EU’s Hydrogen Strategy accepts the need for more infrastructure
The European Commission’s Hydrogen Strategy for a Climate-Neutral Europe
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was adopted in July 2020. By the first quarter of 2022, all of its 20 action points had been implemented and delivered. Those actions aimed at fostering demand for and production of green hydrogen, supported by an enabling framework of EU-wide planning of infrastructure for transport and refuelling infrastructure (including Trans-European Networks / TEN), and market rules implemented in the course of legislative reviews that were necessary anyway.
In its Strategic Agenda 2024-2029, the European Council made it a priority for the Parliament and the Commission to provide a predictable framework for scaling up Europe’s manufacturing capacity for net-zero technologies and products. This is to be accompanied by investing in ample cross-border infrastructure for energy, and in grids, storage and interconnections.
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Ursula von der Leyen’s Political Guidelines for the European Commission 2024-2029 ambitiously announce an Industrial Decarbonisation Accelerator Act as well as plans to invest in the deployment of a hydrogen network. The Commission also announced plans to extend its aggregate demand mechanism from just natural gas to hydrogen.
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Although these are merely policy aims, these plans for cross-border infrastructure of pipelines across the European continent provide investors with reliability that Europe is creating an integrated Europe-wide hydrogen market.
Published in 2023, the EU Strategy and Roadmap established concrete targets, market-driven metrics, and tangible actions to measure success across sectors. A Hydrogen Interagency Task Force was established to advance a whole-of-government approach to clean hydrogen.
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Establishing Hydrogen Markets
The Regulation on the internal markets for i.a. hydrogen 2024/1798 as well as the gas market Directive 2024/1788 aim at facilitating the emergence of properly functioning and transparent markets with a high level of security of supply. This requires harmonising the network access rules for cross-border exchanges in hydrogen. Member States must implement regulated third-party access to hydrogen networks based on published tariffs, applied objectively and without discrimination. As in the electricity, natural gas or telecommunications markets, network operators must first be unbundled from production. Network operators get access to the network of other hydrogen network operators. Traders and users must be granted discrimination-free access to those networks and by 2026 also to hydrogen storage. Access may only be refused due to a lack of capacity or a lack of connection. Network users must be able to rely on neutral capacity-allocation and congestion-management, balancing rules and imbalance charges, and the facilitation of capacity trading. Each EU Member State drafts an integrated network development and financing plan including storage and rules for terminal operators. The next years will show whether a market for hydrogen develops more quickly, if it functions according to these principles from the outset, or whether this is overregulation
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and a traditional market consisting of fully integrated players is first required, which is then liberalised in a second step.
RED III aims at another aspect, namely acceleration of permitting procedures for new infrastructure and as a consequence at reducing initial administrative burdens.
The Delegated Acts based on RED III provide for (relatively) clear rules where and by using which electricity hydrogen production facilities must be planned to obtain certificates of origin for trading and storing such hydrogen.
In the United States: Focus on the transport sector, pipelines and on safety
In the United States, the National Clean Hydrogen Strategy and Roadmap
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explored opportunities for clean hydrogen to contribute to national decarbonisation goals across multiple sectors of the economy. In response to the Infrastructure Investment and Jobs Act (Public Law 117-58), also known as the Bipartisan Infrastructure Law (BIL), it provides a snapshot of hydrogen production, transport, storage, and use in the United States and presents a strategic framework for achieving large-scale production and use of clean hydrogen, examining scenarios for 2030, 2040, and 2050. In 2022, the U.S. Department of Energy commenced supporting clean hydrogen hubs, electrolysis, and manufacturing and recycling to support domestic clean hydrogen supply chains. The long-term aim is to cut the cost of clean hydrogen to $1 per 1 kilogram by 2032.
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A. Production of Hydrogen
Most economies lack production capacities for low-carbon hydrogen; it will take many years just to replace grey hydrogen with low-carbon hydrogen – not to mention producing sufficient quantities for replacing other dirty technologies. But here a conflict of strategic objectives is revealed: Facilities that produce hydrogen, such as electrolysers, are not only production facilities but at the same time large consumers of electricity that could also be used otherwise. Before their supporting effect to the green transition is felt, electrolysis puts a strain on the electricity grids that already are under pressure because of the volatile electricity generation from renewable sources.
The EU approach can be seen from the two Delegated Acts of February 2023: They provide legal certainty for the development of H2 production facilities if the hydrogen is to be marketed as green. At the same time, the Delegated Acts impose strict requirements including the place of production and the grid to be used for classifying hydrogen as green with the apparent aim of avoiding that hydrogen production hampers the electrification of other sectors. European governments focus on hydrogen production since 2023: In the first half of 2024, the European Commission approved state aid amounting to just under €1 billion for projects in the Netherlands,
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€1.2bn in Spain,
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€260m in Germany,
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similar initiatives are reported for Italy worth €450m,
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in Portugal and other European countries. The hydrogen bank tenders of the European Innovation Fund provide extensive support for investments in hydrogen infrastructure projects.
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Strategies with regional focus
In the US, the UK and other countries the objective of supporting infrastructure for hydrogen production is pursued with a different approach: the model of hydrogen valleys or hubs. This is where investments in infrastructure and market building are bundled and supported in a specific region.
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In October 2023, the U.S. government granted support for production facilities of clean hydrogen in seven regional clean hydrogen “hubs”. The U.S. government aims at catalysing more than $40 billion in private investment including infrastructure.
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It remains to be seen whether the new Trump administration will continue this strategy. The European Commission recently approved financial support for nine hydrogen “valleys”. In fast-developing economies like Brazil, hydrogen hubs comprise “regions” where industries such as fertilisers, steel and metals or petrochemicals industries are clustered (compare the Brazilian national chapter). The hydrogen laws of such markets therefore cover all aspects of the infrastructure related to production, processing, storage, transport, sale and exportation of low-carbon hydrogen. Some governments just design an over-all support scheme such as the Czech Republic’s 2.5bn EUR decarbonisation of industry programme and Austria’s comparable 2.7bn programme.
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Projects located in such clusters or hubs may also benefit from fast-tracked permitting authorisation processes as well.
Standardisation
Another approach is standardisation. India, for example, launched a broad initiative for standardisation in green hydrogen. India has set an ambitious target of producing 5m t p.a. of green hydrogen by 2030, which is the third highest target in the world after the EU and the US. Although this initiative may be seen against the background of a specific permitting regime in India, the US for example used a comparable approach at least for pipeline and storage infrastructure (see points B. and C. below). In India a total of 73 approvals is required for green hydrogen projects (43 by the State Government, 23 by Central Government entities and seven by local government bodies). Such approvals are general and legal approvals, and such for renewable energy use, fire safety, pollution control, labour and land allocation and use.
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Obviously, standardisation is a massive simplification.
B. Transport to the User
No matter where and how (low-carbon) hydrogen is produced, a functioning market is inconceivable without adequate transport infrastructure. In both the United States and the EU repurposing natural gas pipelines to pipelines for hydrogen or building new hydrogen pipelines is a major policy objective. While in the United States a main concern is to make the transport of gas, including hydrogen, safer, Europe focuses on building interconnected hydrogen grids.
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In the United States pipelines in general but also for hydrogen, have been maintained or even replaced under the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (PIPES Act of 2020), implementing historic infrastructure investments from the Infrastructure Investment and Jobs Act (IIJA) of 2021. According to official information, nearly two-thirds of the energy consumed in the U.S. is transported via pipeline. Both the Infrastructure Investment and Jobs Act and the Inflation Reduction Act include significant incentives for the build-out of the hydrogen and carbon capture utilisation and storage (CCUS) sectors. To address risks associated with the expansion of hydrogen and carbon dioxide pipeline infrastructure, both safety and environmental, regulations of these materials have been strengthened. Safety in the transportation of hydrogen and other cryogenic materials - via truck, train, plane, and vessel – has been strengthened too via an infrastructure grant programme and safety regulations.
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In the EU domestic hydrogen infrastructures in Belgium, Germany (the “Kernnetz”)
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, Italy and Denmark received government support
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, and so has an intercontinental hydrogen corridor from Portugal, Spain and France to Germany. Another large-scale project is that of building a Northern Hydrogen Route from Finland, through Estonia, Latvia, Lithuania and Poland to Germany. The hydrogen pipeline project between Italy, Austria and Germany to become operational by 2030 (the “H2 Collector East”
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as part of the Hydrogen Region “H2REAL”
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), a connection to the European Hydrogen Backbone
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with links at least to Slovakia and Slovenia by 2050 receive government support. Further projects are between France and Belgium, Denmark and Germany, Norway and Germany, and the Czech Republic and Germany. Bulgaria is planning a hydrogen pipeline between Thessaloniki in Greece and Sofia.
C. What to do with hydrogen that can’t be immediately used – the question of storage
Hydrogen isn’t just a fuel or feedstock, it can also be used as a long-term/seasonal energy storage. Hydrogen’s true competitive strength lies in its unique ability to store energy for long periods of time and in large quantities. Long-term hydrogen storage is important in countries with significant seasonal differences between power demand and renewable power generation. For example, Germany has 30% higher energy demand in winter than in summer, but its current renewable energy sources generate about 50% less power in winter than in summer. Hydrogen could thus be produced in summer to help meet the winter demand.
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For this reason, investment in infrastructure for large-scale storage at low cost (compared to e.g. short-time battery storage) is required.
Hydrogen storage can also be an energy vector so that e-methanol, green ammonia and other hydrogen derivatives can be transported away from their sites of production to far away customers. In all this, developers, operators, consumers, and governments must address the question of where hydrogen (or its derivatives) can be stored.
Only a few countries have a specific regime for hydrogen storage. In most cases, storage is regulated together with existing provisions on the gas market or gas infrastructure. In this, technical specifics, and the marketability of hydrogen must be ensured. This includes clear rules for the transfer of guarantees of origin from renewable electricity to the hydrogen produced with it and the treatment of blending with other hydrogen, e.g. blue hydrogen, or with natural gas.
As the sector scales up, it will be important to undertake further safety assessments and ensure that the right permits (such as COMAH authorisations) are obtained. In the USA, the problem is once more being approached from a security perspective as the nucleus for infrastructure development: Safety rules, consensus standards, codes, etc. of the past may not be adequate for future hydrogen use. So, one initiative has been systematic efforts by local/state/federal government entities, producers of hydrogen products (e.g., automotive industry, etc.), codes and standards organisations, users, and others have been devoted to:
- Identifying safety-related issues associated with the production and use of hydrogen-fuelled systems; and
- Developing or updating and then validating regulations, codes and standards relating to the safe transportation, use and servicing of hydrogen-fuelled systems.
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In contrast, the UK applies a system of control of major accident hazards (COMAH) as set forth in several regulations instead of standards – i.a. for hydrogen quality; design, construction and operation of pipelines; dangerous substances; and hydrogen transport.
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As such, currently, the construction of the first storage facilities is likely to require financial support. As with pipelines, repurposing natural gas storage facilities into hydrogen infrastructure can be a first step. Pioneering examples can be found in Denmark, where a hydrogen storage facility is being funded. This is known as the Green Hydrogen Hub in Northern Jutland,
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and combines electrolysis hydrogen production with long-duration underground storage in large salt caverns. or the south-west of France
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where a network of pipelines and stores is also planned for 2030.
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D. What about refuelling?
Transport and industrial use are the two dominant use cases for hydrogen. However, in mobility, at least in Europe, the lack of infrastructure remains a hurdle.
By the end of 2023, over 1000 hydrogen refuelling stations (HRS) were in operation in 35 countries worldwide. Most of these are in China, South Korea and JapanJapan
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. The construction of this infrastructure is involving a number of regional or global companies including the likes of H2 Mobility, Hynet, Shell, Linde, Air Liquide and Air Products).
Yet much more is needed if hydrogen shall become the transport fuel for large vehicles such as buses, trucks or as an addition to fuel for planes. Obviously, it must also be available along the most frequently used routes of such transport vehicles. In Germany, for example, the network development at petrol stations in large cities with a strong commercial vehicle sector is also an important location factor, as are the Trans-European Transport Network (TEN-T) and industrial parks and logistics centres.
A study by McKinsey e.g. identifies several key enablers – mostly physical infrastructure – that have to be rolled out by 2050 to facilitate the future hydrogen economy. In an optimistic scenario, over 163,000 refuelling stations for trucks would be needed globally, alongside a network of more than 40,000 kilometres of hydrogen pipelines in Europe alone.
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All this requires regulation or standardisation.
In Europe, Croatia was among the first states to support refuelling stations.
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Finally, technical standards for vehicles and refuelling pumps (sizes, pressure, temperature, fuel cells
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) are yet to be developed. Cooperation between petrol station operators and, for example, manufacturers of gas reciprocating compressors and/or reciprocating compressor components is necessary.
