The EU is targeting green hydrogen production below €1.8/kg ($2/kg) by 2030, European Commission president Ursula von der Leyen said at the start of European Hydrogen Week.

The current rise in gas prices means green hydrogen can already be cheaper than grey hydrogen  in some parts of the world, according to the Commission. Further reductions in the costs of green hydrogen will help accelerate the switch to the clean form of the fuel.

“Our target should be to bring the cost below €1.8/kg by 2030,” says von der Leyen. “And this goal is within reach. We have to scale up clean hydrogen production, expand its applications, and create a virtuous circle where demand and supply feed each other and bring the prices down.”

The US has set a production cost target of $1/kg by the same date—approximately half that of the EU.

“We have to scale up clean hydrogen production” von der Leyen, EU

Electricity represents 40-70pc of the levelised cost to produce hydrogen from electrolysers with a capacity of over 20MW, with the cost and utilisation rate of the electrolyser the second-most significant factor. Wholesale power prices in the US were about half the level of those in Germany in 2020, according to statistics body Statista.

A recent study by investment bank Lazard found that new plants coming online in the US could produce green hydrogen at $3.29/kg, whereas cost estimates in the EU at the moment are over $5/kg.

Prices of less than $2/kg are likely to be competitive with grey hydrogen production—even without the current spike in gas prices.

Clean Hydrogen Partnership

The Commission this week launched the Clean Hydrogen Partnership—a joint initiative with the Hydrogen Alliance that will build on the work of the Fuel Cells and Hydrogen Joint Undertaking (FCH JU) to accelerate the development and deployment of a European value chain for clean hydrogen technologies.

The FCH JU is a public-private partnership between the European Commission and industry association Hydrogen Europe designed to accelerate the deployment of hydrogen technologies. It will be rolled into the Clean Hydrogen Partnership.

Innovation funding

As well as providing R&D support through these initiatives, the EU is also financing projects through its Innovation Fund—paid for by its Emissions Trading System.

129 GW – Electrolyser commitments under hydrogen compact

Three large-scale hydrogen projects will receive funding under the initiative, it was announced earlier this month.

In September, the EU launched a hydrogen ‘compact’—a partnership between nations, NGOs and businesses that aims to encourage deployment targets. Parties have committed to 129GW of electrolyser capacity under the compact.

The Commission has also specifically committed to cooperate on green hydrogen development with the African Union under the framework of the Africa-Europe Green Energy Initiative.

European Hydrogen Week aims to bring together policymakers, industry representatives, civil society organisations and the research community to discuss the latest developments at EU level in the hydrogen sector.

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Author: Tom Young