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Will Joe Biden’s climate policy challenge the European Hydrogen strategy?

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It was like telling the world: We are ready to become the global Hydrogen champion! The European Hydrogen Strategy that was released in July last year marks a step change in the European climate policy.

It was supported and backed by the heads of state and government at their December summit with a 15-page decision urging the European Commission to implement this strategy consequently and in coordination with the member states.

The members of the EU reacted immediately by launching a new IPCEI (an important project of common European interest) with regards to hydrogen technologies, a legal instrument allowing governments to relax strict state aid rules for dedicated projects. In the meanwhile, the first post-COVID-19 recovery plans to overcome the economic downturn are presented by the member states. In the context of the Resilience and Recovery Fund initiative that had been launched last year the EU will spend some  €750 billion to overcome the economic damage caused by the pandemic. German Vice Chancellor and finance minister Olaf Scholz made the start and declared in front of the Euro Group the commitment of his government to assign €11 billion for climate technologies combined with  €11 billion on digital technologies and placed hydrogen in the centre of this ambition.

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At the same time, the President of the European Commission Ursula von der Leyen addressed the Hydrogen Council, a global initiative of nearly a hundred CEOs being active in the field of hydrogen technologies. Her 10-minute statement is a clear signal to the industry but also to the financial markets: the EU is committed to spend money on the systemic change in order to reach the climate agreement targets and at the same time to create jobs by becoming more competitive especially by combining climate and digital technologies.

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The race is on. Who will be the Hydrogen champion on this globe? So far it was Japan and Korea exploring the capacities especially of fuel cells for mobility but also for residential heating. In the last two years, China was catching up and adding the production of electrolyses to this development. The Chinese government but also many regional initiatives in China clearly show their readiness to replicate what has been done in other renewable or climate mitigating technologies like in solar. The pace of Chinese public investment and economic development with regards to hydrogen technologies is fast. Yet, the Europeans now have dedicated plans to not let this time a technology be kickstarted on the good old continent and then given up too early.

The situation might dramatically change with the new US president. Joe Biden has undoubtedly positioned himself as a president who takes climate change very seriously. Not only he has invited John Kerry to be his special envoy in this matter. He undoubtedly made the case of decarbonising the energy supply during his election campaign especially in the debates he had with his opponent. Will that mean that the US becomes a strong player in hydrogen technologies? It was the US that initiated in the early years of this millennium and initiative on exploring the possibilities of hydrogen technologies on a global scale. The International Partnership for the Hydrogen Economy (IPHE) was launched by the administration in Washington and still has an important impact until today liaising all-important administrations round the world. Despite the fact that the last four years might have been more difficult it goes without saying that some global players in hydrogen technologies definitely stem from the United States.

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It’s interesting to see how oil and gas companies from the US are engaged in studies on the potential of hydrogen for Europe. Last but not least the final declaration of the recent G20 summit in Saudi Arabia can be regarded as a clear sign to enhance better the possibilities of renewable energy is in combination with hydrogen. Saudi Arabia as the host focused in the declaration on renewably produced hydrogen as one important source of climate mitigation also in combination with the production of synthetic fuels and other derivatives of clean hydrogen. In the upcoming market of the new clean global commodity, nobody wants to be left out. Hydrogen, therefore, becomes more and more strategic factor worldwide.

To what extent the new technology already influences the geostrategic agenda is also reflected by the question of Nord Stream II. Whereas first sanctions were raised against some companies involved during the last hours of the Trump administration this was picked up by the new Biden administration as an issue to be continued. There were first reactions in the European Parliament to use this incident in order to stop the project. At the same time, discussions have started whether Russia could replace the content of the pipeline by sending decarbonised hydrogen towards Europe.

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A new technology called pyrolysis could help to decarbonise natural gas without emissions to nearly a hundred per cent and hence contribute to the upcoming European hydrogen market. If the pipeline would carry clean hydrogen and would be open also for the countries around the Baltic Sea it would definitely have a different character and could hardly be denied as an important contributor to the European climate policy.

It is now up to European policymakers and the European industry to accelerate the development of their own hydrogen strategy. The fact that the European Clean Hydrogen Alliance was not initiated immediately after the launch back in July might be regarded as a small hiccup. However, the different players have shown their appetite to make Europe the leading marketplace for clean hydrogen as a new commodity.

It’s a question of speed whether this new commodity will be denominated in euros rather than dollars in the near future. But speed is not the only factor, patience with the development of this market might have the same importance. The industry of solar panels might be a good example of which elements should be avoided this time.

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