EU’s Move To Replace Gas With Hydrogen Held Up By Red Tape
Europe’s move to green hydrogen is being held up by EU proposals relating to its production, according to an industry group.
(Bloomberg) -- Europe’s move to green hydrogen, a potential substitute for natural gas, is being held up by European Union proposals relating to its production, according to an industry group.
A number of green hydrogen projects in Europe have already been put on hold or delayed by regulatory uncertainty, said Daryl Wilson, executive director of The Hydrogen Council, an industry group. The EU’s draft proposal on the matter was subject to public consultation in June, and is still a long way from becoming law.
So-called green hydrogen is made from water using an electrolyzer powered by renewable sources and the technology has long been viewed as a solution for steel, chemicals and other carbon-intensive industries seeking to cut emissions. Relative to other energy sources, the economics for hydrogen have improved in Europe as natural gas last month surged to about ten times its usual level. Even so, projects to make green hydrogen, also known as renewable hydrogen, are small and mostly still in pilot stages.
“The draft rules for qualifying hydrogen production in Europe -- as well as imported hydrogen -- as renewable have indeed been and remain a major concern for the industry,” Wilson said by email.
Certifying the hydrogen as green may prove difficult under the EU’s current proposals. Klesch Group, whose Heide oil refinery in Germany is at the center of a green hydrogen hub, highlights one of the sticking points:
According to Klesch, the draft proposals stipulate that green hydrogen must be produced within the same hour as the associated green electricity. Without the benefit of using batteries, production will be limited to windy periods of the day for an electrolyser linked to a wind farm. That will push up costs and could lead to more idling and equipment wear, said Sandra Niebler, head of commercial and economics at Heide.
Read more: Europe’s Green Hydrogen Rules Raise Costs for Industry
Electric cars are generally considered a greener form of transport, yet they aren’t subject to any restrictions on when they are charged, said Wilson at the Hydrogen Council. And of course, EVs can be charged irrespective of whether the electricity comes from green sources or carbon-emitting fossil fuels.
“It’s like having a Tesla that has to sit on the driveway for 70% of the time,” said Wilson. “Uncertainty around rules that work against the economics is a problem.”
The Klesch project includes cement maker Holcim AG and the local utility as partners, making it typical of such projects in Europe. The company is among several German oil refiners to outline plans to build a green hydrogen electrolyzer.
Shell Plc’s Rhineland refinery in Germany was the first in Europe to start a pilot but plans to expand it appear to have stalled for now. Shell recently announced its intention to build an electrolyzer in the Netherlands, though. BP Plc has yet to take a final investment decision on an electrolyzer at Lingen in Germany.
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