Dutch regulator urges caution on H2 transport

Dutch energy regulator ACM recommended that investors should target the scaling up of hydrogen production as well as waiting for higher hydrogen consumption prior to developing transportation infrastructure, including repurposing existing gas pipelines.

Investors should focus on bringing sufficient hydrogen production capacity on line before developing transportation routes in order to avoid excess costs from underutilisation, ACM said.

And consumption of hydrogen — which is "virtually absent" at present — must become widespread in order to justify investments in pipelines, it added. Hydrogen can be used for chemical products, heat-intensive industrial processes, heavy transport and electricity generation, as well as a form of energy storage, but is not widely used for these purposes today.

Fossil-fuel derived blue and grey hydrogen must be scaled up before sustainable green hydrogen, as the electrolysis process used to produce hydrogen from renewables-generated electricity is still "too expensive", the regulator said.

But ACM suggested that appropriately pricing CO2 emissions into the cost of grey and blue hydrogen could make green hydrogen more competitive.

Governments should offer subsidies to improve the technological performance of electrolysers used in the production of green hydrogen, the regulator said.

Once hydrogen production and consumption have reached a certain threshold, ACM recommends that operators take a "step-by-step approach" to developing transport infrastructure.

Firms should only gradually convert gas pipelines for hydrogen use in order to limit the possibility of stranding assets following the transition, it said. And investors should focus on first developing pipeline projects at industrial sites, which are largely positioned along the coast near seaports in the Netherlands.

Industrial sites can utilise hydrogen most easily, and offshore wind sites could provide an opportunity for green electrolysis moving forward, ACM said.

Hydrogen could also be transported in liquid form or as ammonia by ship to the seaports.

Government rules regulating hydrogen markets and related infrastructure should be implemented incrementally as needed rather than in advance, ACM said. This will allow for "innovation" while also preventing the "abuse of market power", it said.

A number of Europe's gas system operators have proposed building a continent-wide hydrogen network by combining repurposed gas pipelines and new infrastructure, called the European Hydrogen Backbone (EHB). Rotterdam's port authority — where the country's lone LNG import terminal Gate is located — is working with transmission operator GTS and German utility Uniper to build hydrogen infrastructure that could connect to such a network if developed.

By Elaine Atwood