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Sia Partners analyzed 12 European countries, regarding 8 different topics, surrounding renewable and low carbon hydrogen, from the upstream to the downstream. Our global rating shows 3 stages of development between these European countries.
Renewable and low carbon hydrogen production is still in the early stages of development, but projects are multiplying across 12 European countries at different speeds.
European production capacities of renewable and low-carbon hydrogen currently represent 0,1 Mt/year, which is less than 1% of total production capacity.
However, considering the production projects announced for 2030, production capacities should increase to 7,8MT/year thanks to large-scale electrolysis projects but also due to the development of carbon capture for steam methane reforming processes (SMR + CCUS). Strong differences in quantities produced and technologies used will appear between the 12 countries studied in the observatory.
Allocation of production capacities of low carbon and renewable hydrogen demonstrates the primary uses of hydrogen: greening hard to electrify industrial sectors and as an alternative energy carrier for mobility applications. If historical consumers of hydrogen for industrial applications such as Germany, the Netherlands or France have a great interest in hydrogen, countries with small current roles in the ‘hydrogen economy’ are also gradually developing projects to produce hydrogen for mobility, residential heating or as a tool for energy management. Transport and storage infrastructure will however have to scale up to link regions of production and consumption.
Since June 2020, many European governments have announced strong financial supports and initiatives to develop renewable and low carbon production and use, revising upwards their objectives and investments.
Many of these hydrogen strategies are based on the deployment of electrolysis production capacities. However, given the current electrolysis technologies, taxes on energy and prices of electricity from the grid, low carbon hydrogen produced from grid-connected electrolysis is not able to compete economically with hydrogen produced by SMR+CCUS.
Given the 2020 carbon content of the European electricity production, hydrogen produced from grid-connected electrolysis cannot be considered low carbon in most European countries. To avoid CO2 emissions associated to increasing hydrogen production, announced electrolysis projects will have to be associated with the deployment of additional 20GW of renewable production capacities by 2030. European governments will have to support the development of these additional renewable electric production capacities as well as reduce electricity costs through tax exemptions.
Based on our comparative analyses of levels of development regarding hydrogen production, transport, use, mobility applications and governmental ambitions, Sia Partners offers a ranking of the 12 countries studied. Germany, France and the Netherlands, stand out from the others European countries as particularly ambitious and promising. These 3 countries set ambitious targets in terms of renewable hydrogen production, transport and downstream uses (mobility and industry) and announced significant public investments to support hydrogen development over the next 10 years.