To date, the European industrial sector is the only certain source of demand for hydrogen, and is concentrated in Germany, Holland, France, Spain, Italy and the United Kingdom
Last April 11, the European Parliament adopted the Renewable, Natural and Hydrogen Gases (RNGH) Directive and the RNGH Regulation and the following day it published both documents. Once approved by the Council and published in the Official Journal of the European Union – which will happen by June – the Package, together with the TEN-E Regulation, will constitute the new regulatory framework, regulating the construction and access to hydrogen networks, as well as the conversion and dismantling, and access to natural gas networks in the European Union.
A paper from the Oxford Institute for Energy Studies analyzes the impact of this framework on existing natural gas networks and the emerging hydrogen network, and seeks to establish whether the rules guarantee flexibility and security of supply.
EUROPE WILL HAVE TWO GAS NETWORKS: NATURAL GAS AND HYDROGEN
While it is accepted that there will be two types of gas networks in Europe, the topology, size and scale of the European hydrogen network is currently unknown, and will be determined by the actual supply and demand of renewable and low-energy sources. These factors will also have an impact on European natural gas networks, some of which will have to be reconverted to transport hydrogen (or CO2) or dismantled.
To date, the European industrial sector – in particular fuel refining and ammonia synthesis – is the only certain source of hydrogen demand and is concentrated in Germany, the Netherlands, France, Spain, Italy and the United Kingdom. Additional demand could come from other industrial applications – such as steel production – and from non-industrial sectors, although estimates for this demand differ widely.
THE CHOICES AVAILABLE TO INDUSTRIES
Industries will have to choose whether to decarbonize through renewable hydrogen, low-carbon hydrogen or both. The infrastructure requirements will be different, as renewable hydrogen would require greater renewable energy generation capacity and the installation of electrolysers, while low-carbon hydrogen would require the construction of CCS facilities and CO2 transport networks.
These choices will determine the first contours of the European hydrogen network, thus also having an impact on its future topology, scale and timing, as well as on the shape of the natural gas network, influencing how much (or how little) of it will have to be adapted, repurposed or decommissioned.
THE DEFICIENCIES OF THE EUROPEAN REGULATORY FRAMEWORK
The OIES document identified several shortcomings associated with the new EU regulatory framework for natural and renewable gases and hydrogen, consisting of the RNGH Directive, the RNGH Regulation and the TEN-E Regulation. These shortcomings could limit the flexible and gradual development of hydrogen networks, in light of significant uncertainty over hydrogen supply and demand in Europe. They could also lead to an inability to ensure a coordinated process of decarbonisation of the grid, without negatively impacting the security of natural gas supply.
EXEMPTIONS FOR HYDROGEN INFRASTRUCTURES
The document concludes that while regulatory flexibility is built into the framework, establishing a transitional implementation period and allowing for exemptions and derogations for existing and new hydrogen infrastructure – and enabling financial and regulatory support through PCI/SME status – it is not certain that it will be sufficient to allow the European Union hydrogen market to develop on a large scale.
The framework also does not guarantee that the phasing-in of hydrogen networks and the phasing-out of natural gas networks – through conversion or dismantling – will be carried out in a coordinated way across the EU without negatively impacting the security of natural gas supply.
Overall, the framework appears to be built on the premise that the EU hydrogen market will develop rapidly and on a large scale, but lacks a “safety buffer”. Specifically, it does not guarantee the coordinated reconversion of natural gas networks which may still be necessary if market development were slower and more gradual. The current framework, obviously, can be adapted and will continue to remain in the “work in progress” phase at least until 2030, since further rules will be established in the next network codes, in the 2020s, as the market expands.
Tags: role hydrogen decarbonisation European gas network
