Government commitments to decarbonisation are becoming more robust. Hydrogen is gathering political and industrial momentum as a viable and sustainable energy source. Deployment investment has picked up pace swiftly, affirming renewable hydrogen as a mainstay major in the global energy transition.
With over 80% of new projects located throughout Europe, the continent remains the leader in the emerging hydrogen economy. However, other parts of the world are stepping up efforts with an impressive number of more than 359 large scale projects announced globally. The total of associated hydrogen deployment investment is estimated to be about $500 billion by 2030, delivering over 10 million tons of total capacity by then or about a third of the increase in demand for total green hydrogen anticipated over the next decade.
The competitiveness of various hydrogen technologies hinges on the ultimate dimension of the internal European market and consistency of hydrogen demand at industry level. Preliminary estimates indicate that hydrogen demand in the EU with the UK could amount to up to 2,300 TWh by 2050, proportionate to 20% to 25% of all energy consumption. Be that as it may, one should bear in mind that the growing use of hydrogen energy will have profound geopolitical repercussions worldwide with potential for remapping energy, geopolitical, economic and security relations, especially a diverse range of foreign and security policy repercussions. Global competition for technology, control over price and supply chains, and concerns over security of supply will grow in the hydrogen sector, reshaping future cooperation and geopolitical rivalries.
The issue of new dependencies and supply risks of large scale green hydrogen imports is much more complex than is currently being discussed. The EU will define sustainability criteria that are based not only on climate policy goals, but also on foreign policy and geopolitical interests. This will enable diversification of future hydrogen imports; therefore ensure its sustainability and resilience. The upcoming Hydrogen and Gas Market Decarbonisation Package due in late 2021 may serve to lay down ground rules for the future hydrogen market so that the EU can protect sectoral integration. That will also support resolving market fragmentation and cross-border connectivity issues, assuming that much of hydrogen infrastructure will be redeployed existing gas infrastructure.
Despite the fact that natural gas remains imperative to safeguarding security of supply over the near future, functional gas infrastructure could progressively be converted to transport hydrogen, as it will become a competitive commodity and energy carrier with a decisive role in a future energy system. The European Commission has already given priority to the expansion of the EU’s electrolysis capacity, which at present is around 1 GW of installed capacity. Nevertheless, the final transformation of local hydrogen clusters into a real progressive network across the EU will amount to technological capacity and scalability of blue and green hydrogen production in north-western and southern Europe, including the potential for imports from Eastern Europe, particularly Ukraine.
While the transition to a decarbonised energy system has become essential, it is also necessary to prepare for a systematic transition. The cost of inaction may be high, given that hydrogen has great potential not only to create new markets, but also to redraw the global energy trade map.
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