Investors present European lawmakers with wish list for the hydrogen economy – pv magazine International
If the EU is to generate more than half a trillion dollars in hydrogen investment over the next decades, it will need to get investors on board. The European Investment Bank has polled financiers to find out what they want.
Potential hydrogen investors have told the European Investment Bank (EIB) that measures such as hydrogen uptake guarantees, consumption quotas, a carbon tax and more flexible aid rules will be needed to achieve the EU’s hydrogen ambitions.
The EIB interviewed 20 hydrogen companies and 26 investors on behalf of the European Commission to identify obstacles to the development of the hydrogen economy in Europe. Respondents said green hydrogen fueled by renewables is more expensive than other forms of energy carrier, with a lack of uniform regulation for hydrogen deployment.
Funding is limited, cross-border projects need to be better coordinated and the multiplicity of funds available to support hydrogen projects is counterproductive. Investors and hydrogen companies have suggested that incentives could include guaranteed off-take contracts, feed-in tariffs for hydrogen production, green public procurement to drive hydrogen demand, and production capacity auctions. .
Respondents pointed to Germany’s H2 Global plan to create a hydrogen market through a public body to buy the gas at the cheapest price and sell it to end users for the highest return. Carbon Contracts for Difference (CCFD) have also been suggested, with associated changes to the European Emissions Trading Scheme (ETS) and Guarantees of Origin to certify carbon reduction volumes.
The CCFDs would set an auction-determined revenue level for companies producing carbon allowance certificates linked to the market-determined price of the certificates on the European ETS. Instead of being subject to fluctuations in the carbon price, certificate producers – in this case, electrolyser manufacturers – would receive a state-funded top-up to the value of their certificates when the price determined by the ‘ETS is lower than the CCFD figure. Where the ETS carbon price is higher than the CCFD strike price, certificate holders would refund the difference to the appropriate public fund.
Quotas could stipulate a minimum requirement for green hydrogen consumption, for example by European steelmakers, in conjunction with an EU carbon border. They could also impose the transport of a certain volume of hydrogen in European gas pipelines, in order to reduce transport costs.
Hydrogen industry representatives have called for a relaxation of state aid rules for large-scale projects. Businesses and investors have also called for uniform hydrogen regulation across the EU, to help cross-border projects.
Standard contracts for the installation of hydrogen pipelines would be useful, according to the EIB report entitled “Unlocking the hydrogen economy”, as would safety and pressure standards, in particular for transport and storage of the energy carrier. The EIB report says the European Union wants the bloc to have 6 GW of electrolyzed hydrogen production capacity by 2024 and 40 GW by 2030.
This will cost €24 billion ($25.8 billion) to €42 billion by 2030 for electrolyzers alone, the report says, with a total hydrogen investment cost up to 2030.” of the order of hundreds of billions of euros”, and the bill until the middle of the century. “up to 470 billion euros”.
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