'Green hydrogen exports could delay decarbonisation of domestic power grids — and the EU may not even need H2 imports': report
Would-be exporting countries might be better off using renewable energy to clean up their own electricity production, rather than producing green hydrogen for others
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.
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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.
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.
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.
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.
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