The EU has massively overestimated how much green hydrogen it will need by 2030 — and how much it will need to import, according to a report published today (Tuesday) by engineering consultancy Ricardo.
Moreover, efforts to install renewable energy capacity to supply electrolysis projects for green hydrogen export to the EU in countries such as Namibia and Chile risks drawing investment away from renewables schemes that could decarbonise the grid in those countries, it added.
The bloc's RePowerEU plan (aimed at reducing dependence on Russian gas) envisages demand of 20 million tonnes by 2030, met with 10 million tonnes of green hydrogen per year and the same amount of imports.
But the Ricardo paper, Weighing the EU's options: importing vs domestic production of hydrogen/e-fuels, commissioned by non-governmental organisation Transport & Environment, points out that RePowerEU is non-binding, while the legally binding targets set out in the updated Renewable Energy Directive will require significantly less than 20 million tonnes.
Meeting the mandate for 42% of industrial hydrogen to be renewable would only require 3.5 million tonnes of green H2. Meanwhile, for renewable fuels of non-biological origin (RFNBOs) to make up 1% of transport, this would only translate to a million tonnes of hydrogen demand — a total of 4.5 million tonnes.
While Ricardo and Transport & Environment note a range of different estimates for how much renewable H2 could be feasibly produced within the EU, the paper’s analysis of International Energy Agency (IEA) scenarios suggests between 5.8 million and 7.5 million tonnes could be made in Europe — enough to meet the mandated volumes.
Some developers argue that imported volumes of hydrogen will be much cheaper than those produced in Europe, owing to stronger wind and solar resources. However, the report counters that transport costs are likely to massively increase the final cost of delivered hydrogen.
The paper compares the levelised cost of hydrogen in Spain and Morocco along three different transport vectors.
Transporting the hydrogen as a gas via pipeline adds $1.8-3.9 per kilo of H2, while shipping as a liquid comes with $1.2-4.9 in extra transport costs per kilogramme. Converting H2 to ammonia and cracking it back to hydrogen would bump up the cost by $0.8-4.1/kg.
As such, the final delivered cost of Moroccan hydrogen to a possible hub in the French city of Marseilles would range from $2.6/kg to $8.1/kg, compared to an estimated $2.28/kg for Spanish H2.
The report also calculates the cost of hydrogen produced from offshore wind in the North Sea with an LCOE of €40/MWh ($43/MWh) would reach €1.8/kg.
As such, assuming an electrolyser efficiency of 71% and current exclusion zones for offshore development, enough offshore wind capacity could be installed to produce up to 5.1 million tonnes a year of hydrogen at €1.8-2.8/kg and up to 7.6 million tonnes at €2.8-4/kg.
Impact on exporters
The report also explored how hydrogen production could impact six countries often touted as potential exporters to the EU: Egypt, Oman, Norway, Chile, Namibia and Morocco.
The report expects these six nations to be able to export a combined 2.61 million tonnes a year of H2.
Not only is this below the 10 million tonne-a-year import target for REPowerEU, it would be insufficient on its own (ie, without EU-produced volumes) to meet demand set out in the Renewable Energy Directive — although the paper notes that other exporters would likely top up Europe’s imports of hydrogen.
Additionally, the report warns that many of these countries, including Oman, Chile and Namibia, will have to export their hydrogen to Europe via ship, which will come with significant scope 2 emissions up to 2030 as zero-emission marine fuels are not expected to take off until after that year.
Ricardo and T&E also warn that investment into green hydrogen production could draw away funding for renewable electricity to displace fossil fuel-fired power generation.
In some cases, such as Norway, Chile and Namibia, the scale of renewable energy assets planned for hydrogen production far exceeds the amount of clean electricity that would be needed to completely decarbonise power generation, while others, such as Egypt, Morocco and Oman, would see only partial decarbonisation if renewables for hydrogen projects were redirected to supply the grid.
All of the six countries but Norway face problems with water stress. While some project developers have already posited using desalination plants to supply electrolysers — and even oversized to supply water to local communities — the report notes that this comes with the risk of damaging aquatic ecosystems depending on how brine is discharged into the environment.
Similarly, the report raises that at least one major project — Hyphen Hydrogen Energy in Namibia — is located in an area with high levels of biodiversity, particularly for species at risk of extinction, with potential harm from land clearing for installation of renewables and electrolysis capacity.