Our Benelux Hydrogen team attended the World Hydrogen Summit in May 2023 to discuss the latest developments, opportunities and challenges in the hydrogen energy sector. With over 11.000 guests from large companies, start-ups and governments attending, the organisers had to double this year's summit capacity. These are the three key insights we gained during the event.
#1. The Inflation Reduction Act and EU supprt schemes help unlock a clean hydrogen economy
The US heavily incentivises hydrogen production through provisions in the Inflation Reduction Act of 2022 (IRA), by awarding a tax credit for the production of clean hydrogen. The amount awarded depends on the carbon intensity of the hydrogen produced. We regularly heard the opinion that the EU should stop being so dogmatic about the color of hydrogen and should focus on carbon intensity, just like the IRA. Moreover, many were of the opinion that the EU needs a regulatory framework similar to the IRA, to stimulate the willingness to pay for hydrogen. On the other hand, Frans Timmermans stated that the EU's focus on the regulatory framework provides long-term stability which goes beyond offering tax reductions and investment possibilities. "Before the end of 2023, we will have a complete picture on the final legislative framework, public funding, and the emerging infrastructure," the Executive Vice-President for the European Green Deal said.
"The IRA is a one stop shop and simple. It is big, blunt and quick." – Marcel Galjée (Managing Director HyCC)
#2. Although the investments in hydrogen have increased, less than 10% of capital is committed yet
During the summit, the Hydrogen Council presented its 2023 Update on the state of the global hydrogen economy. Globally, the industry has announced more than 1,000 large-scale project proposals as of the end of January 2023. However, only 10% has reached the crucial final investment decision (FID) state. To reach this category, infrastructure, storage, green electrons and a regulatory framework are necessary, which makes it very challenging. Bankability of hydrogen projects also remains an issue. This has to do with complex project structures, technical and long term supply chains risks. The lack of incentives in the EU to reduce the price of hydrogen and stimulate offtake further complicates things for bankability.
"For developers to take FID, securing offtake and potentially government funding is key." - Hydrogen Insights 2023
#3. Momentum for hydrogen builds up, with the Port of Rotterdam being Europe's major hub
The global hydrogen economy keeps growing. Representatives from Australia, Oman, Saudi Arabia, Germany and Brazil attended the summit, to mention a few. During the summit, the Kingdom of Saudi Arabia signed a Memorandum of Understanding with the Dutch Government to deepen cooperation in areas such as hydrogen. “Rotterdam could be our hub in Europe,” the Saudi Arabian Energy Minister said, adding that the Netherlands and Germany could be Saudi Arabia's 'natural partners' in the green hydrogen trade. During the event, the importance of the Port of Rotterdam was stressed multiple times, because it will function as a gateway for hydrogen production, import, application and transport to other countries in Northwest Europe. Until 2030, ammonia will probably be the leading hydrogen carrier, as we already have a safe and efficient infrastructure for transporting ammonia in place in many ports.
“We are determined to be the leading exporter of hydrogen, as well as to provide clean hydrogen for local uses in heavy industries to produce green products such as green steel, green aluminium, fertilizers and others at competitive prices.” - Adbulaziz bin Salman Al Saud, Saudi Arabia's Minister of Energy
Even though the momentum clearly remains strong, much more needs to be done. To be on track to net zero in 2050, more than a doubling of announced investments is needed by 2030. These also need to be matured and deployed. We therefore have to continue creating partnerships, and make sure the right regulatory frameworks are put in place. The summit once again greatly contributed to this.
Hydrogen-related matters to discuss?
Our multidisciplinary Hydrogen team gladly assists you with the challenges and opportunities in this field, whether these concern the regulated transport and import of hydrogen carriers, the development and financing of infrastructure and storage capacity, or the conclusion of contracts. Are you interested in discussing any hydrogen-related matter? Do not hesitate to contact Gaike Dalenoord, Iris Kieft or David Wumkes.