The EU aims to massively increase the production of green hydrogen. However, experts see the lack of transport infrastructure as a major obstacle. This article analyzes the importance of pipeline networks for the development of the European hydrogen market and discusses possible solutions.
The European Union has set ambitious goals for green hydrogen: By 2030, 10 million tons are to be produced and imported annually. In 2022, the production of renewable hydrogen in the EU was 20,000 tons, which is 0.2% of the amount targeted by 2030. Currently, less than 1% of global hydrogen production meets the highest environmental standards. Infrastructure
According to Timm, a significant obstacle to market growth is the lack of transport infrastructure. Only 7% of the announced hydrogen capacities in the EU have received a final investment decision. Without long-term offtake agreements, many project developers have difficulties securing financing.
The current distribution model, where hydrogen is mostly produced and consumed at the same location, also prevents increasing demand and thus more investment security, says Timm. A midstream infrastructure plays a crucial role in matching supply and demand safely and cost-effectively.
Advantages of a European Pipeline Network
Pipeline networks are considered the most economical option for transporting hydrogen over long distances and in large quantities. With costs of 0.11 to 0.21 €/kg per 1,000 km, they outperform ship transport for all reasonable distances within Europe and in adjacent regions.
A pipeline system could facilitate cross-border trade within the EU and balance regional differences in supply and demand. The planned European Hydrogen Backbone (EHB) is set to cover 31,500 kilometers by 2030. It could reduce supply costs by 330 billion euros compared to a localized model. Germany and the Netherlands have begun expanding their national pipeline networks, including cross-border connections.
Companies like Everfuel, HyCC, and HH2E are aligning their strategies with this model and launching large-scale production plans for connection to pipelines. However, there are currently no projects to supply cross-border customers with green hydrogen.
Strategies to Promote Infrastructure Development
Timm suggests guarantees as a possible solution. According to him, governments and transmission system operators should guarantee the availability of pipelines and compliance with deadlines. In return, he believes producers would commit to delivering certain quantities and utilization rates.
The market for renewable hydrogen would benefit from a clear implementation of commitments on the demand side. This would create a level playing field for EU production and imports and contribute to the introduction of an EU-wide system of tradable certificates.
Without the necessary attention from policymakers, the start of the hydrogen economy will be massively delayed, Timm believes. The midstream infrastructure is essential to realize cost-effective solutions and reduce the risks associated with investments.