European Court of Auditors report on hydrogen
Last week, the European Court of Auditors (ECA) presented a report examining the green hydrogen targets set by the European Union. Green hydrogen refers to hydrogen produced through a process known as electrolysis, in which the components of water are separated, generating hydrogen and oxygen, using electricity from renewable sources.
Challenges in the decarbonization of certain sectors
There are sectors in the economy that are particularly difficult to decarbonize and electrify. In such situations, green hydrogen could be a crucial solution to reduce polluting emissions. Among the notable sectors are steel production, the petrochemical industry, cement and fertilizer manufacturing. Furthermore, green hydrogen can also be used as a means to store energy, which would contribute to the flexibility of the energy system. However, this storage is not without drawbacks, since the transformation process involves large energy losses that affect its overall efficiency.
Current dependence on conventional hydrogen
Currently, 96% of the hydrogen consumed in Europe is produced from natural gas, making this practice a significant source of carbon dioxide (CO2) emissions. The transition to green hydrogen has several challenges in its path.
Production costs and sustainability
The costs associated with producing green hydrogen are not competitive compared to conventional hydrogen. In fact, auctions similar to those for renewable energy are already being held to encourage its long-term development. Data from 2022 reveal that the cost of producing hydrogen obtained from natural gas varies between 1 and 3 dollars per kilogram, while the production of green hydrogen ranges between 3.4 and 12 dollars per kilogram. In addition, the production of green hydrogen requires additional electricity and water resources, prompting debates about possible alternative uses for these inputs. Finally, the transportation and distribution of green hydrogen requires physical infrastructure that cannot always take advantage of existing facilities for natural gas.
Goals for 2030 under scrutiny
The European audit body has been clear about the targets set for the implementation of green hydrogen by 2030. The European Union committed to achieving certain objectives that were intensified in response to the crisis caused by the invasion of Ukraine. However, the ECA notes that the objectives regarding green hydrogen, both in terms of operational capacity and production, are not sufficiently defined. There is even some inconsistency in the figures presented in the documents presented by the European Commission over the last few years. In addition, it emphasizes that these objectives have been driven more by political motivations than by solid analysis, leading to the conclusion that they are unlikely to be achieved before 2030.
Perspectives and realism in energy projections
This implies a new realistic approach to energy projections at European and global level in this sector. According to information provided by the International Energy Agency (IEA) earlier this year, only 7% of green hydrogen projects announced this decade are expected to reach full operational capacity by the year 2030. The IEA has identified that the projects that reach a final investment decision are limited, and in recent years an increase in costs has been observed.
The importance of government support
The ECA stresses that it is vital for governments to support investment decisions through coherent policies that strengthen demand. Decarbonisation represents one of the most complex challenges facing the European Union and the rest of the world, and the ECA report on green hydrogen shows how, at times, political will can override reality.