The monitoring report from Acer, the European Agency for the Cooperation of Energy Regulators, acknowledges the delay and the uncertainty surrounding the demand, investments, and costs of renewable hydrogen in Europe.
Will Europe fail to meet its 2030 targets for developing a renewable hydrogen market? It is “likely,” responds Acer, the European Agency for the Cooperation of Energy Regulators. So far, ambition has not been matched by sufficient action. Projects related to this energy carrier remain too risky for two reasons: high costs and uncertainty about how demand volumes will evolve. This is the message that emerges from Acer’s first monitoring report on hydrogen.
EU 2030 Hydrogen Targets…
What is the EU aiming for? The European Hydrogen Strategy, published in 2020, aims to make hydrogen an integral part of the community’s energy system by promoting the creation of an EU renewable hydrogen market that can support the energy transition.
By renewable hydrogen, the EU refers to both hydrogen produced via electrolysis powered by clean energy and hydrogen obtained through biogas reforming or biochemical conversion of biomass, provided these processes meet certain sustainability criteria.
By 2030, Europe aims for:
- A demand of 20 million tons (Mt) of renewable hydrogen, with 10 Mt from domestic production.
- The installation of electrolyzers with a capacity of 40 GW.
...and the Necessary Reality Check
These are goals from which Europe is still far off. Acer’s data show slow progress, and, above all, a great deal of uncertainty. The worst combination for stimulating the investments that would be necessary.
Non-Existent Renewable H2 Demand
The report explains that Brussels has set ambitious and achievable targets for the growth of renewables and decarbonization. Therefore, renewable hydrogen demand could indeed increase. However, adoption has been slow so far. The current consumption at the European level is 7.2 Mt, of which 99.7% is produced from fossil fuels.
Electrolysis: Year Zero
The development of electrolysis capacity brings no better news—quite the opposite. The total installed electrolyzer capacity in Europe in 2023 was 216 MW. According to the strategy, we should have installed 6 GW by 2024.
It’s true that the project pipeline is long. For 2030, another 70 GW of capacity is announced. But this is still less than the over 100 GW that, according to Acer, would be necessary to meet domestic production targets for this decade.
EU H2 Infrastructure: Many Projects, Few Investments
The EU renewable hydrogen market needs the necessary transport and storage infrastructure, including revamping existing infrastructure for fossil gas and new builds. Again, the report highlights delays and uncertainties.
Announced projects amount to 42,000 km of hydrogen pipelines, with many more for storage and terminals. But only 1% has reached the final investment decision.
The Cost Hurdle
Demand is not picking up, and investments are lacking, also due to the cost hurdle, which remains high. Today, the cost of 1 kg of low-emission renewable hydrogen is 3 to 4 times higher than hydrogen produced through steam reforming of fossil gas.
How to Accelerate the Creation of an EU Renewable Hydrogen Market
According to Acer, the EU can close the gap with its 2030 targets if it follows through on these priority actions:
- Policy side: Quickly incorporate the EU 2024 regulations on hydrogen and decarbonized gas into national legislation (and implement them);
- Accelerate on electrolyzers and decarbonization of the electricity sector to increase the competitiveness of renewable hydrogen costs;
- Accelerate integrated planning to identify realistic hydrogen infrastructure needs, adopting an incremental approach when future demand remains uncertain (to avoid building too many networks too quickly and reducing the risk of stranded assets);
- Focus on reusing gas networks for hydrogen to minimize costs.
Read the first hydrogen monitoring report published by Acer.
