Contrasting European Hydrogen Pathways
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March 2021 Contrasting European hydrogen pathways: An analysis of differing approaches in key markets OIES PAPER: NG 166 Martin Lambert, Senior Research Fellow, OIES Simon Schulte, Head of Gas Markets, EWI The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies, the Institute of Energy Economics at the University of Cologne or any of its members. Copyright © 2021 Oxford Institute for Energy Studies (Registered Charity, No. 286084) This publication may be reproduced in part for educational or non-profit purposes without special permission from the copyright holder, provided acknowledgment of the source is made. No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the Oxford Institute for Energy Studies. ISBN 978-1-78467-155-6 March 2021: Contrasting European hydrogen pathways ii Contents 1. Introduction ...................................................................................................................................... 1 2. Overview and Comparative Analysis ............................................................................................... 2 2.1. Policy drivers by country ......................................................................................................... 2 2.2. Hydrogen Demand .................................................................................................................. 3 2.3. Hydrogen Supply ..................................................................................................................... 5 2.4. Summary Conclusion ............................................................................................................ 12 3. France ............................................................................................................................................ 13 3.1. Policy Framework .................................................................................................................. 13 3.2. Hydrogen Demand ................................................................................................................ 14 3.3. Hydrogen Supply ................................................................................................................... 17 4. Germany ........................................................................................................................................ 19 4.1. Policy Framework .................................................................................................................. 19 4.2. Hydrogen Demand ................................................................................................................ 21 4.3. Hydrogen Supply ................................................................................................................... 24 5. Italy................................................................................................................................................. 27 5.1. Policy Framework .................................................................................................................. 27 5.2. Hydrogen Demand ................................................................................................................ 28 5.3. Hydrogen Supply ................................................................................................................... 29 6. Netherlands .................................................................................................................................... 30 6.1. Policy Framework .................................................................................................................. 30 6.2. Hydrogen Demand ................................................................................................................ 31 6.3. Hydrogen Supply ................................................................................................................... 32 7. Spain .............................................................................................................................................. 34 7.1. Policy framework ................................................................................................................... 34 7.2. Hydrogen Demand ................................................................................................................ 35 7.3. Hydrogen Supply ................................................................................................................... 38 8. United Kingdom ............................................................................................................................. 39 8.1. Policy Framework .................................................................................................................. 39 8.2. Hydrogen Demand ................................................................................................................ 40 8.3. Hydrogen Supply ................................................................................................................... 42 9. Conclusion ..................................................................................................................................... 43 Annex .................................................................................................................................................... 45 March 2021: Contrasting European hydrogen pathways iii Figures Figure 1: Comparison of hydrogen strategies and policy drivers by country .......................................... 2 Figure 2: Current (2018) natural gas (left) and hydrogen (right) demand by country ............................. 3 Figure 3: FCH JU low and high scenarios for 2030 hydrogen demand by sector and country .............. 5 Figure 4: LCOH for green hydrogen production for selected RES technologies and regions by 2030 .. 7 Figure 5: LCOH for green hydrogen production for selected RES technologies and regions by 2050 .. 7 Figure 6: Comparison of natural gas-based and RES-based hydrogen production in 2030 (left) and 2050 (right) based on Brändle et al. ...................................................................................................... 10 Figure 7: French heating sector by source ........................................................................................... 16 Figure 8: Current hydrogen production by technology in France.......................................................... 17 Figure 9: German hydrogen consumption as estimated in different scenario studies .......................... 22 Figure 10: LCOH and cost benchmarks on the demand side in Germany in 2019 .............................. 25 Figure 11: Final energy consumption in Germany in 2050; technology mix scenario with 95 per cent carbon emission reduction .................................................................................................................... 26 Figure 12: Italy potential hydrogen demand by sector .......................................................................... 28 Figure 13: NL Hydrogen use by application in petajoule (PJ) in 2019 Source ..................................... 31 Figure 14: Estimated 2019 hydrogen supply by industrial cluster ........................................................ 33 Figure 15: UK total hydrogen demand by scenario .............................................................................. 41 Figure 16: Hydrogen demand by sector and scenario .......................................................................... 42 Tables Table 1: FCH JU assumed penetration in 2030 of low carbon hydrogen by country and sector ........... 4 Table 2: Electricity system characteristics of individual countries .......................................................... 9 Table 3: Comparison of the CO2, natural gas and hydrogen infrastructure of the selected European countries ................................................................................................................................................ 11 Table 4: Final energy consumption for natural gas in 2018 .................................................................. 14 Table 5: Final energy consumption for natural gas in Germany in 2018 .............................................. 21 Table 6: Final energy consumption for natural gas in Italy in 2018 ...................................................... 28 Table 7: Final energy consumption for natural gas in the Netherlands in 2018 ................................... 31 Table 8: Final energy consumption for natural gas in Spain in 2018 .................................................... 36 Table 9: Final energy consumption for natural gas in the UK in 2018 .................................................. 40 Table 10: Key features of UK National Grid Future Energy Scenarios 2020 ........................................ 41 March 2021: Contrasting European hydrogen pathways iv 1. Introduction The year 2020 will be remembered as the year when the Covid-19 pandemic swept the world, but it has also seen increasing momentum behind the urgency of tackling the longer-term global challenge of climate change, with more and more countries making pledges to achieve "net-zero" emissions. The UK and France started in mid-2019 with targets to achieve net-zero by 2050, but perhaps the most significant development in 2020 was the pledge by China to