IMPORT ROUTES

Developing Renewable Hydrogen Import Routes Into The Eu

by Floyd March

Developing renewable hydrogen import routes into the EU could be a major cornerstone in developing a global hydrogen frameworks. Recent studies by the OIES highlights how existing and future trade pipelines can develop to meet European and global framework.

There is widespread discussion around hydrogen production and use, spanning various platforms and eliciting both bullish and bearish views on the future role in enduse sectors.

Hydrogen is a uniquely positioned sector as there are decarbonisation efforts for existing uses while discourse has grown significantly to explore its potential in new sectors.

The report began by explaining the future of low-carbon hydrogen as an internationally-traded energy commodity. “Prior to 2022, export and import announcements regarding hydrogen did not align with projected supply and demand trends. Given the significant investments required to establish a functional value chain between its endpoints, a stronger signal was necessary to catalyse investment in the export-import domain.”

New EU targets to quadruple imports are the largest import target for decarbonised and renewable hydrogen by 2030 globally. It is likely, for example, that this import target may have stimulated new or existing announcements from export-oriented countries such as Saudi Arabia and the UAE, which have suggested or announced plans to export hydrogen within the next seven years.

Existing feedstock split across sectors

According to recent estimates: “The current global production of hydrogen stands at approximately 100 million metric tonnes. This production constitutes a 60/40 split between pure hydrogen and hydrogen that is mixed with other gases (syngas). Notably, 99% of the hydrogen produced in 2020 was derived from sources with unabated CO2 emissions, where the primary feedstock sources were natural gas and coal (see Figure 1).”

Methane (Pure H2) 43.8%

Methane or Coal (Syngas) 39.6% Coal (Pure H2) 13.4% Chlor-Alkali bi-product 1.9% Methane + CCS (Pure H2) 0.6%

Methane or Coal + CCS (Syngas) 0.4%

Renewable Electrolysis 0.3% Coal / Coke + CCS (Pure H2) 0.1%

When discussing the global landscape of hydrogen and highlighting potential import routes, it is useful to pinpoint the likely areas and regions involved.

Abdurahman Alsulaiman, Author of the report explained: “Geographically, a significant proportion of hydrogen is currently produced in Asia, which accounts for almost half of global production. Meanwhile, Europe and North America combined accounted for roughly onethird of global production in 2020.”

An essential aspect of building future trade routes is developing hydrogen price indexes. Addressing this, EEX Bourse launched its Hydrogen Index which reports the trade prices of hydrogen on a weekly level. These market performance reviews help support the roadmap to establishing existing trade routes and discovering potential import routes.

Speaking to Hydrogen Industry Leaders, Abdurahman Alsulaiman explained that: “Enhancing visibility and establishing linkages between supply and demand participants will bolster the future development of the hydrogen value chain, including potential import routes. ” However, increasing market participation will be crucial. “This entails the involvement of competent regulators and standardization bodies from both the supply and demand sides to define and reach a consensus on the rules governing the future trading of hydrogen commodities.”

Potential

trade routes

will use topdown and bottom-up approach

Top-down and bottom-up approaches for the hydrogen market is a widely discussed concept, and is often intertwined with a specific focus on national policy announcements.

When exploring how both approaches can be balanced to ensure the hydrogen economy is being secured on different levels, Abdurahman said: “The interest and motivation behind using different approaches and methodologies heavily depend on the end-benefactors of these analysis tools, such as private or public investors, decision-makers.”

Nevertheless, figuratively speaking, we have to remember that all these analysis tools look at different sides of the same hydrogen economy coin. Therefore, increased visibility and stakeholder dialogue will be key to ensuring a secure hydrogen value chain.

Core recommendations include standardisation

The report concluded with multiple recommendations, although Abdurahman emphasised: “Infrastructure, joint scenario building, technology cooperation, standardization, investment and finance frameworks, market development and trading platforms, education and training, and the creation of coordination hubs.”

Each of these aspects warrants its own dedicated research paper. However, the key first step will be for investors, customers, governments and regulators to work together to establish reasonable confidence in the future revenue stream to enable investors to decide to proceed with hydrogen projects.