Europe Should Focus on Hydrogen for a Reliable and Flexible Energy Future

On June 25, ArcelorMittal, the world’s largest steel manufacturer, announced that it is investing in two routes to lower emissions by 30% by 2030 and become carbon neutral by 2050. The company released a report, Climate Action in Europe, that identifies smart carbon technologies and the direct reduction of iron ore as necessary to achieve carbon neutrality. These technologies will require using hydrogen instead of natural gas as a reducing agent. ArcelorMittal’s climate action plan put hydrogen in focus and on the corporate climate action map.

Since Europe’s COVID-19 recovery plans identify hydrogen as a key enabler of a clean energy future, it is likely that other corporations, countries, and governments will soon follow suit. Earlier in 2020, the European Commission presented its new European Industrial Strategy to help Europe's industry lead the transition toward climate neutrality and digital leadership. The strategy establishes the key drivers of Europe's industrial transformation and proposes a comprehensive set of future actions, including a Clean Hydrogen Alliance to accelerate the decarbonization of industry and maintain industrial leadership. In a May 27 press release, the European Commission noted the rapid upscaling of clean hydrogen production and its use in Europe, and it has established a goal of 1 million tonnes of clean hydrogen production for its first phase. The new Clean Hydrogen Alliance also aims to steer and coordinate the rapid upscaling of clean hydrogen production and use in Europe.

Building a Resilient Energy Infrastructure

If incentivized, the hydrogen value chain could offer the largest reduction of emissions and help achieve net zero targets. While industrial electricity demand has been declining over the last couple of months, the share of generation from renewable energy sources in the global fuel mix has largely increased. While solar and wind investments are capital intensive, hydrogen is largely driven by operational costs and reliant on scale economics. According to Guidehouse Insights, increasing adoption of hydrogen that can offer flexibility and optimization for end consumers can support resiliency across the energy industry. Policymakers will need to identify specific projects and mechanisms that offer the much-needed ROI and create a resilient energy infrastructure.