Published 24 November 2020
European policy makers have recently acknowledged the major role that hydrogen will have to play in the EU energy system.
Acting on this recognition, the Commission adopted a Hydrogen Strategy in which it addresses various levers for growing the clean hydrogen economy. According to this strategy, although both low carbon and renewable hydrogen will be allowed to be supported in various ways, subject to meeting certain standards, the Commission favors (i) R&D and production support and (ii) renewable hydrogen. On the demand side, the Strategy provides few concrete details regarding the measures that are likely to be implemented, but the Commission’s immediate priority is to replace the carbon-intensive hydrogen in existing end-use sectors with clean hydrogen. Support for innovative use of clean hydrogen in other sectors seems to be a second and midterm priority. In terms of the effect of this Strategy at the Member States’ level, the functioning of the biggest fund of the European Recovery Plan will likely enable the Commission to influence, to some extent, Member States’ hydrogen-related policies and subsidies, aligning them to some extent on its Hydrogen Strategy. Lastly, the EU Taxonomy is highly likely to dis-incentivize private capital flows towards inefficient electrolyzers and CCUS apparatus.
Overall, the EU Hydrogen Strategy, complemented by the upcoming European Recovery Plan and the EU Taxonomy, provides a regulatory framework well tailored to rapidly grow low carbon and especially renewable hydrogen production and to incentivize Member States and the private sector to align on its objectives.
One will have to see whether and how these expectations will now turn into actual legislation.