The European Court of Auditors has assessed the EU’s hydrogen strategy, deeming its 2030 goals unrealistic and unfounded. The ambitious target of producing 10 million tons of clean hydrogen annually by 2030 lacks thorough research and is driven more by political will than practicality. Critics argue that the strategy’s complexity is hindering investments and slowing progress. With billions of euros at stake and the potential for new strategic dependencies, the auditors are urging the European Commission to reassess its approach, stimulate green hydrogen production effectively, and develop a broader vision for heavy industry. This reality check could be crucial for the EU’s competitiveness in the global hydrogen market and its path to climate neutrality.
Why this is important
Hydrogen’s importance in decarbonizing some hard-to-abate sectors is undisputed. It is a good fit to replace fossil sources in the process industry, for instance. As Europe plans to become the world’s first climate-neutral continent, it set high targets for its hydrogen production, yet the current strategies don’t meet such ambitions.
The EU’s hydrogen strategy, introduced in 2020, aims to establish the region as a leader in renewable and low-carbon hydrogen. This initiative is part of the broader REPowerEU plan, designed to decarbonize the EU cost-effectively and reduce reliance on imported fossil fuels. Central to this strategy is the production of 10 million tons of green hydrogen within the EU and importing an additional 10 million tons by 2030.
One of the major points of criticism is the absence of a cohesive EU import strategy for hydrogen. The ambitions of individual member states do not add up to the required hydrogen amounts. Furthermore, the funding landscape is fragmented, with €18.8 billion scattered across several programs from 2021 to 2027, complicating access for companies. This disjointed approach hampers establishing a robust hydrogen economy, which necessitates hundreds of billions of euros in investments, especially in solar and wind parks.
Lack of joint strategy and industry hesitation
Industrial companies currently find green hydrogen too expensive, causing delays in constructing necessary hydrogen plants. The ECA warns that without a clear vision for heavy industry, the EU risks creating new strategic dependencies. For instance, the potential complete disappearance of steel production from the continent could be a significant economic and strategic setback. A broader vision is required to determine which industries the EU wants to retain and at what cost.
The European Commission acknowledges that developments in green hydrogen are still in the early stages, making it premature to judge the market’s ultimate success. However, hydrogen production by 2030 is expected to be lower than initially anticipated due to weakened goals for its use in industry and transportation. Despite this, significant growth in hydrogen production is still projected between 2030 and 2050.
Call for a strategic reassessment
The ECA has called for the European Commission to conduct a critical reassessment of how to stimulate green hydrogen production effectively. They recommend a more strategic allocation of scarce subsidy funds, ensuring that investments are directed toward the most impactful projects. Furthermore, a broader vision is needed for the heavy industry sector to determine which industries should be preserved in the EU and at what cost to avoid creating new strategic dependencies.
A major constraint in achieving the EU’s hydrogen goals is the complexity and lengthy process of implementing necessary legislation. The approval process for Important Projects of Common European Interest (IPCEIs) on hydrogen has been notably slow, impacting investment decisions. Additionally, the delegated act defining renewable hydrogen has taken longer than anticipated, further deferring critical investments.
Industry and stakeholder responses
Industry groups, such as Hydrogen Europe, have echoed the ECA’s concerns, urging a revision of the hydrogen strategy to enhance global competitiveness. They emphasize the need for the European Commission to take more proactive ownership in guiding member states and reflecting their national priorities in EU policies. This would help create a more coordinated and effective approach towards achieving the hydrogen targets.
The ECA also highlighted the necessity of precise market incentives for renewable and low-carbon hydrogen production and usage. They suggest that the funding should be prioritized and focused on specific parts of the hydrogen value chain to maximize impact. Countries like Germany, Spain, France, and the Netherlands have been identified as having significant potential for hydrogen production, but a unified and strategic approach is essential.
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