Europe cannot generate sufficient renewable electricity to meet the upcoming demand for green hydrogen. Establishing hubs for the import of hydrogen and hydrogen carriers is therefore recognised as a key priority in the Dutch Hydrogen Roadmap. However, the regulatory landscape for transporting and storing hydrogen and hydrogen carriers is complex and remains a moving target. Realising infrastructure and storage facilities requires a great number of stakeholders to overcome planning and real estate obstacles. Allocating risks in this developing market may raise antitrust concerns. In this blog, we share three insights on how to address these challenges.
1. A well-structured cooperation helps you to avoid antitrust hurdles in an emerging market
Developing new markets often leads to tensions in terms of antitrust rules, in particular the cartel prohibition. Tensions that should not complicate the development of new markets. Competition authorities recognise their broader social responsibility and consider facilitating the energy transition one of their top priorities. By carefully considering how to best structure an intended cooperation, you could avoid potential competition law hurdles. For example, the cartel prohibition does not apply to so-called ‘full-function' joint ventures and sustainability partnerships may benefit from an exemption from the cartel prohibition. The Netherlands Authority for Consumers and Markets (ACM) sets a clear example by welcoming discussions and is prepared to offer informal guidance. As a result, temporary arrangements on – for instance – exclusivity and minimum off-take are not inherently problematic.
2. Navigating the four main regulatory challenges
Once a vessel transporting hydrogen or ammonia enters Dutch waters, four main regulatory challenges arise:
- Complexity of regulatory framework
- Uncertainty of regulatory framework
- Porthos ruling on nitrogen emission during construction
- Lead time for required permits of up to 5 years
The EU and the Dutch regulatory framework for import and storage of hydrogen and ammonia are both complex and uncertain. As the framework is under development, targets and conditions for production and certification are constantly shifting. It is therefore important to be at the table when the rules are designed. In addition, the Dutch nitrogen crisis (see the recent Porthos ruling by the Dutch Council of State) requires a careful assessment of nitrogen effects. The lead-time for the required permits can easily be up to five years in the Netherlands. Close cooperation with the relevant authorities may help speed up the permitting and authorities are looking for ways to streamline this process.
3. Property structuring is key in project finance
Once hydrogen or ammonia docks in the port, it will have to be stored and treated. Because of the way port real estate is typically held in the Netherlands, proper real estate planning is required to enable hydrogen projects to successfully advance from pilots to full-scale bankable projects. In the Netherlands, municipalities are the predominant owners of port real estate. The port areas are usually issued in continuous leasehold in favour of the port authority. The port authority, in turn, issues the relevant plots in sub-leasehold in favour of the user, or enters into a lease agreement. The property law structuring is complex and involves various parties with different interests. The bankability of the property law structuring is a key consideration.
Cooperation is key as the hydrogen journey continues
These three insights emphasise the importance of approaching each hydrogen project from a multidisciplinary perspective. Collaboration between many stakeholders is key to implementing hydrogen in society. Once hydrogen has been stored and treated, its journey continues onshore to end users as fuel or feedstock in the heavy industries. In the future, the heavy-duty mobility sector will be supplied, and perhaps the residential and consumer sectors. This requires additional effort: existing gas infrastructure has to be redesigned and additional storage options have to be developed, such as empty salt or natural gas caverns. The policy and regulatory frameworks, meanwhile, are clearly work in progress whereby it is relevant for all stakeholders to be part of the conversation.
Let us build a thriving hydrogen economy together
Dutch ports can pioneer as gateways to the European hydrogen market. From the regulated transport and import of hydrogen carriers, the development and financing of infrastructure and storage capacity to contracting between market parties: our multidisciplinary hydrogen team can help you tackle challenges and seize opportunities. Only together, we can build a thriving hydrogen economy in the Netherlands, and beyond.