EU must review 'overly ambitious' H2 targets: Audit
The EU needs a "reality check" on "overly ambitious targets" for renewable hydrogen production and imports, the European Court of Auditors (ECA) has said.
The European Commission's RePowerEU targets of producing 10mn t/yr renewable hydrogen by 2030 and importing the same amount were based on "political will" rather than "a robust analysis," the ECA said in a report on EU renewable hydrogen policy. The bloc is "unlikely to meet" the targets "based on available information from member states and industry".
Some industry participants have for a long time criticised the EU goals as unrealistic.
In a response to the ECA's report, the commission said it "acknowledges the challenges" associated with reaching these "aspirational targets". The commission said it will "assess whether the aspirational targets can be reached," but noted it "cannot commit to any update at this stage". It said the underlying objectives "are still valid" and that "a downward review of the targets" could increase uncertainties for investors.
But earlier this year, an assessment in which the commission set out scenarios for the energy sector anticipated much lower domestic renewable hydrogen production of around 3mn t/yr by 2030. The commission told Argus at the time that the RePowerEU projections for 2030 would be reviewed once member states have submitted updated national and energy climate plans (NECPs). These were due by the end of June, but only a few member states submitted them on time.
Responding to the ECA report, the commission said it would accept a recommendation to review its hydrogen strategy more broadly — including incentive mechanisms, the prioritisation of funds and the role of imports compared with domestic production — noting it would take the NECPs into account for this.
EU funding could amount to €18.8bn in 2021-27, based on the ECA's estimates. But the commission itself "does not have a full overview of needs or of the public funding available," the ECA said. Funding opportunities are "scattered between several programmes," which makes it "difficult for companies to determine the type of funding best suited for a given project," it said.
The ECA acknowledged that progress has been made on key regulatory areas, including a definition of renewable hydrogen. But the body notes that this took a long time, leading to investment decisions for projects being delayed.
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German CCS debate heats up as government advances
German CCS debate heats up as government advances
Berlin, 17 September (Argus) — The debate on carbon capture and storage (CCS) is heating up in Germany, as the federal government finalises its carbon management strategy and environmental groups reiterate their warnings on the associated risks. Environmental group Greenpeace today slammed Berlin's plan to support CCS technology as part of its nascent carbon management strategy. Greenpeace pointed to the technical risks and high costs, and that Europe's only larger CCS sites — Norway's Sleipner and Snohvit — have already encountered "unexpected" problems. Germany's federal ministry of economic affairs and climate action stressed in a strategy paper last week that CCS is categorised as safe and "not a high-risk technology". The ministry started consultations last week on its strategy with other relevant ministries, with a draft to be sent to parliament in the next few weeks. The paper stresses that funding will be available only for dealing with technically unavoidable and "hard-to-abate" emissions, based on a "scoring model" developed by the economy ministry that analyses CCS use based on costs, technological availability, avoidance potential, emission source and lock-in risk. The cement, lime and thermal waste treatment sectors have been given an "A" score, as their emissions are deemed "technically unavoidable", with steam crackers scoring a "B", allowing these sectors to be considered eligible for support. Blue hydrogen, the glass industry and gas-based direct reduced iron (DRI) technology in the steel industry are rated "C", and aluminium, gas-fired power plants, combined-heat-and power (CHP) plants, and blast furnace technology in the steel industry are rated "D". The development of CO2 infrastructure should be "private-sector and market-driven" and "as competitive as possible", the paper said, but some "hedging mechanisms" for investors may be necessary in the "ramp-up" phase to mitigate the risks for first movers and leverage the long-term potential for economies of scale. Support would go beyond Germany's carbon contracts for difference (CCfDs), and possibly imply some kind of state backing via public bank KfW. CCfDs are among the existing funding instruments planned for certain CCS applications for larger industry firms, along with decarbonisation aid for medium-sized companies presented last month . The ministry plans to set up a CO2 infrastructure working group to co-ordinate planning, possibly alongside other working groups on areas such as CO2 use or storage. The annual quantities of CO2 to be sequestered in Germany are estimated at 34mn-73mn t of CO2 in 2045. Germany's amended draft carbon storage bill, which forms the legal framework for the pipeline-based transport and storage of CO2, is now under parliamentary scrutiny. And Germany will deal with carbon removal and the targets for "technical sinks" in its long-term strategy on negative emissions, which the government aims to present by the end of this year. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Cop 29 presidency sets out initiatives, summit agenda
Cop 29 presidency sets out initiatives, summit agenda
London, 17 September (Argus) — The president-designate of the UN Cop 29 climate summit, Azerbaijan's Mukhtar Babayev, has set out 14 initiatives and a detailed agenda for the conference, including a new focus on methane reduction and tackling barriers to a "clean hydrogen" market. There is an "urgent need to harmonise international frameworks, regulations and standards to create viable business models" for hydrogen, Babayev said. The Cop 29 presidency will build on the declaration of intent on mutual recognition of hydrogen certification schemes, made at Cop 28 last year, it said. It plans to launch a framework to set priorities ahead of Cop 30, scheduled for November 2025 in Brazil. The Cop 29 presidency also aims to tackle "the growing problem of methane from organic waste", it said. Methane — a potent greenhouse gas (GHG) — is often a focus at Cop summits, although typically with an eye to the largest emitters, the agriculture and fossil fuel industries. Babayev has called for governments to commit to targets to cut methane from organic waste in their climate plans, as well as for more signatories of the Global Methane Pledge. The pledge, launched in 2021 at Cop 26, asks signatories to cut methane emissions by at least 30pc by 2030, from 2020 levels. The Cop 29 presidency has also developed a two-pronged pledge, which seeks to scale up global installed energy storage capacity to 1.5TW by 2030 and add or refurbish more than 80mn km of power grid by 2040. It has developed a "green energy zones and corridors" pledge as well, to maximise sustainable energy generation and ensure "cost-effective transmission over large distances and across borders". Babayev provided further details of a planned climate fund , which will be capitalised by fossil fuel producing countries and companies. "We believe that countries rich in natural resources should be at the forefront of those addressing climate change," Babayev said, noting that the direction came from Azerbaijan's president Ilham Aliyev. The fund will be a public-private partnership, with "concessional and grant-based support to rapidly address the consequences of natural disasters" in developing countries, Babayev said. It will "provide offtake agreement guarantees for small and medium-sized renewable energy producers and first-loss capital for green industrial projects", with a focus on food and agriculture, he said. Cop 29 is set to take place in Baku, Azerbaijan on 11-22 November. It will be the first Cop hosted in the Caucasus region, Babayev noted. He flagged the "extreme heat [and] water scarcity" the region faces, but also pointed to its wind and solar power potential. Topics of other programmes set out today include water, climate action in tourism and a peace initiative which emphasised the "interplay between conflict and climate change". By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Clean H2 to hit 12mn-18mn t/yr by 2030, goals in doubt
Clean H2 to hit 12mn-18mn t/yr by 2030, goals in doubt
London, 17 September (Argus) — Global supply of clean hydrogen could reach 12mn-18mn t/yr by 2030, up from less than 1mn t/yr currently online, according to industry body the Hydrogen Council. This is well short of global government targets and suggests supply will remain far below estimates of what is needed to combat climate change. Announced projects could provide 48mn t/yr of capacity by 2030, of which around 75pc would be renewable hydrogen and the remainder 'low-carbon' output from natural gas with carbon capture and storage, the association said in its Hydrogen Insights 2024 report published today. But only 4.6mn t/yr of this has moved to a final investment decision (FID) or beyond and "natural attrition" — prioritising the most viable projects — means many of the announced ventures will not materialise as planned, the Hydrogen Council said. A "probability adjustment", based on completion rates for other renewables projects, suggests only around 30pc of the announced capacity will be operational by 2030, the group predicts, although the 12mn-18mn t/yr estimate does not factor in potential future announcements. If these forecasts materialise, governments around the world are bound to spectacularly miss production targets set for 2030. The EU and the US are targeting 10mn t/yr of domestic production each, India 5mn t/yr, while Egypt, Saudi Arabia, Oman and the UAE have goals for at least 6.5mn t/yr between them. Scores of other countries have ambitious goals. The forecast would also fall far short of climate change imperatives. Paris-based energy watchdog the IEA estimated last year that 69mn t/yr of clean hydrogen would be needed by 2030 to put the world on track for net-zero emissions by 2050. The Hydrogen Council puts this at 75mn t/yr. The Hydrogen Council has pointed to global macroeconomic headwinds as a key reason for slow progress, along with uncertain regulation within the sector. A slew of recent project cancellations have counteracted the optimism arising from an increased number of FIDs . Growing up Still, the industry has shown some encouraging signs of maturity, even if it is not on track to meet the heady targets set by many governments and companies, the Hydrogen Council said. Committed funds for hydrogen projects past FID, being built, or in operation was $75bn across 434 projects as of May 2024, compared with $10bn across 102 projects in 2020, it said. The $75bn is nearly double the $39bn in this category as of October 2023. There was only a 15pc increase in the combined value of projects in the 'announced' category, to $303bn from $259bn, over the same period, signalling the pace towards realisation of projects is picking up. The near double growth in 'committed' funds was driven 60pc by investments in end-use, 40pc in infrastructure, and only 15pc by investments in hydrogen production. Investment decisions for end-use applications grew several times over between October 2023 and May 2024. This may satisfy market participants' repeated calls for a government focus on stimulating demand recently. But planned investments in end-use and infrastructure projects are lagging far behind what will be needed in a net-zero scenario, the Hydrogen Council said. Announced investments in end-use projects is $145bn below what is required by 2030, and midstream infrastructure is trailing by $190bn. But announced investments in production projects this year for the first time surpassed what will be necessary, with a $15bn surplus — although much of this could fall by the wayside. "With the current announced investments and the growth observed since last publication, investments are behind the required net-zero pathways with net-zero targets unlikely to be met," the Hydrogen Council said. By Aidan Lea Assumptions for probability adjustments % Project stage Assumed success rate In operation 100 Under construction 100 Post-FID 99 Front end engineering design 40-80 Feasibility study 5-40 Announced 0-20 - Hydrogen Council Global announced electrolyser capacity through 2030 GW As of Announced capacity Dec-20 55 Dec-21 115 May-22 175 Jan-23 230 Oct-23 305 May-24 375 - Hydrogen Council * based on the Hydrogen Council's probability adjustment, globally installed electrolysis capacity could reach 90GW by 2030 Investments until 2030 by project stage $bn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Sweden’s H2 Green Steel rebrands, eyes Portugal site
Sweden’s H2 Green Steel rebrands, eyes Portugal site
London, 12 September (Argus) — Sweden's H2 Green Steel has rebranded as Stegra as part of plans to diversify. The company will focus on three distinct areas of "green hydrogen, green iron and green steel", it said. The new name, which is Swedish for 'elevate', "reflects our long-term ambitions", chief executive Henrik Henriksson said. The company's main priority remains building a €6.5bn plant in Boden, Sweden which will use hydrogen to reduce iron and make lower-carbon steel. But the new name "future proofs" the company because it may also do projects where it only sells hydrogen or only sells green iron, according to its head of public and media relations Karin Hallstan. Stegra's Boden project will be the largest renewable hydrogen plant in the world at 700MW, at least until Saudi Arabia's 2GW Neom project comes on line. Boden will remain the largest in Europe, as the next biggest project in the region that has passed the final investment decision stage is only is 300MW. Stegra's most advanced project outside Sweden is in Portugal, where it has reserved land near Sines, it said. The firm said it has been awarded a grid connection for a "substantial allocation of the power needed" from the relevant Portuguese company, but it still needs to agree a deal for power supply, which is handled by another company, Hallstan said. The Portuguese project "may not be another steel plant, it could be hydrogen and green iron to become a supplier to the European steel industry", Hallstan said. "We might not do all three steps in all locations," she added. The project is still some years away, as it is around "where we were in 2020 in Sweden", Hallstan said. "But these are long lead projects and you have to start early in the areas where it makes sense to have large-scale hydrogen production and where there is good logistics for raw materials like iron ore," she said. That means working on grid connections and permitting early, she added. "Looking at a map of the world, you can zone in on areas that make a lot of sense to start prospecting, then you need to do that early." The two areas of Europe where Stegra is working have some of the lowest hydrogen costs, as evidenced by the results of a recent hydrogen bank competition . It is also developing projects in Canada and Brazil, it said. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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