Delays to key EU policies clarifying the definition of ‘green’ hydrogen are preventing European developers from taking FIDs and potentially discouraging firm offtake agreements from international projects, according to speakers at the recent World Hydrogen Congress.

As a bloc that has committed to 10mn t/yr of hydrogen imports by 2030, the EU presents a compelling demand centre for export-focused projects in the Middle East and North Africa (Mena) and Asia-Pacific.

But delays on the certification of green hydrogen are becoming a barrier to development, according to Abdulrahman Anazi, senior energy specialist at Saudi Arabia’s Ministry of Energy.

“Today, there is no certification system in place... the key markets in Europe and Asia are expected to import substantial quantities of hydrogen, so their desired standards will dictate or set the expectation for exporters in the Mena region,” he says.

“Most of the countries in the Mena region are still under the impression that Europe will be importing 100pc renewable hydrogen” Anazi, Saudi energy ministry

The European Commission began consulting earlier this year on the two delegated acts it will use to define hydrogen. But the process has been criticised by industry as slow and overly restrictive. MEPs in the European Parliament voted through an amendment to the Renewable Energy Directive recently on the delegated acts defining hydrogen that means they may take even longer to emerge.

Projects outside of Europe are “definitely” being delayed as a result of this uncertainty over EU certification of green hydrogen, according to Hans Dieter Hermes, vice-president for hydrogen at Australia-headquartered engineering services firm Worley. “It is not so important to have the last detail of the certification right. It is more important to have it agreed and clarified,” he tells Hydrogen Economist.

However, other industry insiders are confident that Mena megaprojects will easily comply with any additionality requirements, especially as many will have dedicated renewables assets. Compared with European projects, these developments are in areas with few restrictions for permitting and little opposition from the local population.

“Most of the countries in the Mena region are still under the impression that Europe will be importing 100pc renewable hydrogen,” continues Anazi.

Alternate demand centres

Europe remains one of the few demand centres specifically for green hydrogen, as opposed to any form of low-carbon hydrogen.

While the EU has not specifically ruled out blue hydrogen imports, and some MEPs have proposed including it in demand targets, developers are looking to export blue hydrogen elsewhere. But an alternative demand centre for green hydrogen remains elusive.

While Japan and South Korea have started pilot projects, both countries are far behind Europe in terms of market maturity and mechanisms, according to Vineet Mittal, chair of Indian green hydrogen project developer Avaada. “Europe has gone out and articulated a very clear vision, that they would import 10mn t/yr of green hydrogen… so they have created a huge market,” he says.

But South Korea has a more advanced policy environment than some might think, according to Katrina Fritz, vice-chair of US thinktank the California Hydrogen Business Council.

10mn t/yr – EU target for hydrogen imports by 2030

“South Korea is a smaller market compared to the US and Europe, but it is much more advanced [in demand-side support for hydrogen and fuel cells,” she tells Hydrogen Economist. Fritz cites the country as having a particularly supportive policy environment across a wide range of sectors.

South Korea’s Renewable Portfolio Standard, which requires power companies to steadily increase the proportion of renewable energy in their generation mixes, drove early investment into fuel-cell generation. Earlier this year, the country announced a similar initiative, the Clean Hydrogen Portfolio Standard, details of which are expected to be released in mid-2023.

The country also has more than 27,000 fuel-cell electric vehicles and 196 hydrogen stations—compared with 177 refuelling stations across Europe—with an aim to increase this to 800,000 vehicles and 664 stations by 2030, according to James Kim, CEO of South Korean industrial gases firm Deokyang.

South Korean industry consumes c.2.5mn t/yr of hydrogen, and demand for the low-carbon varieties is rising. “By 2030, it is expected that an additional 2.96mn t/yr of clean hydrogen supply is required,” Kim says, adding at least two-thirds of this will likely be imported.

Saudi Arabia’s “usual customers of the energy business in the Far East” will be a target market for hydrogen projects, confirms Driss Berraho, executive manager for business development at government-affiliated developer Acwa Power.

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Author: Polly Martin