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Europe should take hydrogen seriously now, rather than view it as a future fuel source
As the European weather forecasting agency, ECMWF, warns of a particularly cold winter, lawmakers could be forgiven for thinking they are right to focus on acquiring replacement gas in its shift away from Russian supply. But this would be a strategic misstep. There is little value in a continuing reliance on natural gas for Europe in the long run, as it does not match Europe’s climate ambitions. Instead, Europe should be spending its resources on energy that will not just address short-term problems, but solve long-term challenges. That means investing in hydrogen. Overreliance on the Nordstream pipelines was a strategic error, but we should not forget that the gas crisis started before Russia’s invasion of Ukraine. A combination of stronger-than-anticipated demand and insufficient gas storage levels, a market failure, led to historically high prices late in 2021. This has set off a frenzy of state visits to the Gulf countries, as Europe tries to secure alternative gas in the form of additional LNG cargoes. Now, several new LNG terminals have come online or are being constructed and Germany is producing more power from coal and lignite than previously hoped for. All of this is to prevent companies from bankruptcy and European citizens from freezing this winter. Much of this activity is coming at the expense of climate targets, which will be damaged if resources are spent on swapping out one source of natural gas for another. EXISTING INFRASTRUCTURE It does not have to be this way. Europe has a huge network of 200,000 kilometres of high-pressure gas pipelines and a multitude of distribution grids. Rather than simply use these for natural gas, they could instead be repurposed for hydrogen. We still hear many voices expressing doubts about hydrogen as a major energy carrier, often referring to conversion losses in the hydrogen supply chain. Although conversion should always be minimised, the reality is that these losses are going to be compensated by efficiencies in transport and storage. Europe has a seasonal energy demand pattern and that will not change. As a result of the energy transition, in the future, we will have more energy supply in the summer months, whereas the peak demand will remain in the winter. For that reason, Europe already has several thousand terawatt-hours of energy storage in the form of underground natural gas storage, petroleum tanks and coal heaps. To put that into perspective, electricity storage, mostly in the form of pumped hydro, is negligible compared to storage in energy molecules. (Electrochemical storage in batteries cannot even be seen on the scale we are discussing here and will never be meaningful in seasonal storage.) In addition to storage, bulk transport of gas is 10-15 times cheaper than electricity. Europe’s electricity grid is more than 100 years old, can hardly cope with growing demand, and is certainly not prepared for the exponential growth of renewables. HYDROGEN READY However, Europe has an established gas grid. This network can be repurposed to accommodate hydrogen and the cost of that conversion is estimated to be 20% to 25% of an entirely new pipeline system. A leading consortium of European gas transmission system operators estimates that 75% of Europe's gas grid can be made suitable for hydrogen. In contrast to natural gas, hydrogen can be produced in Europe, or purchased from friendly countries. So, the strategic value of hydrogen lies in the low cost of transport and storage, as well as the flexibility in supply options. The Hydrogen Accelerator, part of the REPowerEU strategy, which was released just eight days after Russia's invasion of Ukraine in February 2022, calls for an amount of hydrogen (20 million tons of green hydrogen by 2030) four times larger than previously targetted (5.6 million tons). MENA SUPPLY Half of that amount, ten million tons per year, is to be covered by imports. This is a lot of clean hydrogen, 2030 is effectively tomorrow, and there are no better places to serve Europe than the Middle East and North Africa. We should almost certainly see more deals like the hydrogen supply agreement between the United Arab Emirates (UAE) and Germany earlier this year, particularly as the Gulf states work to place themselves at the heart of hydrogen production. Already host to one of the major industry conferences in ADIPEC, and set to host COP28 next year, the UAE, alongside other major hydrogen producers, is looking to take advantage of their existing hydrocarbon infrastructure to better position itself in the global hydrogen market. This is a strategic move that the EU should not just look to benefit from, but imitate. Last month, the Hydrogen Bank was announced by European Commission President Ursula von der Leyen in her State of the Union address. It is time for Europe to take hydrogen seriously now, not just wait for it as some far-off solution for the future. It must make sure that it uses today's crisis to navigate the energy transition. Anything less will be a strategic misstep.•

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