Twentieth Report of Session 2019–21 Contents

1EU Hydrogen Strategy1

This EU document is politically important because:

  • EU policy in this area is of strategic importance to the UK; and
  • there are specific regulatory implications for Northern Ireland, with potential regulatory implications for the UK as a whole.

Action

  • Write to the Minister.
  • Draw to the attention of the Business, Energy and Industrial Strategy Committee and the Northern Ireland Affairs Committee.

Overview

1.1As part of its Green Deal policy, the Commission has put forward this Strategy to boost zero-carbon hydrogen. It is a non-legislative roadmap which signals the EU’s intended direction of travel in an area of interest to the UK and with implications for the UK’s strategic interests, such as climate change, as well as potential implications for future UK-EU research cooperation and for regulatory requirements under the Ireland/Northern Ireland Protocol.

1.2The Commission notes that hydrogen has many possible applications and that, most importantly, it does not emit carbon dioxide when used. It therefore offers a solution to decarbonising industrial processes and economic sectors where reducing carbon emissions is both urgent and hard to achieve. This, argues the Commission, makes hydrogen essential to delivering the EU’s commitment to reach carbon neutrality by 2050 as part of wider global ambition to mitigate climate change.

1.3Hydrogen, though, is still largely produced from fossil fuels and its level of use is marginal. The Commission concludes that, for hydrogen to contribute to climate neutrality, it needs to achieve a far larger scale and its production must become fully decarbonised. The long-term priority for the EU is to develop renewable hydrogen,2 produced using mainly wind and solar energy. In the short and medium term, however, other forms of low-carbon hydrogen3 are needed, primarily to rapidly reduce emissions from existing hydrogen production and support the parallel and future uptake of renewable hydrogen.

1.4The following phases are identified by the Commission:

1.5These objectives will, acknowledges the Commission, require substantial investment. The Commission expects electrolyser costs to halve in 2030 compared to today. In regions with low-cost renewables, electrolysers are expected to be able to compete with fossil-based hydrogen by 2030. From now to 2030, says the Commission, investments in electrolysers could range between €24 bn (£21.6 bn) and €42 bn (£37.8 bn) and €220–340 bn (£198–306 bn) would be required to scale-up and directly connect 80–120 GW of solar and wind energy production capacity to the electrolysers to provide the necessary electricity.

1.6To support these investments and the emergence of a whole hydrogen “eco-system”, the Commission proposes to kick-start the European Clean Hydrogen Alliance (announced in the Commission’s recent Industrial Strategy). The key objective of the Alliance will be to identify and build up a clear pipeline of viable investment projects. This will facilitate coordinated investments and policies along the hydrogen value chain, and cooperation across private and public stakeholders across the EU, providing public support where appropriate and crowding in private investment.

1.7A range of policies will be explored in order to unlock demand and scale-up production. To boost demand, the Commission will — among other actions — consider quotas of renewable hydrogen in specific end-use sectors, for example certain industries in the chemicals or transport sectors. In order to encourage production, the Commission’s suggestions include:

1.8The Commission also notes that there will need to be a framework for hydrogen infrastructure and market rules. This is with a view to ensuring system interoperability and cross-border trade. Furthermore, the Commission suggests that research and innovation into hydrogen technologies be promoted. This would, in part, be through the Clean Hydrogen Partnership under the Horizon Europe framework Programme for Research. Finally, the Strategy recognises the need for ambitious and well-coordinated policies at national and European levels, as well as diplomatic outreach on energy and climate with international partners.

1.9In his Explanatory Memorandum and subsequent corrigendum, the Minister of State for Business, Energy and Clean Growth (Rt Hon. Kwasi Kwarteng MP) says that the Government welcomes the publication of the Hydrogen Strategy as part of the European Green Deal, but offers no further analysis.

Our assessment

1.10The Minister fails to provide any analytical comment at all on this Strategy, which is very disappointing and serves only to frustrate our ability to scrutinise the Government’s approach. While we recognise that the details of the EU’s future plans will be set out in greater detail at a later stage, we consider that there is a sufficient level of information to indicate the direction of travel. We will therefore ask for an expeditious and thorough analysis from the Government.

1.11While we are reluctant to provide our own analysis in advance of receiving the Government’s perspective, we note the following potentially relevant observations:

Action

1.12We have written to the Minister as set out below. Our letter has been copied to the Business, Energy and Industrial Strategy Committee and the Northern Ireland Affairs Committee.

Letter from the Chair to the Minister of State for Business, Energy and Clean Growth (Rt Hon. Kwasi Kwarteng MP)

We have considered your Explanatory Memorandum on the above document.

The lack of analysis was very disappointing and has rendered our task of scrutinising your approach impossible. We consider that the Strategy may at least have regulatory implications for Northern Ireland, with wider strategic — and potentially regulatory — implications for the whole of the UK.

We therefore ask that, within ten working days, you provide a comprehensive analysis to include, as a minimum:


1 Commission Communication — A hydrogen strategy for a climate-neutral Europe; COM(20) 301; Legal base: —; Department: Business, Energy and Industrial Strategy; Devolved Administrations: Consulted; ESC number: 41389.

2 ‘Renewable hydrogen’ is hydrogen produced through the electrolysis of water (in an electrolyser, powered by electricity), and with the electricity stemming from renewable sources. The full life-cycle greenhouse gas emissions of the production of renewable hydrogen are close to zero. Renewable hydrogen may also be produced through the reforming of biogas (instead of natural gas) or biochemical conversion of biomass, if in compliance with sustainability requirements.

3 ‘Low-carbon hydrogen’ encompasses fossil-based hydrogen with carbon capture and electricity-based hydrogen, with significantly reduced full life-cycle greenhouse gas emissions compared to existing hydrogen production.




Published: 16 September 2020