EU’s renewables: third project in the hydrogen value chain

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Although the renewable hydrogen supply chain in Europe is still in a nascent phase, however, the new Hy2Infra project will deploy the initial building blocks of an integrated and open EU-wide renewable hydrogen network. This project was jointly prepared by seven states: France, Germany, Italy, the Netherlands, Poland, Portugal, and Slovakia.  

The EU-wide, so-called Important Projects of Common European Interest, IPCEIs have attracted recently additional attention from business and governance. The new IPCEI called Hy2Infra project is aimed at establishing the first regional infrastructure clusters among the EU states and preparing grounds for future interconnections across Europe, in line with the European Hydrogen Strategy. This will support the market ramp-up of renewable hydrogen supply and take additional steps towards first in the world European climate-neutral continent by 2050.

On IPCEIs legislation in:

The Commission published the REPowerEU plan in May 2022, which sets out a series of measures to rapidly reduce EU’s dependence on Russian fossil fuels by accelerating the clean energy transition, including a Hydrogen Accelerator. The plan sets a target of 10 million tones of domestic renewable hydrogen production and 10 million tones of imports by 2030, to replace natural gas, coal and oil in hard-to-decarbonise industries and transport sectors.
In December 2023, the European Parliament and Council have provisionally agreed on updated EU rules to create a hydrogen market that will make a key contribution to the EU’s efforts to reach climate neutrality by 2050.
In July 2020, the Commission published its EU Hydrogen Strategy, and launched the European Clean Hydrogen Alliance, bringing together the European hydrogen community (industry, civil society, public authorities). Jointly with the policy priorities set out in the European Green Deal, notably in terms of environmental sustainability as well as the transition of industry and transport sectors to climate neutrality, these initiatives played an important role for the objectives of the IPCEI Hy2Infra and facilitated the creation of partnerships.

Hy2Ingra project
Hy2Infra involves 33 projects by 32 companies, including five small and medium-sized companies, from seven EU states: France, Germany, Italy, the Netherlands, Poland, Portugal, and Slovakia. The participating member states will provide up to €6.9 billion in public funding, so far the highest aid amount approved for IPCEIs in the field of hydrogen. This is expected to unlock additional €5.4 billion in private investments, for a total of over €12 billion.
Hy2Infra complements two previously approved IPCEIs in the hydrogen value chain:
a) “Hy2Tech”, a research IPCEI and “Hy2Use” that encompassed a mix of research and hydrogen production projects. It will also help Europe diversify energy sources and reduce fossil fuels imports. For instance, in line with the REPowerEU Plan, Hy2Infra participants will develop a port infrastructure in the Netherlands capable of handling hydrogen transport from overseas, either from other EU states with high renewable potential, like Portugal, or elsewhere in the world.
b) Hy2Infra also includes an offshore pipeline project in Germany, to transport renewable hydrogen produced from wind farms in the North Sea, and a pipeline project across Slovakia, paving the way for future imports of hydrogen from Ukraine.

    Note. IPCEI Hy2Infra complements the first and second IPCEIs on the hydrogen value chain. The Commission approved IPCEI “Hy2Tech” on 15 July 2022, which focuses on the development of hydrogen technologies for end users. IPCEI “Hy2Use” was approved on 21 September 2022 and focuses on hydrogen applications in the industrial sector. Hy2Infra concerns infrastructure investments, which are not covered by the first two IPCEIs.

Hy2Infra project: two phases
Hy2Infra is focusing on infrastructure and is based on two pillars:

= The first pillar concerns the construction of infrastructure in regional clusters, and involves four different types of infrastructure along the hydrogen supply chain. Relevant projects include 3.2 gigawatt of large-scale electrolysers; around 2,700 kilometers of new and repurposed hydrogen transmission and distribution pipelines; up to 370 gigawatt hours of large-scale hydrogen storage facilities; as well as handling terminals and related port infrastructure for hydrogen carriers.

= Under the second pillar, participants will collaborate on interoperability to facilitate future interconnections and will contribute jointly to the development of common technical standards.
For instance, several participants in the “West Germany cluster” will build three electrolysers in the Rhine-Ruhr area. This hydrogen infrastructure will connect to three different pipeline projects and have access to a storage facility. By mid-2027, the renewable hydrogen produced will be available to companies operating in the steel, cement, chemical, refinery, as well as mobility sectors. This cluster will significantly reduce CO2 emissions of the off-takers and has an important cross-border dimension, with a pipeline connecting to the Dutch national hydrogen network.

The hydrogen infrastructure needed for the green transition requires an initial public funding boost to mitigate the financial risks associated with pioneer projects. In addition, collaborations within the IPCEI help reassure customers that there will be sufficient renewable hydrogen readily available for their hydrogen-based technologies, and give confidence to producers that the demand will be there along with necessary transport and storage infrastructure.

Besides, IPCEI Hy2Infra will cover a wide part of the hydrogen value chain by supporting:
= the deployment of 3.2 GW of large-scale electrolysers to produce renewable hydrogen;
= the deployment of new and repurposed hydrogen transmission and distribution pipelines of approximately 2,700 km;
= the development of large-scale hydrogen storage facilities with capacity of 370 GWh; and
= the construction of handling terminals and related port infrastructure for liquid organic hydrogen carriers (‘LOHC’) to handle 6,000 tones of hydrogen a year.

Positive spillovers…
Beyond a significant contribution to the EU-wide objectives in terms of hydrogen deployment, the project was approved because it generates positive spillover effects across the EU.
= First, additional stakeholders will have the possibility to connect to and use open access infrastructure under non-discriminatory terms.
= Second, Hy2Infra participants will be amongst the first to face and solve the technical challenges linked to new large-scale infrastructure projects, generating operational experience useful to other market players. Indeed, participants commit to share their knowledge with the wider community, notably through collaborations with universities and research organisations.
= Thirdly, Hy2Infra participants will contribute to developing cross-border operational rules and to addressing standardization gaps identified by the European Clean Hydrogen Alliance.

Furthermore, the approved aid per beneficiary is capped at the so-called “funding gap”. The State aid enables projects of great importance to the EU to take place, while ensuring that only those that would not take place without public support are supported and that taxpayers’ money is wisely spent. And even for these projects, we have made sure that the public support does not crowd out, but rather crowds in, private investments.

Bottom-line. IPCEIs are examples of truly ambitious European cooperation, where companies, the member states and the Commission, each and all, play their role and work together to reach a common objective.

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