Little to lose: The case for a robust European green hydrogen strategy

Abstract

Europe is bound by the Paris Agreement to transition to net-zero greenhouse gas emissions by 2050; the EU has further proposed a 90% emissions reduction target already for 2040. Green hydrogen (that is, hydrogen produced from clean electricity) is often framed as a key component in the transition to net-zero emissions, being a viable emissions-free alternative to fossil fuels in some contexts. However, there is a lot of uncertainty in the research literature about how much green hydrogen Europe might need to produce in the next couple of decades. The optimal production level depends on various uncertain factors such as competition (fossil fuels with carbon capture and storage as well as imports) and demand (related to electrification rates, especially of land transportation). This study analyzes green hydrogen production pathways under a large set of different scenarios, with the aim of identifying a robust production target. We find that a green hydrogen production target of some 25 Mt/a by 2040 hedges against the risk of failing carbon capture and storage and green fuel imports. While subsidies would be required to reach the target in most cases, we show that the outcome is unlikely to be overly expensive. Specifically, total system cost is kept to within 10% of the cost-optimum in most scenarios—Europe risks little by committing to such a target. Notably, however, the target could be lowered if transportation electrification was sped up. Narrowing down the uncertainties surrounding green fuel imports and carbon sequestration potential are also high priorities for future research. The methods developed in this study could readily be applied to different regions and continents.