The Netherlands will almost certainly miss its 2030 electrolyser capacity goals and binding EU targets for renewable hydrogen use in industry by a large margin, government body the Environmental Assessment Agency (PBL) has warned.
A raft of challenges, from sharply increased power grid tariffs and rising electrolyser costs to market uncertainty on hydrogen demand, are combining to derail the country's plans, according to PBL, which advises the ministry of infrastructure and environment.
In its Climate and Energy Outlook 2024, published today, PBL forecasts that the Netherlands will have 1.2-1.5GW of electrolyser capacity installed by 2030, less than half of its 3-4GW target. This already factors in €7bn ($7.6bn) in government funding support that have been earmarked for ramping up electrolyser capacity alone, according to the agency. The various schemes to subsidies production in their current forms are insufficient to meet the target, PBL said.
PBL also sharply cut its forecast for renewable hydrogen consumption by Dutch industry, slashing it by more than half to 12-15 PJ/yr from the 27-40 PJ/yr it had predicted in last year's report. The 12-15 PJ/yr would equate to 100,000-125,000 t/yr, based on hydrogen's lower heating value of 120 MJ/kg.
This would be insufficient to meet the EU's binding quota for 42pc of all industrial hydrogen use to be made from renewable sources by 2030, PBL said. Around 70 PJ/yr, or roughly 580,000 t/yr, of industrial hydrogen use could be covered under the mandates based on existing consumption of fossil fuel-based hydrogen and projections for future developments, PBL said. The agency sees only a 5pc chance of the Netherlands meeting the 42pc quota, it said.
The fact that the exact rules for the 42pc mandate remain unclear, and in particular the extent to which it will affect ammonia producers, has not helped matters, according to PBL. EU member states have until May 2025 to transpose the industrial demand targets and their implementation into national law.
The Dutch government plans to open a consultation on this before the end of this month, it said recently. The Hague is considering placing specific obligations on renewable hydrogen use on individual companies, a measure that industry participants and observers have warned against in many EU countries. But the government is also planning to develop a demand-side support mechanism in pursuit of the EU targets.
Hydrogen producers have repeatedly complained about a dearth of demand and stressed that the 42pc target will not motivate industry to buy more expensive renewable hydrogen over fossil hydrogen until policymakers clarify which sectors or companies are obligated and what the penalties will be for not complying.
The government has said the results of the consultation will feed into applications for the ongoing second round of its subsidy scheme for hydrogen production.
The Hague is also currently "working out" the so-called "refinery route" measure, which industry has said is crucial to stimulate demand.
For now, the well-known challenges for production and demand are still holding back progress, the PBL report suggests. While the country is slipping behind on targets, the new government that took over this year has made cuts of €1.2bn to previously-announced measures to scale up hydrogen in its budget from September.
