Green Hydrogen & International Cooperation

The development of hydrogen production capacities in the European Union (EU) and in its immediate vicinity has clear advantages that should not be underestimated. First, hydrogen supply within the EU and its immediate vicinity has important advantages from a security of supply perspective. While this goes without saying for countries within the EU, also those in the immediate vicinity of the EU are less likely to abandon the EU market for other buyers. This should not lead to an unbalanced dependence on single suppliers or transport routes. However, a base of regional suppliers can build a robust core, to be supplemented with suppliers from farther afield.
 

A European hydrogen pipeline infrastructure will be essential not only for Member States with large renewable energy potential to supply demand centres in other parts of the EU (IRENA 2022a). It is also important for enabling the supply of hydrogen from the EU’s northern, southern and eastern neighbourhood. To support diversification, it will also be important to equip major European ports to be able to handle hydrogen and hydrogen-based synthetic fuels.
 

Current discussions on an emerging hydrogen economy and related policy developments appear to have sidelined previous discussions on increased integration of electricity systems both within the EU and between the EU and its neighbours. While renewable electricity production has steadily increased in the EU over recent years, interconnection capacity has not (Pepermans 2018). Increased interconnections within the EU and with neighbouring countries provide the basis for increased electricity imports with benefits for balancing variable renewable energy sources. Electricity grids also have an often neglected geopolitical dimension. They can function as a distinct realm of integration and may be used as channels of influence (Westphal, Pastukhova and Pepe 2022).
 

Partnerships for promoting hydrogen trade between potential producer countries and the EU will be successful only if embedded in broader green industrial partnerships aimed at supporting decarbonisation and socio-economic development in both the EU and partner countries. Indeed, some of the most tangible efforts at promoting investment in renewable hydrogen projects are linked to strategies for increasing domestic value-creation in the sector. The development of future economic relations will have to take these industrial development ambitions into account.
 

Robust sustainability-certification schemes are needed to ensure that hydrogen production in partner countries makes a positive contribution to both climate protection and local sustainable development. It is also likely to represent a precondition for sustained public acceptance of policies in support of hydrogen-based decarbonization schemes (ILF and LBST 2021). The example of international biofuel trade – and the import of biofuels based on palm oil in particular – has shown how a lack of credible sustainability standards may lead to the erosion of public acceptance and reduced policy support over time (Oosterveer 2020). At the same time, there are concerns that adherence to sustainability standards will slow down the needed ramp-up of renewable hydrogen production. This dilemma cannot be resolved entirely. However, a phased approach to the implementation of sustainability certification schemes could offer an entry-point for enabling the needed scale-up of investment, while ensuring that sustainable production practices are established over time (Climate Bonds 2022).
 

Without common principles for hydrogen foreign policy in the EU, different Member States may send contradictory signals to respective partner countries. This weakens the EU’s attractiveness as a partner and hence its ability to influence global standards for hydrogen trade. While overcoming such differences may not be easy, this should be an important goal of EU-level hydrogen policy. In the absence of such an agreement, a second-best option would be a common approach among a group of like-minded countries.
 

While the EU wields significant market power that it can deploy to promote international standards, a joint approach across G7 economies would significantly augment the weight of related standards. In this vein, the various G7 initiatives, such as the G7 Industrial Decarbonisation Initiative, the G7 Hydrogen Action Pact and the Climate Club initiative represent important steps in this direction that should receive strong support from the EU and the European G7 countries (G7 Germany 2022). Of course, this also implies compromise with G7 partners. It is, however, in the EU’s interest to find an accommodation within the G7 on these issues to retain its influence on global developments in this sphere.
 

Emerging hydrogen partnerships, such as Germany’s partnerships with the UAE and Norway, have acknowledged that blue hydrogen is expected to play a major role in planned hydrogen imports from these countries (BMWK 2022a; BMWK 2022b). Against this background, it is essential that Germany and the EU clarify the conditions under which blue hydrogen, and hence CCS, should in fact be part of their pathways towards climate neutrality. In addition, imports of blue hydrogen require engagement with partner countries to ensure the capture and large-scale, safe geological storage of CO2, as well as the highest possible standards for natural gas production and transport to avoid methane leaks (Tovar and Azadegan 2022; Filiou et al. 2003; Floristean and Brahy 2019). This should be a precondition for any imports of blue hydrogen.
 

If increased hydrogen imports are to unfold their mitigation potential in hard-to-electrify segments of the transport  sector (such as aviation) an infrastructure for synthetic fuels will have to be developed. Synthetic fuels are produced in an energy-intensive process on the basis of hydrogen and carbon dioxide (CO2) (Ferrari et al. 2014). This means that emerging hydrogen partnerships targeting synthetic fuels will also have to support the establishment of an infrastructure for CO2 capture and transport (Billig et al. 2019). This should build on an informed public debate and the creation of related standards and regulations to ensure the compatibility of these CO2-related technologies and their deployment in partner countries with climate-neutrality targets (Chauvy and De Weireld 2020).