In parallel with the 2020 recovery plans, the European Commission, France, Germany and other EU Member States have simultaneously announced ambitious hydrogen development strategies, representing more than 50 billion euros of investment by 2030. The ultimate goal is to contribute to achieving climate neutrality. This study aims to identify the main challenges for the development of hydrogen technologies, so that they can effectively contribute to achieving a sustainable emissions-neutral system.

Key Messages

  • The relative low energy efficiency of hydrogen compared to other energy carriers indicates that it is not intended to replace fossil methane (natural gas) in the energy system. Nevertheless, it is useful for the decarbonization of certain uses, primarily in industry and transportation, and could play an essential role in the balancing and security of the electrical system. The rapid development of these new markets requires the dissemination of radically new technologies, equipment and supply systems, the success of which depends on the implementation of policies to support both the supply and demand sides.
  • Long-term hydrogen infrastructure needs depend on strategic supply and demand choices, including the role of fossil methane and CCS-based hydrogen, the use of hydrogen for power generation and heavy-duty transportation, and cross-border supply choices for hydrogen and derived fuels.
  • In an emissions-neutral system, hydrogen must be produced from renewable or nuclear electrolysis, while hydrogen based on fossil methane and carbon capture and storage (CCS) could only play a role in a transition period if it meets climate and economic viability conditions not reached today. The cost of hydrogen by electrolysis varies according to the electricity resources it mobilizes. Even taking into account the expected technological progress, it will remain higher in the long term than the fossil fuel alternatives that hydrogen must replace, but will offer an economically viable solution in sectors for which there is no or few alternatives.
  • Cross-border hydrogen trading can be economically interesting, but raises issues of energy supply geopolitics, industrial specialization and the implementation of sustainability standards.
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