Renewable hydrogen - online 15:00-17:30

15:00-17:30, 19^th of October 2022, virtual Meeting

Presentations:

The objective of this workshop was to discuss the status of the development of renewable hydrogen in Africa and other world regions, specifically for exports towards the EU, and the challenges and opportunities ahead. It also addressed building blocks of cooperation strategies between EU Member States and other world regions for hydrogen production, export and domestic use.

KEY QUESTIONS

What are the main barriers for the development of renewable hydrogen?
What are possible financing mechanisms for renewable hydrogen in the market development phase?
Which projects are currently being pursued? Which barriers are these projects facing?
What policies and business models are required to develop renewable hydrogen?
Which cooperation strategies should be pursued by the EU to develop renewable hydrogen production in other world regions?

MMag. Dr. Irene Giner-Reichl, Ambassador a.D., President of GFSE, opend the event with a warm welcome and noted the urgency of alternative energy carriers under current circumstances.

DI Dr. Leonardo Barreto-Gomez from the Austrian Energy Agency and GFSE Secretariat summarized GFSE policy Brief on natural gas and renewable hydrogen in Africa and cooperation opportunities with the EU. In his presentation, Mr. Barreto-Gomez talked about the advantages and requirements for intercontinental hydrogen trade. Measures to support investments in hydrogen production projects and H2-transport infrastructure as well as an increase of demand for renewable hydrogen in the EU will be necessary. The reduction of market risks and removal of commercialisation barriers to renewable hydrogen also play an important role. Trade of hydrogen derivatives such as Ammonia, methanol and e-kerosone may be more suitable in the first phases of market build up. Partnerships between the EU and other regions should go beyond hydrogen, including other renewable energy carriers and energy efficiency as well. A careful balance should be cast between generation capacity to meet domestic demand and capacity to produce H2. Mr. Barreto-Gomez also pointed out that the cost of producing renewable H2 has to be much lower in the exporting region than in the importing region to compensate for transport costs. Therefore, Renewable hydrogen projects require significant upfront investments. However, there is competition between project developers to secure the most promising locations and funding and first movers may be willing to accept lower profits to secure advantages in the long term. There are, however also risks for first movers, including including: Uncertain demand, Uncertain regulatory frameworks, Fossil fuel price volatility, Lack of infrastructure, Lack of operational experience or Lack of a skilled workforce. Mr. Barreto-Gomez also spoke about renewable H2 as feedstock for local industry and asked the participants of the workshop for their opining: Would hydrogen-dependent EU industry consider relocating to countries with cheaper renewable hydrogen?

Dr. Michael Losch from the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology (BMK) and World Energy Council Austria, started his presentation stating, that due to Austrias high process emissions, it would not be enough to make heating co2 neutral. New processes in “hard to abate”-sectors like the steel and cement industry are necessary. Many of these adapted chemical production processes need hydrogen. Currently Austria imports 90 Twh of gas, and produced 5TWh itself. The huge gap in between local production and import of energy carriers, will be similar in the Hydrogen sector. Dr. Losch hereby stressed the importance of Green Hydrogen, meaning Hydrogen produced though electrolysis using electricity from renewable sources. The currently used Grey Hydrogen that is generated from natural gas, or methane, through steam reforming. This traditional production method is not in line with Austrias Co2 goals and carbon capture and storage is not option in Austria the storage is needed for gas.

For Austria to fulfil its future hydrogen-needs, win-win partnerships with other countries, that produce a surplus in renewable energy, are a necessity. Potential partner countries could be from the North of Europe the MENA region, or from Ukraine. A lack of pipelines will mean, that in the beginning, fuels will mainly be imported by ship, with potential harbors being in Germany, the Netherlands and Belgium. Finally Dr. Losch, referred to Von der Leyens SOTEU speech, stating, that a unified strategy for the EU is needed. Especially in the delegated act, the topic of “additionality” is sill open and will still be a challenging one, since current definition will not apply to all regions. Dr. Losch also points out the urgent need to work on multinational framework for international certification.

Dr. Rudolf Zauner from Verbund and World Energy Council Austria presented a study conducted by the world energy council. He first gave details on the Energy provider Verbund and its expansion of renewables in Europe and Austria. In order to expand to green hydrogen, the hard to abate sectors are in the beginning of the project. Later on hydrogen could also be used as a seasonal storage. Verbund already gathered experience in various fields connected to hydrogen including carbon capture to plastics. Through its activities, the Energy provider realized the importance of partnerships in this new emerging market as value-chains in it are complex. Despite all local expertise and all the progress made by Verbund, imports will be needed. Austria is currently already importing huge amount of energy through natural gas, and these imports must be replaced by imports as a production at this scale is not possible domestically.

The study Dr. Zauner presented, covered decarbonised hydrogen imports into the EU to which the WEC contributed to Austrian part of study. The study found that a large amount of cost lies in the electricity production, therefore it is crutial to go to countries with low electricity cost. Another important task will be to coordinte and efficient infrastructure. All these activities are still on holde, waiting to the implementation of a regulatory framework, defining international standards and a solid well designed certification system. Currently green hydrogen is still not cost competitive compared to grey h2 and therefore also need financial support to help “kick-off” the new production method. A successful strategy of hydrogen imports builds on stable relationships and can help foster industrial development.

Khalid Salmi from the Regional Center for Renewable Energy and Energy Efficiency (RCREEE), Green H2 Development in The Arab region (Promising Trends & Sustainability Concerns) introduced RCREEE and presented an overview of the Moroccan hydrogen strategy. He also pointed out to sustainability concerns related to additional renewable electricity generation, irrigation and potable water supply in dry climate zones.

Jorge Pinheiro Machado from R20 spoke about Opportunities and Challenges, R&D and Finance and gave a Brazilian perspective on hydrogen. Opportunities for the industrial sector mainly lie in oil&gas, fertilizers , steel and chemistry. Brazil has aboundants of potential for renewable energy like solar and wind in the Northeast of the country and would be interested to export Hydrogen produces by Electrolysis to Europe. More than US$ 30 biliion investment have already been announced. But also the local demand is increasing: Especially in the automotive sector through heavy vehicles Hydrogen production from Ethanol using steam reform may become an option. For local production, using technology to produce H2 from the waste is also considered an option.

Challenges still facing the sector include lie in yet to be developed technology: New Technologies could make the process more efficiente and bring the cost down. There is also still a need for better solutions for transportation and storage. To advance in these technologies, more R&D for fuel cells for the automotive sector is needed. The National Energy Council has already approved an R&D budget in 2021 in which Hydrogen should be a priority. Overall BNDES and Finep are ready to finance hydrogen projects.