Hydrogen is not taking off: EU production below 50% of targets, Italy without a strategy. The Agici report

Hydrogen is not taking off: EU production below 50% of targets, Italy without a strategy. The Agici report

The race to thehydrogen in Europe is proceeding, but for now it seems more like a slow walk. During the conference “The Future of Hydrogen”, organized today, Thursday 24 October, in Milan by act, the data presented do not leave much room for optimism: by 2030, the first seven EU countries in terms of production capacity will not be able to produce even half of the hydrogen expected by the target REPowerEUThe target is to produce 10 million tonnes (Mton) of hydrogen, plus another 10 Mton to import, for a total of 20 Mton, but if all goes well, only 4,8 Mton will arrive, less than 50% of what was expected.

E Italy? Our country has put 2 billion euros on the table, distributed mainly in the North and the South, but the road is still uphill. There is still half a billion to allocate and there is a lack of a national strategy to guide investments. In short, there is fuel, but the maps to get there are missing.

Hydrogen: Only 27% of Projects Move Forward, Europe Risks Being Left Behind

These numbers emerge from theObservatory on the International Hydrogen Market, presented during the event, which analyzed over 1.900 hydrogen projects on a global scale. Of these, only 27% (about 510 projects) are at an advanced stage, i.e. operational, under construction or with final investment decisions. Europe remains the leader with 208 projects at an advanced stage, but the pace of development of the sector remains disappointing compared to the ambitious objectives set.

To date, projects in advanced stages would cover just 10% of the necessary production potential. The real risk is that without significant demand, especially in the industrial and transport sectors, hydrogen will remain an interesting but unrealized option. 

Too high operating costs: the main obstacle of hydrogen

One of the main problems that is holding back the development of hydrogen is represented by the very high operating costs (Opex), especially for the production of renewable hydrogen. To address this challenge, at European level, several seven incentive mechanisms that seek to bridge the gap between the cost of producing hydrogen and that of fossil fuels. The total allocation of these instruments amounts to 12,9 billion euros, but it is still not enough to make hydrogen production competitive on a large scale.

In Italy the funds are there, a strategy is missing

Even in Italy the hydrogen market is struggling to take off. Despite over 70 projects financed with EU structural funds 2021-2027 and 15 initiatives within the Ipcei (Important Projects of Common European Interest), the road appears full of obstacles. The National Recovery and Resilience Plan (PNRR) provides for six investment lines for hydrogen, with a total allocation of 2,9 billion euros. Of these, 2 billion have already been allocated, with the Northern Italy which leads the investment ranking with 693 million euros and 68 projects launched. The South follows with 506 million and 56 projects, while the downtown is awarded 118 million for 20 projects. However, there remain still 550 million to be allocated and, especially, there is a lack of a national strategy that clearly directs investments. In addition, the rigid deadlines for PNRR funding, set for 2026, risk causing us to lose resources if projects do not start on time.

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Stefano Clerics, director of the Agici Observatory, stressed that, without a clear strategy, hydrogen could remain a missed opportunity. “Hydrogen represents one of the main options for the decarbonization of hard to abate sectors, but neither Europe nor Italy are truly ready. The current global political and geopolitical phase, but also the legislative and regulatory complexities, generate uncertainty on the market and slow down investments. Our country has allocated a significant share of resources and has the possibility of playing a leading role in Europe, but without a national strategy we will not be able to achieve tangible results”.

The Francesco Elia, coordinator of the Observatory, confirmed that, despite the ambitions, high costs and still limited demand are holding back the development of a real global hydrogen market. “Several countries have started to define a clear strategic vision about their role in the international hydrogen market, as producers, exporters or net consumers potentially importing. However, to date, hydrogen as an energy carrier remains a largely unexplored option, due to very high initial and operating costs that, on the one hand, prove unsustainable for operators and, on the other, prevent the development of significant demand in industries and transport, which is essential for the start of a real global market for the molecule”.

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Publish date : 2024-10-24 08:17:00

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