Is trouble ahead in the fight for hydrogen dominance?
Both China and the EU aim to become market leaders in the booming hydrogen industry.
Not so long ago, the energy transition was primarily an idealistic concept that was promoted by environmentalists and researchers. The main obstacle was the high cost of clean technology. The drastically falling price of PVs, for example, has drawn global attention to the solar industry. A similar situation could arise with regard to emission-free hydrogen production as China and the EU are preparing to dominate the market. Germany's trauma The solar industry in Europe's largest economy, Germany, experienced a spectacular boom in the mid-2000s. Renewable energies were high on the Berlin agenda, which supported the companies with generous subsidies. The success of this policy led to a strong presence of German companies on the world stage when a fifth of all photovoltaic cells were produced in the European country. However, the situation changed when China's huge industrial complex adopted Beijing's strategy of building a domestic PV sector. Since the mid-2000s, the Asian country has seen a remarkable rise. Beijing's success was underpinned by several factors: public support, a large internal market and an important industrial complex. The EU and Germany have learned from their mistakes and from China's success, which is emulating the hydrogen economy. The EU strategy Despite the Covid 19 crisis, there has been a flood of public sector announcements in Europe that have given both national and supranational institutions the impetus for a hydrogen-based economy. The leitmotif is Europe's current technological performance and the recognition that its dominant position could easily be resumed if the necessary policy measures are not taken in time. The German government has secured a prominent place for its future hydrogen economy in the economic stimulus packages that are intended to cushion the financial consequences of the current health crisis. At least 9 billion euros are to flow into promoting the development of hydrogen-related technologies. Since Germany took over the six-month EU Council Presidency on July 1st, Economics Minister Peter Altmaier also dedicated a significant part of his speech to green hydrogen. In addition, the EU's "Green Deal" is partly devoted to the goal of launching a continental zero-emissions economy. The strategy includes a three-step plan that will begin implementing green hydrogen production and consumption in industries such as steel, chemicals and refineries by 2024. In the second phase, plants are to be connected in order to create "hydrogen valleys" by 2030. In the last phase, the hotspot is connected and a large European hydrogen infrastructure is created. The EU hopes to produce 1 million tons from 6 GW of electrolysis capacity by 2024. By 2030, this should grow from 40 GW capacity to 10 million tons. Germany alone would contribute 5 GW by 2030. Other countries, such as the Netherlands, also want to make a contribution and benefit from the new hydrogen economy. The Netherlands is uniquely positioned with its access to the North Sea for the installation of wind turbines and an existing gas network that could be reused for export purposes. China in the rearview mirror The strong EU support for the hydrogen industry is a welcome departure from the past. European companies such as Siemens and Thyssenkrupp currently supply a significant number of electrolysers. However, Chinese companies are not far behind. Although the EU remains the industry leader in terms of knowledge and production capacity, it cannot afford to slacken. First of all, the Chinese have proven that they can implement industrial policy with ruthless efficiency and dominate the market. A clear disadvantage is that Beijing has not yet set a clear goal for an emission-free society by 2050, as the EU has done. According to a Cleantech Group report, China's electric vehicle strategy could be used as a warning sign for competitors. Two decades ago, vehicle electrification became an industrial goal and a national priority. At present, Chinese companies are leaders in sales and production capacity. While the EU is warned to have the right policies this time around, increasing competition is good news for consumers and the environment in general. Current attention to hydrogen remains a hype that needs to be translated into concrete results. The situation is very promising as public support remains strong and the installation of wind and solar energy is progressing faster and faster, which is a prerequisite for green hydrogen production.