Europe needs to act rapidly on green hydrogen to secure cost-efficient supply – report

Europe must hurry up to allow its prized industry to switch to large-scale green hydrogen use at reasonable cost, a German research alliance has found. “If Europe makes consistent decisions early on, a cost-effective, robust and strategically sensible hydrogen supply is possible,” said the so-called Transhyde alliance, which includes several Fraunhofer research institutes, universities, the Research Institute for Energy (FFE), and industry.

“The future of hydrogen in Europe remains in our hands if we pull the levers by the end of the decade,” said Mario Ragwitz, head of the Fraunhofer Research Institution for Energy Infrastructures and Geotechnologies (Fraunhofer IEG) and one of the main authors of a report published by the alliance.

The use of green hydrogen made with renewable electricity is seen as a key ingredient to make heavy industry climate-friendly, but Germany’s ambitious plans for a ramp-up are in trouble, as supply and demand have remained well below expectations despite billions in subsidies.

The researchers found that the greatest demand for hydrogen is set to come from the steel and chemical industries, but warned there was a wide range of possible developments, depending on global competition, the price of CO₂, and the cost of green hydrogen. They forecast a total industry demand of 779 terawatt-hours in the EU, Great Britain, Norway and Switzerland.

The report argues that a rapid and consistent expansion of renewables is crucial for future green hydrogen supply. “If this expansion falls short of the targets, both hydrogen costs and import dependency will rise significantly,” the researchers warned.

Targeted measures and support instruments including contracts for difference (CfDs), which bridge the price gap between climate-friendly and carbon-intensive production, as well as lead markets for climate-friendly raw materials, would be needed for the conversion of the steel and chemical industries, the report said.

The researchers said pipeline imports from regions such as North Africa or South-Eastern Europe are the cheapest long-term option, especially if existing natural gas pipelines can be used by converting them to hydrogen. “This reduces costs and the need for new large-scale projects, but also requires early coordination.”