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The hydrogen battle, the lobbies are coming into play to guide the Green Deal
The European Recovery Plan will guide the continent's new energy and industrial strategies. A battle in which the big gas and energy companies won’t give up trying to chart the course
June 11, 2021

Francesca Cicculli
Carlotta Indiano
Giulio Rubino

Europe’s decarbonisation strategy, caught between its Green Deal, and the relaunch of the post-pandemic economy, seems to want to give a key role to hydrogen. Hydrogen is considered a clean fuel because its combustion releases only water or water vapor as a residue, however it is not present in nature. Before being burned, in fact, it must be produced. Hydrogen is not an energy source, it’s only an energy carrier, a “battery”, and not all the existing technologies to produce it have a low environmental impact.

Hydrogen will also need to be transported and stored, that is to say, an entire industrial chain should be set up in order to be able to implement its use – a chain that is still non-existent at the moment, or at least extremely limited. Moreover, many of the technologies needed to produce and distribute it economically are still experimental, and there is no guarantee that they can really work on a large scale.

In brief, the investment needed in this field is huge, and it is not clear whether its benefits can actually live up to its promises. But whether the benefits for the climate and for the citizens are there or not, surely there are already tens of billions of euros from the EU on the plate, enough to justify a colossal lobbying effort to guarantee them.

Green hydrogen, blue hydrogen

On May 22nd 2020, a letter signed by Choose Renewable Hydrogen – a joint initiative of the main European energy companies – arrived in the offices of Frans Timmermans, Vice-President of the European Commission, calling for investment in green hydrogen produced from renewable energy because, together with the electrification of the networks, «it is the best way to achieve full decarbonisation and climate neutrality by 2050».

EU Commissioner and vicepresident Frans Timmermans at a press conference in Brussels on July 8, 2020 – Photo: Alexandros Michailidis/Shutterstock

A month later, on June 24th, another letter reached the same office. The signatories this time are the leaders of europe’s leading oil and gas companies. Echoing the group of “electricians”, even “gas workers” see hydrogen as the key element of the energy transition, but call for investment in blue hydrogen, produced from natural gas with CO2 capture and storage. «Hydrogen produced from natural gas with carbon capture creates the conditions needed to make the market competitive», reads the letter, «Currently, the cost of hydrogen produced by gas is up to five times cheaper than the one obtained from renewables and therefore the production of blue hydrogen would also encourage a reduction in the cost of green in the long term».

The difference between the two “colours” of hydrogen is substantial: green hydrogen is in fact produced by electrolysis of water into hydrogen and oxygen, using energy produced from renewable sources. An expensive process, but completely free of climate-changing emissions.

The blue one, on the other hand, is produced from methane gas by steam reforming (SMR) process, and produces high amounts of CO2, with an added risk of methane losses along the supply chain. The capture and storage of the carbon dioxide produced (CCS) would be the only element that, according to those who promote it, could make this process “clean”, but it is a technology that presents several critical issues, as we will see.

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The Commission does not yet seem to have taken a clear line between these two different positions. At the present day, they are betting on green hydrogen but passing through the blue one, considering both as sustainable. At the base of the Commission’s choices, however, there is an intensive lobbying activity, which is likely to bring new funding precisely to the companies responsible for the biggest part of the emissions.

Why hydrogen?

«Hydrogen has had many lives since the 1970s», Alessandro Franco, professor of energy at the University of Pisa, explains to IrpiMedia. «After the 2008 crisis, it was planned to use hydrogen in the automotive/transport sector, then supplanted by hybrid and electric mobility. Now green hydrogen is the new trend, produced from renewable sources», continues Alessandro Franco who adds: «I do not know if it will be an important element in the energy transition, despite its positive characteristics».

Hydrogen production is a field in which many different actors have research interests and this, according to Professor Franco, is why it attracts diverse kinds of industries. «Compared to the past, this time traditional industries – the oil industries – are also aiming for hydrogen, because clearly there has been a crisis in the sector that pushes for diversification and a search for new markets».

But, according to others, the focus on hydrogen is mainly the result of economic strategies: «The coal industry is already dead, the gas industry is a walking dead», says Davide Sabbadin of the European Environmental Bureau (EEB), an association that brings together europe’s leading environmental NGOs. «They know well that the European Commission has to eliminate gas by 2050 because it is not compatible with the scenario of a decarbonised Europe. They are therefore using blue hydrogen as a lifeline».

«The coal industry is already dead, the gas industry is a walking dead. They are therefore using blue hydrogen as a lifeline»

Davide Sabbadin, European Environmental Bureau

Environmental associations are quite wary of blue hydrogen, and they are suspicious of the European Commission’s idea of welcoming it into its environmental strategy. The main criticalities, as anticipated, concern the Carbon Capture and Storage (CCS) technology, which foresees using depleted oil wells to store it. This technology, which is still in the prototype phase, still leaves a significant percentage of emissions into the air and is extremely expensive. Moreover, the transport of captured carbon dioxide requires a network of ducts, which does not currently exist, capable of supporting its extent. Currently, there are no active CCS facilities, nor are there any infrastructures that would allow CO2 to be transported. Therefore, producing blue hydrogen is practically still impossible.

The European Union is already aware of the inefficiency of CCS: between 2008 and 2017 the UE financed €424 million for six failed CCS projects – with the exception of one that did not meet the expectations anyway – and for this reason it was criticised by the European Court of Auditors.

Another critique to CCS concerns one of its main applications: carbon dioxide would be pumped into old oil wells to recover hard to extract oil, with additional economic benefits for the oil industries and an increase in fossil fuels availability.

The collapse of the American CCS

The Petra Nova plant in Texas, USA is the demonstration that Carbon Capture and Storage (CCS) is currently economically unsustainable. The plant – opened in 2016 and funded with $195 million by the Trump Administration – was officially closed at the beginning of 2021 because it was too expensive.

The world’s largest CCS plant was designed to capture CO2 emissions from the WA Parish coal-fired power plant, and then transport them by pipeline to a nearby oil field. There, carbon dioxide was injected into wells that had already exceeded their peak of exploitation, thus allowing the remaining oil to be extracted. But extracting oil with this method has become increasingly expensive, also due to the collapse in the price of crude oil during the pandemic. CCS also required so much energy that the plant was forced to rely on an additional CO2 separation gas plant.

The results were far below expectations: emissions were expected to be reduced by 90%, however a study by the Environmental Projection Agency showed that Petra Nova captured only 7% of them and that in three years the plant was closed for 367 days due to problems with the technology. The same report indicated that CCS caused a significant increase in water consumption at the WA Parish coal-fired power plant.

How blue hydrogen was adopted in the European energy strategy

On September 11th 2019, a new entity was recorded in the European Commission’s transparency register – the database listing organisations seeking to influence the legislative and policy implementation process of the European institutions, Gas for Climate.

Founded in 2017, Gas for Climate is a consortium composed of ten European gas companies, including: Enagás (Spain), Energinet (Denmark), Fluxys (Belgium), Gasunie (Netherlands), GRTgaz and Teréga (France), ONTRAS and Open Grid Europe (Germany), Snam (Italy), Swedegas (Sweden), DESFA (Greece); plus two biogas industries, the Italian Biogas Consortium and the European Biogas Association. The group shares the belief that gas and its infrastructure have a key role in the European decarbonisation process.

On December 11th 2019, the European Green Deal – the strategy that should make Europe to be the first carbon-neutral continent – was presented and Gas for Climate’s companies realise that there is little space left for gas: Europe wants to aim at hydrogen as the key element of energy transition. However, the European Green Deal remains vague on how hydrogen should be produced, generically talking about “clean hydrogen”. Therefore gas companies tried to avoid blue hydrogen to be excluded from European industrial strategy and to prevent the shrinkage of the gas market.

Gas for Climate, together with different European energy companies, was convoked by the Commission when the meetings to establish the European industrial strategy started. These meetings were so successful that on March 10th 2020, along with the industrial strategy, the Commission set up the European Hydrogen Alliance, bringing together stakeholders, governmental , institutional and industrial partners. The activities defined a transitional phase in which blu hydrogen will be produced. «We fought to be heard as an NGO but we obviously played a secondary role», Davide Sabbadin said.

As stated in the Re:Common report La montatura dell’idrogeno (The Hydrogen Hoax), environmental NGOs had only 37 meetings with EU officials as opposed to the 163 that the European Hydrogen Alliance had.

Gas for Climate doesn’t appear amongst the official members of the Hydrogen Alliance, but its members do. Among other protagonists we find Hydrogen Europe, an association that includes more than one hundred industrial companies and Members of the European Parliament, working together to promote hydrogen.

Hydrogen Europe represents the interests of companies and research centres within a partnership both public and private with the EU Commision, the Hydrogen Joint Undertaking. As claimed by Re:Common, Hydrogen Europe is merely «a Commission’s creature that on behalf of all industries, does lobby on the Commission itself». Between May and June 2020, the suggestions that companies gave to the Commission were published, including the ones that came from Gas for Climate.

Companies claim that the current EU infrastructures aren’t able to satisfy the growing demand for hydrogen if they decide to produce only the green one. According to companies, it would be necessary in the medium term to use blue hydrogen and further invest in gas. For this reason, companies also consider it necessary to conclude alliances with Eastern Europe countries for the supply of gas and with North African countries that already have the infrastructures to transport it.

The fact that to produce green hydrogen we need to pass through blue hydrogen is a statement yet to be economically proven. According to some independent studies, including the report of the International Renewable Energy Agency, hydrogen produced from renewable electricity might compete economically with hydrogen produced from fossil sources by 2030. The increase in production of renewable energies would allow green hydrogen to become a cheap solution in the short term. «The strategies proposed may lower the production cost of green hydrogen by 40%in the short term and by 80% in the long run, making the price of the green one fall below $2 per kg, if different States decide to lower costs for electrolyzers» shows the report.

The trick to keep selling gas

The hydrogen strategy was presented officially on July 8th 2020 by the EU Commission. Besides confirming the desire to produce blue hydrogen, the Commission also announced that Hydrogen Alliance will help to plan the hydrogen infrastructures.

Gas for Climate didn’t miss this opportunity: on July 17th 2020 it signes the European Hydrogen Backbone Report that focuses exactly on hydrogen infrastructures. The consortium imagines a hydrogen network – 23.000 km to be achieved by 2040 – that will connect the future centres of supply and demand for hydrogen throughout Europe.

The crucial point of the project, according to its supporters, is that 75% of the network will be made out of retrofitted gas pipelines. The idea is to reconvert and remodel the existing gas pipelines to allow them to transport also hydrogen together with methane gas that, in the coming years, will be used less and less. The cost for this network is estimated between 27 and 64 billion euros.

The companies that signed the report, like the italian Snam, have been testing for years the transport of hydrogen inside gas pipes via blending – mixing hydrogen and methane together. Thanks to this solution, it’s possible to transport up to a maximum of 20% hydrogen blended with 80% methane. As companies themselves claim, if the hydrogen goes beyond this percentage would require tailored pipes.

«When they talk about selling 20% of hydrogen, in fact, they aim at selling 80% of gas – claims Davide Sabbadin -. Money is spent on infrastructures that will be white elephants, because in ten years time this 80% gas will no longer be sold to anyone if we look at the EU climate goals that cut down the consumption of gas. So that’s how hydrogen is an excuse to do some tweaking and keep on selling us methane».

The future of hydrogen

For the post-pandemic recovery, the European Union has planned a complex recovery plan which foresees ample funds to be distributed to each member state. The most widely discussed in recent months has been the Next Generation EU fund, which will allocate €675.5 billion. Each Nation must now fill in its own national plan, investing 35% of the funds it will receive to achieve the goals set by the Green Deal.

Each national plan will be very different from each other. For example, Eastern European countries are more cautious about climate and see gas as transition fuel and for this reason they might direct european funds to the production of blue hydrogen.

Other countries are more interested in green hydrogen. Among these, Germany keeps on making agreements with Russia for the supply of gas, but at the same time it would have a competitive advantage in the production of green hydrogen, because the major producers of electrolyzers (the machines for water electrolysis) in Europe are German. In contrast Italy has Eni and Snam that aim at gas and Enel which is in favour of the development of renewable energies. Eventually, national plans will be a compromise between different companies.

But if we actually want to aim at the decarbonisation and the achievement of the Green Deal goals, talking about hydrogen regardless of its “colour” is likely to be a massive distraction operation.

«Without a surplus of renewable energy production to be used for hydrogen production, any speech about hydrogen is only in favour of gas companies»

Massimiliano Varriale, WWF energy consultant

Massimiliano Varriale, WWF energy consultant, helps us to do the math: «The real problem is that there’s not enough renewable energy production. Each year in Italy barely one thousand new megawatt of renewable energies are installed. Germany on photovoltaic alone installs 4/5000 megawatt per year and it’s one of the least sunny european countries. To get to the goals of decarbonisation that we set we should install 6000 or 7000 renewable energy generators per year». Actually, Varriale concludes «without a surplus of renewable energy production to be used for gas production, any speech about hydrogen is only in favour of gas companies».

As a matter of fact, the European Commision didn’t even define yet a strategy on where to use hydrogen and doesn’t even have a position on network development: «The discussion was led by those who produce pipes and logistics, but they didn’t make a decision about how to distribute hydrogen because it obviously has huge geopolitical impact» said Davide Sabbadin.

After March 27th 2021 we will obtain a clearer picture on the situation, when the European industrial strategy will be published. It will establish the maximum amount of CO2 that can be emitted by producing hydrogen. Within those limits we will refer to it as “clean hydrogen”. The higher the authorized level of emissions is, the more likely is that blue hydrogen will become part of the european strategy.

«The list of areas in which hydrogen will be used, the projects on which to invest the earliest funds, the discussions about the taxation of energy carriers and the amendment of directives about energy efficiency and renewable sources – planned for the summer 2021- will tell us if the European Union still wants to promote gas or not – concludes Davide Sabbadin -. The choices will also depend on the positions of national governments because in the end details will be defined by politics. The big choices will be made behind closed doors and in small rooms».

CREDITS

Authors

Francesca Cicculli
Carlotta Indiano
Giulio Rubino

Editing

Lorenzo Bagnoli

Photo

EU Commission headquarter in Brussels
Photo: Xavier Lejeune/Shutterstock

With the support of

Translated by

Marta Soldati
Allison Vernetti

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