11 Sep 2022

Why Europe's Move to Replace Gas with Hydrogen Is Getting Held Up

11 Sep 2022  by   

A worker inspects a primary water and hydrogen separator at a green hydrogen plant in Puertollano, Spain. Bloomberg

Europe’s move to green hydrogen, a potential substitute for natural gas, is being held up by EU proposals relating to its production, an industry group has said.

A number of green hydrogen projects in Europe have already been put on hold or delayed by regulatory uncertainty, said Daryl Wilson, executive director of the Hydrogen Council, an industry group.

The EU’s draft proposal on the matter was subject to public consultation in June and is still a long way from becoming law.

Green hydrogen is made from water using an electrolyser powered by renewable sources and the technology has long been viewed as a solution for steel, chemicals and other carbon-intensive industries seeking to cut emissions.

Relative to other energy sources, the economics for hydrogen have improved in Europe as natural gas last month surged to about 10 times its usual level.

Even so, projects to make green hydrogen, also known as renewable hydrogen, are small and mostly still in pilot stages.

“The draft rules for qualifying hydrogen production in Europe — as well as imported hydrogen — as renewable have indeed been and remain a major concern for the industry,” Mr Wilson said.

Certifying the hydrogen as green may prove difficult under the EU’s current proposals. Klesch Group, whose Heide oil refinery in Germany is at the centre of a green hydrogen hub, highlights one of the sticking points.

Klesch said the draft proposals stipulate that green hydrogen must be produced within the same hour as the associated green electricity.

Without the benefit of using batteries, production will be limited to windy periods of the day for an electrolyser linked to a wind farm. That will push up costs and could lead to more idling and equipment wear, said Sandra Niebler, head of commercial and economics at Heide.

Electric vehicles are generally considered a greener form of transport, yet they are not subject to any restrictions on when they are charged, said Mr Wilson at the Hydrogen Council.

And EVs can be charged irrespective of whether the electricity comes from green sources or carbon-emitting fossil fuels.

“It is like having a Tesla that has to sit on the driveway for 70 per cent of the time,” said Mr Wilson. “Uncertainty around rules that work against the economics is a problem.”

The Klesch project includes cement maker Holcim and the local utility as partners, making it typical of such projects in Europe. The company is among several German oil refiners to outline plans to build a green hydrogen electrolyser.


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