables business such as Iberdrola, Sunfire and Nel, speakers represented other companies such as Enel Green Power, Wacker Chemie AG and the RWE. The co-founder of the AEM electrolyser start-up Enapter, representatives from the European Parliament and the EC, a representative from the European Investment Bank (EIB) and the CEO of WindEurope, which is a monitoring platform of the wind industry, rounded off this picture.
Opening Remarks at the RHS
Opening remarks during the RHS were given by Giles Dicksen, the CEO of WindEurope, Walburga Hemetsberger, the CEO of SolarPower Europe and Ann Mettler, the Vice-President Europe of Breakthrough Energy.
As Mettler emphasized, despite that Europe has been pushing for renewables quite early, at least in comparison to other regions, and despite that it can be proud to host some of the global industry leaders in the renewables field, it “will need to build up several new clean technology industries…and one important industry on the horizon is certainly renewable hydrogen”. Following Mettler’s argument, successfully building up this industry is tied to three premises: 1) the establishment of a supportive regulatory framework and effective financial instruments, 2) effective leadership in renewables, and 3) effective leadership in electrolyzer technologies.
After Mettler, Walburga Hemetsberger emphasized that the Fit for 55 Package is indeed a sign that the EC is taking renewables seriously and “is setting…clear targets for the fast- and large-scale deployment of renewable hydrogen…both for industry and for transport”. In addition, Hemetsberger highlighted that this does not only send a clear message to investors, but that investments also need to be mobilized, for instance, through “innovation that brings long-term competitiveness to Europe”. However, as Dickson explained, three particular measures are needed beyond innovation:
- “measures that will enable us massively to accelerate the deployment of renewables and of electrolyzers;
- a certification system that will recognize the climate benefits of renewable hydrogen over alternatives;
- incentives that will create business models that will drive investments in renewable hydrogen”
In order to reach the first point, Dickson argued, it will be necessary to simplify the permission rules involved in building wind farms. Only by doubling the amount of wind farms built each year until 2030 starting today, 40% of renewable energy can be generated by then. The certification system, which Dickson mentioned, refers to a “good system of guarantees of origin (GO)”. As he explains, consumers want to be sure that the hydrogen, which they are consuming, is truly renewable. In order to achieve this, EU laws must be adapted, because they currently allow governments to withhold such information. More particularly, this would require changes in the most recent Renewable Energy Directive (§19). By the last measure, Dickson refers to public financial support schemes, revenue stabilization mechanisms and climate contracts for difference, reasoning that the latter needs to cover both capital and operational costs.
Fire-Side Chat with Ignacio S. Gálan
Ignacio S. Gálan, the CEO of Iberdrola, emphasized that “we [Europe] already have…the renewable energy sources to power green hydrogen and…the industrial capability”. As such, the right time to create a new industry is now, especially considering that countries such as the US are developing innovation in this field at a rapid speed. As Gálan pointed out, Europe might therefore have some advantages over the US. One of them is that it already has particular targets for green hydrogen at member state level and secondly, companies in the EU are ready to invest. However, at the current stage, as Gálan explains, green hydrogen is still very expensive in comparison to hydrogen which is generated from fossil fuels. Some much-needed tools, therefore, could be effective regulatory frameworks, tax incentives and faster-permitting processes.
Fit for 55 package- Shaping Europe’s Global Leadership in Renewable Hydrogen
As Salvatore Bernabei, the CEO of Enel Green Power, argued, green hydrogen is a “possible opportunity” on the pathway to decarbonize our economies rather than a tool which itself is strong enough to lead Europe down the net zero road. Next to setting on renewables, the EU should also work on energy efficiency and industry behaviours, among others. As Bernabei reemphasized “hydrogen…could play a role in some particular field of energy consumption, where electrification is not…feasible technically” (i.e. fertilizer production). After Bernabei, Jon André Løkke, the CEO of Nel Hydrogen, joined the discussion to explain that “green hydrogen is actually relying on renewables, but renewables is also relying on green hydrogen, because green hydrogen is making renewables relevant in new sectors” (i.e. the steel industry). Thereafter, Laura Shields, who moderated the session asked all speakers to mention things, which the Fit for 55 Package addresses well, as well as things, which could be improved about the latter package.
| Speakers | Advantages of the Fit for 55 Package | Disadvantages of the Fit for 55 Package |
| Rafael Mateo, CEO Acciona Energía | It offers a ‘historical chance’ to foster both the energy transition and steer the transformation of the economyThe definition of renewable fuels is good | The simplicity of the permitting processes related to green hydrogen projects needs to be improved More measures need to be taken to make the price of hydrogen more competitive |
| Mads Nipper, CEO Ørsted | There is not something particularly missing in the Fit for 55 Package, it just needs to build on a solid regulatory frameworkThe ambitious goals of the package, such as the 50% renewable target, is good | It is not about the package, but a solid regulatory framework needs to be set up to support the development of renewable hydrogen In order to make renewable hydrogen a competitive market, there needs to be some financial support mechanism in the first years to balance the opportunity cost |
| Jon André Løkke, CEO Nel Hydrogen | The overall 50% renewable target is greatMoving away from coal | A regulatory framework is needed |
| Salvatore Bernabei, CEO Enel | Clear direction where to go at a high level | Permitting processes need to be simplified to cater to everyday business in the renewable hydrogen businessKPI/Monitoring |
| Christophe Grudler, MEP | Holistic, joint approach to address greenhouse gas emissions with a focus on renewable hydrogen | Industry competitivenessFocus on the impact of the package on citizen’s purchases |
Towards the middle of the session, Christophe Grudler emphasized that more research on renewable hydrogen and innovation in this field is needed before making huge investment decisions. Especially, since green hydrogen is not yet an established industry, keeping score and analyzing where and how green hydrogen may or may not constitute an effective solution remains an important task of research and development in the upcoming years.
Unlocking Investment: Does Europe have the right support and finance instruments?
At the beginning of this session, Dr. Sopna Sury, the COO of the Hydrogen RWE Generation SE, emphasized that there is a lack of public support and that there are “not any commercially viable projects yet on the hydrogen sphere”. As Sury explains, therefore actors in the renewable hydrogen field will depend on support from either the EU innovation tender support scheme or the “Important Projects of Common European Interest” (IPCEI). Even if these funding mechanisms have profound benefits, they might not sufficiently cover the transformation towards a green hydrogen economy.
As Dr. Christian Hartel, the President and CEO of Wacker Chemie AG said, there is a need for a concrete action plan, which has the potential to steer the transformation of both the industry and society, among others, by offering “ample green electricity at a very competitive price” and making sure that the infrastructures needed for the grids and green hydrogen are in place. Following Hartel, Vaitea Cowan, the Co-founder of Enapter, illustrated that in order to decrease the cost of green hydrogen, the following two steps are urgently needed: 1) low CAPEX (capital expenditures) and 2) a low renewable electricity cost. Whereas Enapter decreases the CAPEX, thus the cost of their electrolyzers on their own, they demand policy instruments, which will lower the cost of the OPEX (operational expenses) and make renewable electricity available to them at a competitive cost.
As Paulina Brzezicka, the Advisor for Innovation Finance at the European Investment Bank laid open, it is not only companies in the green hydrogen business who struggle with funding. Providing funding and especially large sums of capital to such companies for long-term projects of over 20 to 30 years conflicts with what some banks are able to do and with investors’ tendency to invest in the short-term. Carina Krastel, the Commercial Director at the European Green Hydrogen Acceleration Center (EGHAC), explained that they are a minority investor who fund early-stage industrial hydrogen projects. Thereby, they “try to go away from the discussion on the price of hydrogen, but try to focus on a value chain approach”.
If you are interested to view the entire session, follow this link here.
Feel free to contact the Energy Transition Centre today for questions.
· Julius Moerder, Head of Energy Transition Centre julius.moerder@centurionlg.com
· Oneyka Ojogbo, Head of Energy Transition Centre, Nigeria & West Africa oneyka.ojogbo@centurionlg.com
· Leon van Der Merwe, Head of Energy Transition Centre, South Africa leon.vdmerwe@centurionlg.com
