Regional Outlook

T. CAMPBELL, Managing Editor

In August 2022, the U.S. passed the Inflation Reduction Act (IRA), supporting the hydrogen (H₂) economy through tax credits for green H₂ production and carbon capture, among other benefits. The IRA is a solid start to reducing greenhouse gas (GHG) emissions, but other countries must develop robust policies and strategies to make net-zero goals a reality. Some countries have begun working on frameworks to rival that of the IRA, while others struggle to make concrete plans. Nonetheless, conversations are taking place, and international progress seems to be on the horizon. A common trend among various countries is the integration of H₂ into their energy mixes. The energy transition is underway, but what specifics are nations planning to achieve in the coming years? 

The EU. In 2020, the European Union (EU) developed the EU Hydrogen Strategy to boost clean H₂ production in Europe. The strategy aimed to install a minimum of 6 gigawatts (GW) of renewable H₂ electrolyzers in the EU, and to produce up to 1 million tons (MMt) of renewable H₂ by 2024.¹ By 2030, the strategy aimed to have 40 GW of renewable H₂ electrolyzers to produce up to 10 MMtpy of renewable H₂ in the EU. From 2030, the H₂ will be deployed to decarbonize hard-to-abate sectors.¹ 

In the Fit for 55 package of 2021, the EU intended to reduce GHG emissions reduction targets for 2030 from 29% to 40%.² The European Commission’s (EC’s) REPowerEU plan, released in May 2022 in response to energy market disruptions from Russia’s invasion of Ukraine, aimed to rapidly reduce the EU’s dependence on Russian fossil fuels by 2027. This plan was built upon existing initiatives, including the Recovery and Resilience Facility and increasing the renewable energy target of the proposed Fit for 55 plan from 40% to 45%.³ 

The Fit for 55 package is going through the EU legislative process. Concurrently, the Hydrogen and Gas Decarbonization package is in the infancy stage of legislation, suffering from delays due to energy challenges caused by the Ukraine war. The proposal’s goal is to remove regulatory barriers preventing access to grids and markets for renewable and low-carbon gases. The EC anticipates an approximately 85% reduction in carbon-emitting gaseous fuels, expecting a greater focus on biomethane and H₂ by 2050. 

The forecast for gaseous fuel consumption is expected to reduce from nearly 300 MMtpy of fossil fuel in 2025 to slightly more than 50 MMtpy by 2050. Biogas, eFuels and H₂ consumption are predicted to increase exponentially in the same period. H₂ consumption is expected to increase to more than 100 MMtpy within this timeframe.⁴ This does not include H₂ used in synthetic fuels or to produce ammonia. Furthermore, the EC does not believe H₂ pipeline developments to be a priority until the 2040s, once consumption becomes significant. 

Australia. The Climate Change Bill 2022 outlined Australia’s GHG emissions target of a 43% reduction from 2005 levels by 2030 and net zero by 2050.⁵ The bill was passed by the House of Representatives and Senate in September 2022. Since then, Australia has been working to develop methods to integrate H₂ into its energy mix. Australia’s Hydrogen Working Group predates the bill and aims to develop a national H₂ strategy. According to the Council of Australian Governments (COAG), three of Australia’s top four trading partners—Japan, the Republic of Korea and China—have already made explicit commitments to use clean H₂ to decarbonize their energy systems, and the Australian Government has committed over $146 MM to H₂ projects along the supply chain since 2015.⁶ 

Due to the abundance of wind, solar and hydro resources, Geoscience Australia predicts that approximately 11% of Australia could produce renewable H₂.⁶ Australia has developed three scenarios for H₂ growth based on their potential. In the first scenario, the country aims to supply up to 30% of H₂ demand in some Asian markets, focusing mainly on exporting H₂ to assist the global market. The second scenario sees Australia contributing small amounts of H₂ to international markets and focusing more on H₂ use in steel making and heavy-duty transportation, deprioritizing light vehicles and domestic heating. The final scenario disregards H₂ as a significant energy source, focusing more on electric heating, cooking and transportation.⁶

UK. Britain’s Energy Security Plan highlights the steps the UK government is taking to become energy independent. This plan includes a competition window for Strands 1 and 2 of the Net Zero Hydrogen Fund. Strand 1 provides development expenditure for front-end engineering and design (FEED) and post-FEED activities, aiming to build the pipeline of H₂ production projects to move closer to deployment.⁷ Strand 2 provides capital expenditures (CAPEX) support to H₂ production projects that do not require revenue support. Applicants for Strand 2 must demonstrate a credible low-carbon H₂ production project capable of producing H₂ at scale by 2025.⁷ The UK government is also announcing a shortlist of projects for an electrolytic H₂ production allocation round, with plans to launch a second round in Q4 of this year.⁸

The UK is aiming to develop up to 10 GW of low-carbon H₂ production capacity by 2030.⁸ To achieve this goal, the UK recently announced the first winning projects from the £240 MM Net Zero Hydrogen Fund. The winners included Statkraft’s green energy hub; Wrightbus’ Ballymena Hydrogen; Progressive Energy, Statkraft and Foresight Group’s green H₂ projects in St Helens, Winnington and Middlewich; the Inverness green H₂ hub; Mannok’s green H₂ valley project; Octopus Hydrogen’s Lanarkshire green H₂ project; and HyNet’s H₂ production plant. Furthermore, the UK intends to support up to 150 megawatts (MW) of new electrolytic H₂ production capacity. A second electrolytic H₂ allocation round is planned for late 2023, aiming to support up to 750 MW of capacity.⁸ 

Regarding carbon capture, storage and utilization (CCUS) projects, the UK named the CCUS-enabled H₂ projects moving forward on the Tract-1 clusters to further their ambition of up to 1 GW of CCUS-enabled H₂ in operation or under construction by 2026.⁸ The projects that form the Track-1 project negotiation list are the East Coast Cluster’s net-zero Teesside Power, bpH2Teesside and Teesside H₂ CO₂ capture projects; HyNet Cluster’s Hanson Padeswood Cement Works Carbon Capture and Storage, Viridor Runcorn Industrial CCS, Protos Energy Recovery, Buxton Lime net zero and HyNet H₂ production plant 1 projects. The UK government plans to launch Track-2 to identify two additional clusters to help with the nation’s carbon capture goals.⁹ 

Japan. Japan’s Green Transformation (GX) has five key initiatives to transition from reliance on fossil fuels to clean energy. The government hopes to achieve $1 T of private-public investments to achieve the initiatives. The country’s energy targets are to reach 36%−38% of renewable energy in the power mix by 2030, install 10 GW of offshore wind power and 104 GW−118 GW of solar power by 2030, restart nuclear power (contributing up to 22% of the country’s power mix), establish success cases of ammonia/H₂ co-firing by 2024 and build a CCUS value chain, capturing 120 MMtpy−140 MMtpy of CO₂ by 2050.¹⁰ 

The country’s transportation targets are to achieve 100% adoption of electric vehicles (EVs) and H₂ electric vehicles (HEVs) by 2035, develop 150,000 EV chargers and 1,000 H₂ refueling stations by 2030, and cut the shipping industry’s CO₂ emissions by 1.8 MMt by 2030. Japan also hopes to introduce ammonia/H₂-fueled ships.¹⁰ The country will also distribute GX transition bonds that will provide upfront investment support for industry decarbonization. The government plans to raise $144 B by issuing sovereign bonds as pump-priming, but the details are still being worked out. There is no concrete information available on how the $144 B will be invested, but the initial plan included ammonia, H₂ and CCUS technologies.¹⁰H₂T

LITERATURE CITED 

¹ European Commission, “A hydrogen strategy for a climate neutral Europe,” July 2020, online: https://knowledge4policy.ec.europa.eu/publication/communication-com2020301-hydrogen-strategy-climate-neutral-europe_en 

² European Council, “Fit for 55,” April 2023, online: https://www.consilium.europa.eu/en/policies/green-deal/fit-for-55-the-eu-plan-for-a-green-transition/ 

³ International Energy Agency, “Is the European Union on track to meet its REPowerEU goals?” December 2022, online: https://www.iea.org/reports/is-the-european-union-on-track-to-meet-its-repowereu-goals 

⁴ The Oxford Institute for Energy Studies, “The EU hydrogen and gas decarbonisation package: Help or hindrance for the development of a European hydrogen market?” March 2023, online: https://a9w7k6q9.stackpathcdn.com/wpcms/wp-content/uploads/2023/03/The-EU-Hydrogen-and-Gas-Decarbonisation-Package-ET22.pdf 

⁵ Parliament of Australia, “Climate Change Bill 2022,” September 2022, online: https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6885 

⁶ COAG Energy Council, “Australia’s national hydrogen strategy,” 2019, online: https://www.dcceew.gov.au/sites/default/files/documents/australias-national-hydrogen-strategy.pdf 

⁷ Department for Energy Security and Net Zero, “Net zero hydrogen fund strands 1 and 2: Round 2 open to applications,” April 2023, online: https://www.gov.uk/government/publications/net-zero-hydrogen-fund-strand-1-and-strand-2 

⁸ Department for Energy Security and Net Zero, “Powering Up Britain: Energy security plan,” April 2023, online: https://www.gov.uk/government/publications/powering-up-britain/powering-up-britain-energy-security-plan#:~:text=We%20will%20move%20towards%20energy,the%20same%20as%20energy%20isolationism. 

⁹ Department for Business, Energy and Industrial Strategy, Department for Energy Security and Net Zero, “Cluster sequencing Phase-2: Track-1 project negotiation list,” March 2023, online: https://www.gov.uk/government/publications/cluster-sequencing-phase-2-eligible-projects-power-ccus-hydrogen-and-icc/cluster-sequencing-phase-2-track-1-project-negotiation-list-march-2023 

¹⁰ GR Japan, “Overview of Japan's green transformation (GX),” January 2023, online: https://grjapan.com/sites/default/files/content/articles/files/gr_japan_overview_of_gx_plans_january_2023.pdf