Hydrogen is key in meeting European climate targets

26/02/19

If Europe wants to meet its 2050 climate targets, North Western Europe needs to fully commit to hydrogen. If applied effectively, hydrogen could deliver up to thirty percent of those targets by 2050.

This is one of the major conclusions set out in the most recent report Hydrogen- Industry as a Catalyst published today by the World Energy Council Netherlands. PwC is connected to this international platform that deals in a broad sense with world energy issues of today and in the future.

As a first step, energy intensive industry needs to embrace hydrogen as a first step and build further on what has already been realized in that area. This will then serve as a catalyst to further expansion into broader society (i.e. logistics and domestic use).

‘Potential of hydrogen’

To meet the Paris climate targets, we need vast volumes of clean molecules next to clean electrons in our European Economy. The main author of the report, Jan Willem Velthuijsen, also concludes that this is a pragmatic and achievable scenario.

“The potential of hydrogen is vast. We strongly believe that hydrogen is inevitably required to meet Europe’s 2050 targets. And to achieve this, we need to scale up and accelerate the current industrial application of hydrogen in areas such as chemical processing, refining and steel production. These are processes that already apply hydrogen, but there is still much to gain. In recent years knowledge, experience and infrastructure have been built and the cost of coordination will be limited given the limited number of parties involved in scaling up”.

Transition in two stages: from grey to green hydrogen

Jeroen van Hoof, chair of the WEC Netherlands notes: “The transition we describe will include a phased approach. First, we will move from so called grey hydrogen to blue hydrogen. That means that carbon emissions during the production of hydrogen will be captured and stored. Subsequently, we will move from blue to green hydrogen in terms of hydrogen produced by clean electricity and the application of electrolysis. When we reach this last phase, the possibilities are endless”.

Price of carbon decides transition hydrogen

Velthuijsen, also PwC Europe’s chief economist details the underlying mathematics - the transition from grey to blue appears to reach a tipping point with a limited European pricing of carbon close to forty euro per ton. “Around this price point, it will become economically viable to capture and store carbon emissions in abandoned gas fields in the North Sea. Once the cost of producing green hydrogen from renewable electricity decreases by seventy percent, it too will become economically viable. This is not unrealistic. We have seen the cost of solar and wind energy decrease far more drastically in the recent past, when scaled up”.

A climate neutral world and a competitive industry

Van Hoof adds: “North West Europe is perfectly positioned to deliver on the ‘clean molecule transition’ owing to our innovative and efficient energy intensive industry. We have built the technical know-how and have the required infrastructure already largely in place. These will be further boosted by planned large-scale North Sea wind farms, close access to densely populated areas and a powerful economy combined with a strong European desire to deliver on the Paris agreement. By focusing on a clean hydrogen economy, Europe will not only lead the way towards a climate neutral world, but it will also create a strong clean and competitive industry.”

Download the report Hydrogen - industry as catalyst

Contact us

Jan Willem Velthuijsen

Chief Economist, PwC Netherlands

Tel: +31 (0)88 792 75 58

Jeroen van Hoof

Global Power & Utilities Leader and Global EU&R Assurance Leader, European EU&R IL, Assurance partner, PwC Netherlands

Tel: +31 (0) 88 792 13 28

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