Finland has set out plans to become “the European leader in the hydrogen economy [across] the entire value chain”, which include a target for e-fuels derived from green H2 to make up 3% of the country’s transport fuel by 2030.
“The goal is to grow a new industry in Finland based on hydrogen and P2X [Power-to-X] products,” says the “decision in principle” document released by the government.
The green H2 produced in the country will be powered by new wind farms, it explains
“Large-scale hydrogen production requires abundant availability of competitive clean electricity,” the paper states.
“New wind power capacity is being prepared many times over compared to Finland's current growth needs, which, combined with the stable and predictable development of the operating environment, makes Finland an attractive investment destination and an alternative to the EU’s planned large-volume import of green hydrogen and its further products from outside Europe.
“Sufficient clean electricity production capacity and investments in transmission networks and international connections also enable Finland to develop in the long term as an exporter of added value products such as green steel, as well as hydrogen and electric fuels.”
And the document adds: “We aim for the share of electric fuels to be at least 3% of all transport fuels by 2030 and look at the possibilities of increasing the target after the update of the [EU’s] Renewable Energy Directive is completed.”
Finland is not one of the windiest countries in Europe, and would be able to produce little solar power, but according to a press release about the government resolution, the country's “competitive advantages include predictability of the operating environment, seamless permit procedures and land use planning. Launching investments requires a favourable operating environment, regulation that supports investments and financial incentives”.
Carbon Contracts for Difference (see panel below) seems to be the preferred method of subsidy, which the government describes as “cost sharing”.
“Various risk and cost sharing instruments such as the carbon contract for difference (CCfD) will be investigated, eg, in promoting low-carbon industry. Let's find out the possibilities of using CCfD at the national level.”
While the government does not reveal any targets for green hydrogen production, it says that “Finland has the capacity to produce at least 10% of the EU’s emissions-free hydrogen in 2030”.
“Building a significant production capacity and increasing the degree of processing mean, in the next 10-20 years, in addition to a large increase in wind power capacity, tens of billions of euros in investments in the production of hydrogen and its further processing into, for example, green methane, methanol and ammonia,” says the resolution document.
“The goal is to grow a new industry in Finland based on hydrogen and P2X products, which supports the renewal of the manufacturing industry and grows technology companies in the field into internationally leading suppliers.
“Achieving the goal also requires investments in electricity and hydrogen transmission networks, which must be developed in a sustainable way in terms of land use and regions, aiming for the most efficient utilization of electricity, hydrogen and its production by-products, such as heat and oxygen.”
The government also says that it will speed up the use of hydrogen in industry, transport and balancing electricity networks.
Under a Carbon Contracts for Difference (CCfD) scheme, end users would be paid a guaranteed amount by governments for avoiding CO2 emissions. This would consist of savings made by not paying a carbon price under the ETS, plus a top-up subsidy to reach the “strike price” agreed in the CCfD.
The amount actually paid by governments would therefore depend on the fluctuating EUA carbon price, and would mean that if it exceeded the strike price, end users would actually pay the difference back to the government.
The UK is due to introduce a slightly different Contracts for Difference scheme for green H2 this year, which would offer a subsidy representing “the difference between a ‘strike price’ reflecting the cost of producing hydrogen and a ‘reference price’ reflecting the market value of hydrogen”.
Essentially, this would enable green hydrogen to be available to the market at the same price as grey hydrogen produced from unabated methane.