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maritime transport applications. It will financial instruments are also noted,
still mainly be produced close to the in particular the EU ETS Innovation
user or the renewable energy sources, Fund, which will pool together around
in local ecosystems. €10 billion to support low carbon
technologies over the period 2020-
PHASE 2 (FROM 2030 ONWARDS AND 2030 and, as part of the Commission’s
TOWARDS 2050): Renewable hydrogen recovery plan, the Strategic European
technologies should reach maturity Investment Window of InvestEU.
and be deployed at large scale to reach While the EU Hydrogen Strategy is
all hard-to-decarbonise sectors where mostly and predominantly looking at
other alternatives might not be feasible green hydrogen, it also considers and
or have higher costs. acknowledges the usefulness of other
“The EU Hydrogen Strategy highlights forms of low carbon hydrogen (for
that support schemes are likely to example blue hydrogen). The report
be required for some time to enable envisages a cumulative investment of
renewable hydrogen to become cost- €3-€18 billion for low carbon fossil-
effective on the scale envisaged.” derived hydrogen compared with €180-
€470 billion for renewable hydrogen
SCALE UP OF HYDROGEN CAPACITY (produced using mainly solar and wind).
The most relevant goal of the EU
Hydrogen Strategy is the build-up SUPPORT SCHEMES
of additional hydrogen production In addition to the European Clean
capacity (i.e., building electrolysers). Hydrogen Alliance, the EU Hydrogen
The EU Hydrogen Strategy provides Strategy highlights that support
targets of installing (i) in phase 1, at schemes are likely to be required
least 6GW of renewable hydrogen for some time to enable renewable
electrolysers in the EU by 2024 and hydrogen to become cost effective on
(ii) in phase 2, 40GW of renewable the scale envisaged.
hydrogen electrolysers in the EU, along In this regard, the EU Hydrogen
with an additional 40GW electrolyser Strategy envisaged an amendment
capacity target in the eastern and of the EU Emissions Trading System
southern ‘neighbourhoods’ of Europe, (ETS). In the next revision of the ETS,
FIRST HYDROGEN TRAIN IN HOLLAND e.g., Ukraine, as the priority partners for the Commission may consider how to
cross-border trade in hydrogen. incentivise the production of renewable
Considering the fact that current and low carbon hydrogen while
The path set by the EU Hydrogen electrolyser production capacity in considering the risk of carbon leakage.
Strategy is divided into three phases. Europe is under 1GW per year, these If differences in climate targets around
Each phase sets a specific objective to goals have caused raised eyebrows the world continue, the Commission
be achieved within the relevant phase. throughout the EU. The Oxford Institute will propose a Carbon Border
The EU summarises the objectives for for Energy Studies (OEIS) comments: Adjustment Mechanism in 2021.
each phase as follows: “Achieving 40GW by 2030 (even without According to the EU Hydrogen Strategy,
the further 40GW to supply the EU from Carbon Contracts for Differences
PHASE 1 (2020-24): The objective neighbouring countries) will require (CCfD) could be another valuable
is to decarbonise existing hydrogen a very rapid scale-up in electrolyser support mechanism. The strategy
production for current uses such as the production capacity and/or strong document envisages CCfDs where the
chemical sector and promote it for new reliance on imported electrolysers, public counterpart would remunerate
applications. This phase relies on the most likely from China.” the investor by paying the difference
installation of at least 6GW of renewable between the carbon strike price and the
hydrogen electrolysers in the EU by 2024 The aim of the EU Hydrogen actual strike price in the ETS.
and producing up to one million tonnes The OEIS comments on the
of renewable hydrogen. For comparison, Strategy is to decarbonise introduction of a CCfD support
only approximately 1GW of electrolysers hydrogen production and scheme by stating that “the strategy
have been installed in the EU at the time expand its use in sectors where does contemplate the use of Carbon
of writing this article. Contracts for Differences (CCfDs),
it can replace fossil fuels
presumably awarded by auction to
PHASE 2 (2024-30): Hydrogen guarantee a carbon price to a project
needs to become an intrinsic part Naturally, such a massive and rapid developer irrespective of the actual
of an integrated energy system with scale-up will require considerable price of carbon prevailing under the
a strategic objective to install at investment. Consequently, the EU ETS. CCfDs appear to be a very logical,
least 40GW of renewable hydrogen Hydrogen Strategy foresees the market-based mechanism to promote
electrolysers by 2030 and the establishment of a European Clean decarbonisation in an economically
production of up to 10 million tonnes Hydrogen Alliance, with the key efficient way. Given the significantly
of renewable hydrogen in the EU. aim of identifying and building up a lower cost of blue hydrogen production
Hydrogen use will then gradually clear pipeline of viable investment today, it is to be expected that any
expand into new sectors, including projects by bringing together public auction for CCfDs would be won
steelmaking, trucks, rail and some and private stakeholders. Many EU by blue hydrogen projects initially,

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