The Energy Transition Expertise Centre (EnTEC) is a multi-disciplinary centre of expertise for the energy transition, aiming to identify relevant future topics for the energy transition. Its main objective is to monitor and analyse trends in technologies and innovations that are relevant for the energy transition. ENTEC is conducting studies in several areas as follows: digitalisation, hydrogen, storage and competitiveness. ENTEC has published a research paper assessing the supply gaps and possible options for cost-effective imports of renewable hydrogen carriers to the EU and related transport modes.
According to the European Commission's hydrogen strategy presented in July 2020, the future demand for hydrogen is estimated at 10 million tonnes per year by 2030, and at least 40 GW of electrolyzer capacity for renewable hydrogen should be installed in the EU. However, whether this target can be achieved depends on several factors. The study concludes that supply gaps will likely exist in 2030 and importing hydrogen and/or hydrogen carriers will be required. These supply gaps need to be covered by imports from countries and regions outside of the EU. The study analyses the costs for hydrogen, Power-to-Liquids (PtL), Methanol, and liquid synthetic natural gas (SNG) production and transport up to the EU borders. It also discusses the barriers and regulatory needs for developing hydrogen imports to the EU, with focus on renewable hydrogen and its derivatives. The re-conversion from derivatives back to (gaseous) hydrogen) significantly decreases the total efficiency and is therefore currently not considered as a plausible pathway. Therefore, the study considers that when derivatives are imported, they would have to be used as they are. For some derivatives such as PtL, existing (fossil) infrastructure can be used
There are no established international hydrogen markets presently. Policies to facilitate hydrogen imports need to work on the external level, not only on internal EU level. This includes:
- Bilateral agreements and multilateral partnerships have to be established with exporting countries. Bilateral agreements are more likely in the first phase of market development but EU coordination may be useful.
- Clear regulatory framework and rules (e.g. certification and standards) applicable to imports focused on renewable hydrogen are needed. Harmonisation of certification and standards at the international level would be useful.
- To enable hydrogen and derivative imports, investments are needed for developing repurposed and new infrastructure (terminals and pipelines) both on the exporting and the importing side.
At the EU internal level, market-making mechanisms such as double-sided auctions need to be developed at EU level. Double-sided auctions work by an auctioneer tendering and contracting both hydrogen purchase agreements with suppliers and hydrogen sale agreements with consumers. Public funding is necessary to bridge the difference between the high supply and lower offtake price.
ENTECS newly published study finds that regions that build a dedicated hydrogen infrastructure will also have an advantage in importing derivatives such as ammonia as the existing value chain for fossil-based ammonia and liquid fuels could essentially transport these imports, reducing the investment costs for import infrastructure and storage. In areas that do not develop a dedicated hydrogen infrastructure by 2030, hydrogen could still be used near coastal areas. Similarly, ammonia could supply industry in coastal areas, although there are also industries such as fertilizer plants located inland. Domestic PtLs could still be transported through domestic oil product pipelines or other modes.
More information can be found in the ENTEC Report.