By I. Hansana, JadeTimes News
In 2019, the European Commission, under the leadership of Ursula von der Leyen, prioritized the European Green Deal. This policy aimed to position Europe as a leading destination for investments that generate stable, future proof quality jobs and bolster the continent's industrial base.
To realize this vision, Europe must address regulatory bottlenecks, uncertain investment environments, and international supply chain challenges. The geopolitical upheaval in Ukraine and the introduction of the US Inflation Reduction Act have prompted the European Commission to bolster its green transition agenda with initiatives like the Net Zero Industry Act, the Critical Raw Materials Act, the extension of the state aid framework, and the creation of the Hydrogen Bank.
Despite significant advancements in clean tech, Europe still struggles with international competitiveness. Overcoming these challenges is crucial for maintaining a robust industrial base and creating future proof jobs while transitioning to a net zero economy. Clean hydrogen offers Europe an opportunity to lead a multi billion euro global industry, with substantial economic benefits.
Strengthening Supply Chains
In late April, the European Parliament approved the Net Zero Industry Act (NZIA) and the Critical Raw Materials Act. These acts aim to protect, expand, and enhance supply chains and domestic capabilities for key European industries, including hydrogen. The NZIA's goal is for the EU's net zero technology manufacturing capacity to meet at least 40% of annual deployment needs by 2030.
Europe is competitive in hydrogen technologies, particularly electrolysers, and can achieve these targets. However, many European support mechanisms, like the Hydrogen Bank, still focus solely on price competition, potentially disadvantaging European companies globally. Other regions are implementing measures such as local content requirements to fortify their domestic supply chains.
To promote strategic autonomy, it is essential to consider safety, performance, resilience, and social benefits before granting European funding.
Increasing Financial Support
The Hydrogen Bank's recent pilot auction yielded positive results. The seven winning projects produced hydrogen at costs below €0.5 per kg, well under the €4.5 per kg/H2 ceiling price. This demonstrates the hydrogen sector's potential.
Despite this success, the Commission must ensure that the 2024 auction further narrows the price gap, particularly for hard to decarbonize sectors. The €800 million budget and oversubscription indicate that many projects remain unsupported, and winning projects might not achieve cost parity with grey hydrogen by the time subsidies are disbursed.
Future auctions should offer greater flexibility, such as allowing the cumulation of state aid and adjusting delivery timelines. Additionally, a larger budget and the introduction of resilience criteria are necessary to compete globally. Although other green hydrogen support programs exist, they face common issues like cumbersome processes and funding delays.
Accelerating Clean Tech Procedures
Both Hydrogen Europe's manifesto and the Letta report emphasize the need for faster delivery. They call for significantly reducing the time required for clean tech companies in Europe to access incentives and bring their technologies to market. This involves speeding up permitting procedures and funding access.
The Hydrogen Bank's timeline from announcement to first auction within 18 months serves as an exemplary model. Making such expedited processes standard practice will help Europe become a global hub for clean tech. Hydrogen technologies should lead the way, fostering a sustainable, decarbonized, and resilient future.