EU to publish H2 bank pilot results on 30 April
The European Commission will publish the results of its €800mn hydrogen bank pilot auction on 30 April, EU Innovation Fund policy officer Johanna Schiele said today.
The commission will release a wide range of information about the successful bids, expected levelised costs of hydrogen production and the intended origin of electrolysers used in the projects, Schiele told the Reuters Hydrogen 2024 conference in Amsterdam.
The ceiling price of €4.50/kg for bids submitted in the auction "was more than sufficient", she said, suggesting that successful bids may have stayed well below this threshold.
Through the mechanism, the commission will award 10-year production subsidies to the renewable hydrogen projects that submitted the lowest bids in the auction. Bids closed in early February and the commission previously said that applications were submitted for 132 projects in 17 different countries, amounting to 8.5GW electrolyser capacity that could produce some 880,000 t/yr of renewable hydrogen. But only a fraction of these will likely win subsidies in this round.
The commission is confident that successful projects will be built, Schiele said. Developers had to submit a completion bond for 4pc of the subsidy value which they will lose if they do not finish their projects. Plants have to be built within five years.
Schiele insisted that the commission is happy with the level of interest in the auction and the design it chose. The UK opted for a different path with a contracts-for-difference (CfD) mechanism that involved negotiations between the government and the developers to agree on subsidy levels, but entering into negotiations would have been a more complex and potentially more costly approach, Schiele said. Subsidy levels increased during the UK's negotiation process and could eventually amount to around £12/kg (€14/kg), partly depending on the development of natural gas prices, she added.
The EU may yet switch to a CfD approach at a later stage when the industry matures, Schiele said .
The UK government argued that its mechanism provides greater investment certainty and could unlock a pipeline of subsequent projects.
Round two
The commission expects to launch a second, larger hydrogen bank auction later this year, at around the same time as the pilot auction last year, Schiele said.
The bidding window for the pilot auction opened in December 2023 and bids closed in February.
The second auction will have a budget of around €2.2bn and will take learnings from the first round into account. A launch towards the end of the year would mark a significant delay from previous plans. Commission president Ursula von der Leyen had said that the second round could take place in spring 2024.
Meanwhile, Belgium is considering putting forward some of its own funds to use the hydrogen bank's "auction-as-a-service" mechanism in support of domestic renewable hydrogen projects, the Renewable Hydrogen Coalition's impact director Francois Paquet said at the Amsterdam conference.
Germany used that option for the pilot auction, putting in €350mn to subsidise the most competitive German projects that miss out on support in the EU-wide part of the auction. And Austria has already announced plans to top up the second round with €400mn to support domestic projects.
For Belgium, the hydrogen bank could provide a route for pushing projects forward, many of which have fallen behind schedule. The Renewable Hydrogen Coalition is trying to convince more governments across the EU to make use of the auction-as-a-service mechanism, Paquet said.
It is intended to avoid market fragmentation caused by EU countries using different subsidy mechanisms. France, Denmark, the Netherlands and Italy have organised or announced mechanisms for subsidising production projects outside of the hydrogen bank scheme.
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G7 countries put timeframe on 'unabated' coal phase-out
G7 countries put timeframe on 'unabated' coal phase-out
London, 30 April (Argus) — G7 countries today committed to phasing out "unabated coal power generation" by 2035 — putting a timeframe on a coal phase-out for the first time. The communique, from a meeting of G7 climate, energy and environment ministers in Turin, northern Italy, represents "an historic agreement" on coal, Canadian environment minister Steven Guilbeault said. Although most G7 nations have set a deadline for phasing out coal-fired power, the agreement marks a step forward for Japan in particular, which had previously not made the commitment, and is a "milestone moment", senior policy advisor at think-tank E3G Katrine Petersen said. The G7 countries are Italy — this year's host — Canada, France, Germany, Japan, the UK and the US. The EU is a non-enumerated member. But the pledge contains a caveat in its reference to "unabated" coal-fired power — suggesting that abatement technologies such as carbon capture and storage could justify its use, while some of the wording around a deadline is less clear. The communique sets a timeframe of "the first half of [the] 2030s or in a timeline consistent with keeping a limit of 1.5°C temperature rise within reach, in line with countries' net-zero pathways". OECD countries should end coal use by 2030 and the rest of the world by 2040, in order to align with the global warming limit of 1.5°C above pre-industrial levels set out in the Paris Agreement, according to research institute Climate Analytics. The countries welcomed the outcomes of the UN Cop 28 climate summit , pledging to "accelerate the phase out of unabated fossil fuels so as to achieve net zero in energy systems by 2050". It backed the Cop 28 goal to triple renewable energy capacity by 2030 and added support for a global target for energy storage in the power sector of 1.5TW by 2030. The group committed to submit climate plans — known as nationally determined contributions (NDCs) — with "the highest possible ambition" from late this year or in early 2025. And it also called on the IEA to "provide recommendations" next year on how to implement a transition away from fossil fuels. The G7 also reiterated its commitment to a "fully or predominantly decarbonised power sector by 2035" — first made in May 2022 and highlighted roles for carbon management, carbon markets, hydrogen and biofuels. Simon Stiell, head of UN climate body the UNFCCC, urged the G7 and G20 countries to lead on climate action, in a recent speech . The group noted in today's outcome that "further actions from all countries, especially major economies, are required". The communique broadly reaffirmed existing positions on climate finance, although any concrete steps are not likely to be taken ahead of Cop 29 in November. The group underlined its pledge to end "inefficient fossil fuel subsidies" by 2025 or earlier, but added a new promise to "promote a common definition" of the term, which is likely to increase countries' accountability. The group will report on its progress towards ending those subsidies next year, it added. Fostering energy security The communique placed a strong focus on the need for "diverse, resilient, and responsible energy technology supply chains, including manufacturing and critical minerals". It noted the important of "guarding against possible weaponisation of economic dependencies on critical minerals and critical raw materials" — many of which are mined and processed outside the G7 group. Energy security held sway on the group's take on natural gas. It reiterated its stance that gas investments "can be appropriate… if implemented in a manner consistent with our climate objectives" and noted that increased LNG deliveries could play a key role. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Industry leaders urge realism in green hydrogen push
Industry leaders urge realism in green hydrogen push
Dubai, 28 April (Argus) — Hydrogen and its derivatives will have a critically important role to play in accelerating the energy transition but policymakers need to be more realistic given that many of the technologies are still in their infancy, energy industry leaders from the Middle East and Europe said Sunday at a special meeting of the World Economic Forum in the Saudi capital Riyadh. "The market is a challenge," UAE energy minister Suhail al-Mazrouei said. "There is development of the market, but are we there yet? No. At the same time, are we serious about our production? I would say yes. It's between planning something, and getting the result you are aiming for." The UAE is planning to produce 1.4mn t/yr of hydrogen by 2031, more than 70pc of which will be green hydrogen, al-Mazrouei said. In the longer term the country aims to build its hydrogen capacity to 15mn t/yr by 2050. "Clean energy is something we decided to venture into 17 years ago when we began investing in the likes of [UAE state-owned renewables firm] Masdar and started thinking about what would happen after we export the last barrel of oil," UAE energy minister Suhail al-Mazrouei said. "What we did first is regulate and put a strategy of how much to produce." Al-Mazrouei's Saudi counterpart, Prince Abdulaziz bin Salman, voiced similar concerns. "We don't mind partnering with everybody… With the Koreans, the Japanese, our friends the UAE… but there are challenges," he said. "There is a lack of clarity on the policies, a lack of clarity on the receiving or consumer end, a lack of clarity on the incentives and a lack of clarity around what it takes to develop these technologies." Arguably more prohibitive is the "economics" of new energies such as hydrogen, he said. The cost of green hydrogen today is "between roughly $250-300/bl of oil equivalent," Prince Abdulaziz said. "What kind of a business acumen would choose to buy at $250-300/bl?" Al-Mazrouei agreed that costs are too high. "We cannot just treat the consumers as if they are ready to just pay double or triple the price [of conventional energies today]." Let's be serious The EU has set ambitious targets on renewable hydrogen. In 2022, the bloc doubled its 2030 production target to 10mn t/yr, from 5.6mn t/yr previously, and it is also working towards a separate pledge to import another 10mn t/yr by the same date. The production target is an unrealistic goal, according to the Saudi energy minister. "Those projects that have crossed the finishing line only come to 400,000t ꟷ around 4pc of the target," Prince Abdulaziz said. "How is it conceivable that in 2024, only 4pc has been achieved? How can people imagine that 10mn t/yr can be achieved?" TotalEnergies chief executive Patrick Pouyanne, who was speaking on the same panel, was even more blunt in his assessment, describing the EU's target as "impossible" and "not in reality". "Let us recognise that we are still at the infancy stage, and stop speaking about 10mn t, 20mn t, just to the media. It makes no sense," Pouyanne said. "Let's just be serious about it and find the right roadmap. Yes, we probably won't reach our target by 2030, but that's not a problem. It's more important to take steps and spend the money economically, to give them affordable and clean energy." By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
New technologies aim to boost SAF production
New technologies aim to boost SAF production
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EPA backs out of H2 mandates for power plants
EPA backs out of H2 mandates for power plants
Washington, 25 April (Argus) — The US Environmental Agency (EPA) omitted hydrogen co-firing mandates in the standards it released today to cut emissions from US power plants. The future delivered cost of hydrogen is higher than EPA anticipated last year when it proposed standards that would have given gas-fired power plants the option to co-fire with at least 30pc low-carbon hydrogen or deploy carbon capture and sequestration (CCS) by 2032, and mandated that baseload power plants co-fire with 96pc hydrogen by 2038. EPA at the time modeled that hydrogen would be available at a delivered cost of $0.50/kg by 2032. But EPA is now modeling a delivered cost of $1.15/kg, accounting for Inflation Reduction Act subsidies, which is still ambitious depending on the production pathway used and the recovery of infrastructure or transportation costs. The power sector is only willing to pay $0.40-0.50/kg for hydrogen, a DOE report had estimated last year . The agency was uncertain that enough low-carbon hydrogen would be available in the future to make the standard realistic, it said. While EPA will not consider hydrogen co-firing as a "best system of emission reduction" for power plants, it will establish standards of performance for plants that may opt to co-fire hydrogen in the future. This leaves the option open, but the effect on the hydrogen industry will be a far cry from the initial 320,000 t/yr in demand that EPA had previously expected to create. EPA also abandoned its proposal to set a carbon intensity standard for hydrogen used in co-firing, after previously eyeing a standard of less than 0.45kg of CO2 per kilogram of hydrogen. It would not be helpful to issue a definition while the industry waits for the Treasury to issue final tax credit rules that will set the boundaries on what hydrogen can be considered clean, it said. Hydrogen "regardless of production pathway" will meet EPA's uniform fuels criteria for low load combustion turbines. But the power sector will still need to compete with other hydrogen offtakers in industrial and heavy transport sectors. For this reason, it is improbable that limited conventional hydrogen supply today would be redirected to power plants, which would incur only extra transportation costs without emissions reduction benefits. Even as clean hydrogen production eventually comes online, its users will be co-located with production, which would limit the number of customers that could be found in power plants. Hydrogen combustion is already technically feasible in some combustion turbines and EPA said it may reevaluate its decision as the industry develops. But without a vast quantities of low-carbon hydrogen on the market, it should be prioritized for efficient units rather than boilers or gas-fired steam generating units, EPA said. By Emmeline Willey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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