European Gas Industry Calls For Political Support on Hydrogen

European gas industry officials called Sept. 23 for unequivocal political support to help drive the creation of a hydrogen market, saying large investments would be needed to accelerate developments.

Speaking during a panel discussion at the Gastech conference in Dubai, officials also said one of the challenges facing the sector would be to lower the gap between the cost of renewable hydrogen and fossil-based hydrogen.

“The first thing we need this year is political support and the right regulation for hydrogen,” Marcelino Oreja, CEO of Spanish gas infrastructure group Enagas, said.

The European Commission is due to publish its proposals in mid-December for the development of a hydrogen and green gas market as part of its Gas Decarbonization package.

“Without political support and concrete regulations it will be difficult to develop hydrogen opportunities in Europe,” Oreja said.

Alessandra Pasini, CFO at Italian gas infrastructure company Snam, told the conference that political leaders needed to be specific on the structure of schemes and incentives.

“We all are watching,” Pasini said, adding it was important to find ways to provide incentives for the development of a lower-cost hydrogen ecosystem.

“All of this will require large investments,” she said.

Price differences

Frederic Claux, French Engie’s managing director for thermal and supply, Africa, Middle East and Asia, said hydrogen was a key element in the company’s strategy.

Claux said Engie’s focus was green hydrogen — hydrogen produced from electricity using electrolysis.

But, he said, green hydrogen was currently more expensive than hydrogen made from natural gas (blue or gray hydrogen). “So, for us, the big challenge is to plug this competitive gap between various colors of hydrogen,” Claux said.

The cost of producing blue hydrogen is significantly below that for green hydrogen. S&P Global Platts assessed the price of hydrogen produced using natural gas with CCS, including capex and carbon costs, in the Netherlands at Eur4.72/kg on Sept. 22.

That compares with an assessment of Eur10.38/kg for hydrogen produced using electrolysis, including capex.

Claux said to help bring the costs closer together, there needed to be government coordination and support. “The idea is to have — like we had 10-15 years ago in the renewable business — feed-in tariffs and contracts for difference,” he said.

“These kinds of mechanisms can support the development of the business and can make the product more affordable and naturally find a market and off-takers.”

‘Clear rules’

Enagas’s Oreja agreed it was key to focus on the pricing of hydrogen. “We need long-term consumers. We will work on that. And of course we need to work on the pricing of the production of hydrogen,” he said, adding that blending hydrogen with gas would also lower the price of transporting hydrogen.

“We need clear rules. Without that, there will be no investments.”

Snam’s Pasini said it was important not to focus only on the supply side, but also on demand.

“If you just work on the supply and not focus on the demand, you are not going to have the scale of investments which are required,” Pasini said.

Engie’s Claux said work was needed on both. “I think we need to act both on the supply and demand and the combination of both. There should be clear directions provided by the regulation and by government.”

Stable regulation was key, Claux said. “It is not a sprint, it is a marathon. We need long-term objectives and we cannot change the rules every day.”

Source: Platts.

 

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