Headline: Hydrogen

The availability of renewable energy is an important factor for future investment decisions in the chemical and steel industry. This is a key finding of our survey of 300 decision-makers from the chemical and steel industry. 92 per cent of the respondents anticipate that their company will relocate facilities as it seeks to decarbonize production. In addition to low-cost renewable energies, the respondents identify political support as a key factor in investment location decisions.

In February 2023, the EU presented the Green Deal Industrial Plan, in which it laid out its strategy for the green transition in industry and energy. Green hydrogen will be an essential cornerstone of this transition. The scale-up of renewable hydrogen production and its use in industry and transport has the potential to achieve decarbonization where direct electrification is not an option. Green hydrogen also offers opportunities to develop technological leadership and economic perspectives within a future net-zero economy.

The European continent dominated the global hydrogen race before 2022, with France, the Netherlands, Norway, Germany, Spain, Portugal, and the European Union all presenting ambitious hydrogen strategies by 2020 that outlined their major areas of action and objectives, along with key policy interventions to achieve those goals. Nonetheless, in the fall of 2022, the world's attention shifted to the United States. An initial draft of its long-awaited Clean Hydrogen Strategy and Roadmap was published by the US Department of Energy (DOE), and in the summer of 2023, the final version of the strategy was issued (U.S. National Clean Hydrogen Strategy and Roadmap, referred to hereafter as “the strategy”).

In their decarbonisation journey, European countries have so far focused on policies to dramatically increase the share of renewables and improve energy efficiency across diverse sectors, including industry, construction and housing. However, it has become clear that renewables alone will not enable the industrial sector to achieve its decarbonisation goals, as a large share of the carbon dioxide emissions from industry are emitted during manufacturing processes. Emerging technologies for carbon capture and storage (CCS) and carbon capture and utilisation (CCU) as well as hydrogen (H2) are currently being explored as the most promising solutions.

Green hydrogen (H2) is often portrayed as a key component for the green energy transition, since it is produced with renewable energy through electrolysis – the splitting up of freshwater into hydrogen and oxygen – and does not emit carbon dioxide when combusted. Not only does green hydrogen harbour huge potential for the decarbonization of hard-to-abate sectors (e.g. steelmaking and production of fertilizers) as well as maritime shipping and aviation, its use as an energy storage solution makes it particularly promising for remote and sparsely populated areas with an abundance of renewable energy resources.

The transition to renewable energy in Europe has evolved dynamically since the turn of the century. The share of renewable energy in the European Union more than doubled between 2004 and 2022. Nevertheless, renewable energy represents only 22 percent of overall energy consumption and 37 percent of electricity generation in the EU. In other words, Europe still has a long way to go, even when it comes to the relatively easy task of converting its electricity production to renewables.

Key Takeaways from the IASS Workshop & Roundtable on External Dimensions of Hydrogen Policies in Europe