Europe must improve the speed at which it sets the policy framework for a hydrogen economy if the region is to avoid losing investment to the US and other regions, according to industry group Hydrogen Europe’s CEO, Jorgo Chatzimarkakis.

Speaking at the Recharge Hydrogen Summit in Hamburg, Chatzimarkakis said the US’ Inflation Reduction Act has accelerated the pace of development in the country with its production tax credit of up to $3/kg of hydrogen.

“It is simple and it is clear,” he said, noting that, in contrast, legislation from the European Commission “came late and discriminates against hydrogen”.

Hydrogen Europe was one of several bodies that complained that the provisions of the Commission’s delegated acts on renewable hydrogen were overly complicated. As a result, MEPs in the European Parliament voted through an amendment to the Renewable Energy Directive (RED) that loosened the requirements for hydrogen to be considered renewable.

“We should not spoil this possibility of staying world market leaders” Chatzimarkakis, Hydrogen Europe

Under the new rules, renewable hydrogen can be produced from grid-sourced electricity as long as producers secure power-purchase agreements from renewable energy installations for the equivalent amount of electricity.

Hydrogen Europe welcomed the amendment, but Chatzimarkakis is worried about how long the rules will take to come into law now they are part of a wider package of reforms.

“We need a delegated act—if we wait until RED recast comes into force, it is too late,” he says.

Hydrogen Bank

Similarly, a €3bn ($3bn) hydrogen bank announced by the EU must come online as quickly as possible. The Commission currently hopes to have the scheme finalised by the end of the year.

The hydrogen bank is likely to be based on Germany’s H2 Global plan. Under that scheme, a government-backed entity will buy green hydrogen from non-EU projects under long-term offtake agreements. The hydrogen will then be sold within the EU under short-term resale contracts.

But—as with the delegated acts—speed is of the essence if the EU is to avoid losing investment and expertise to the US, according to Chatzimarkakis.

“If this is not up and running until spring next year, we have a problem,” he says.

Manufacturer roots

A key element in the development of any hydrogen economy is where electrolyser manufacturers establish their production facilities. Although firms such as ITM Power and Nel Hydrogen have led the way by establishing gigafactories in the EU—thanks to the bloc’s pioneering hydrogen strategy released in 2020—they have also complained about the lack of orders since then.

Large projects in Europe have been slow to reach FID because of the lack of concrete policy certainty—exactly the kind of certainty the US has now provided.

As a result, many electrolyser manufacturers are now looking to base facilities in the US—with Nel saying it will become an increasingly important market.

Other regions—such as India, Egypt and the Middle East—are also seeing large amounts of foreign investment in hydrogen projects and are starting to represent a threat to the EU’s leading position, according to Chatzimarkakis.

“We need electrolyser production here,” he says. “We should not spoil this possibility of staying world market leaders.”

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Author: Tom Young