Europe Leading on Green Hydrogen US Will Follow Soon

{Editor Note: Morris Matters has brought you many writers who are not as bullish on the future of Hydrogen no matter the color. We will continue to explore this important energy issue}

We’ve seen this cycle before many times in renewable energy development — European adoption serves as a leading indicator of U.S. demand.

OPED: By Jacob Susman, CEO of Ambient Fuels, September 2024

The past few months have seen a flurry of final investment decision announcements for green hydrogen projects in Europe. While the United States seems quiet, a boom is coming.

In many previous cycles of new renewable energy technology reaching commercialization, policy and business activity in the European Union have been leading indicators of growth on this side of the Atlantic.

Recent examples of EU hydrogen project activity: BP announced that they are moving forward with their 200 MW project in Castellon, Spain, and a smaller 10 MW project in Aberdeen, Scotland. TotalEnergies announced a 50% stake in the Oranjewind offshore wind project and is planning to build 350 MW of electrolyzer capacity to supply hydrogen feedstock for their refineries.

German utility EWE is purchasing electrolyzers from Siemens for their 280 MW Emden project in northwestern Germany. Shell is moving forward with their 100 MW Refhyne II hydrogen project near Cologne, and Virya Energy, HyoffGreen and Messer are going ahead with a 25 MW project in Zeebrugge, Belgium.

Why is the European Union moving forward quickly to realize the potential of green hydrogen in its decarbonization strategy, while the United States seemingly lags behind?

We’ve seen this before — with Europe leading, and the U.S. quickly catching up — many times as renewable energy has developed. Geothermal, wind power, PV solar, and energy storage have all followed this path even when the underlying technology was invented here.

Geothermal energy: Early beginnings

Over 100 years ago, Italy made history with the Larderello Geothermal Power Plant, the world’s first utility-scale geothermal power facility. This pioneering plant harnessed the Earth’s natural heat in 1911, setting a precedent for the development of geothermal energy worldwide.

Inspired by Europe’s early success, the U.S. began exploring its geothermal potential, leading to the development of The Geysers Geothermal Complex in California in the 1960s. The Geysers would eventually become the largest geothermal field in the world, solidifying the U.S. as a leader in geothermal energy.

Feed-in tariffs: Driving solar and wind adoption

Feed-in tariffs, which guaranteed that producers of renewable energy will receive a fixed payment for the electricity they generate and feed into the grid, played a key role in promoting renewable energy development in Europe.

Germany pioneered the concept with their 1991 Electricity Feed-in Law, and other European Union member states followed. Spain’s Electric Power Act of 1997 introduced generous feed-in tariffs to liberalize the country’s electricity sector by guaranteeing payments to renewable energy suppliers. This “Special Scheme” required electricity distributors to purchase all electricity produced by renewable energy sources at wholesale market prices, plus a premium.

This policy was instrumental in accelerating the country’s adoption of renewable energy, particularly solar and wind power. As a result, Spain quickly became a global leader, now ranking fifth in the world for wind energy capacity and leading Europe in utility-scale solar power.

While the U.S. did not embrace feed-in tariffs on a national level, it took inspiration from Spain’s success. Many U.S. states implemented similar incentives through Renewable Portfolio Standards and tax credits, spurring significant growth in renewable energy.

Growth of wind power in the early 2000’s

With feed-in tariffs to support development, Europe got off to an early head start in wind power generation. The U.S. lagged behind initially, with only small installations prior to 2005. Then the U.S. passed the Energy Policy Act, creating the first investment tax credit for wind power. Renewable portfolio standards spread across the country. With this new policy support, the U.S. quickly scaled its wind power development. By 2008-2009, the U.S. was matching Europe in new wind energy installations.

Photovoltaics: A global boom

Solar power followed a similar trajectory. Following Germany’s early success with feed-in tariffs, the country became a global leader in solar photovoltaic (PV) technology throughout the early 2000s. Germany’s aggressive support for solar energy helped drive down costs worldwide, making solar power more accessible

The United States soon followed, with a significant expansion of solar PV, particularly in sun-rich states like California, Arizona, and Nevada. By the late 2000s and 2010s, the U.S. solar industry was booming, supported by a combination of state incentives and federal tax credits.

Green hydrogen will be next on this path

The recent wave of large-scale green hydrogen projects announced in Europe offers valuable insights for the United States as it develops its own industry. These European initiatives, backed by significant investments from major energy companies, demonstrate the technological advancements and supportive policy frameworks driving the growth of green hydrogen across the continent.

Europe’s early success in green hydrogen has been driven by robust policy frameworks that provide financial incentives, regulatory support, and clear targets for hydrogen production and use. The European Union, for instance, offers substantial funding for hydrogen projects through initiatives like Horizon Europe and the Clean Hydrogen Partnership, which help mitigate the financial risks associated with early-stage projects.

Additionally, the European Union, through the updated Renewable Energy Directive and ReFuel EU initiatives, has implemented mandates for use of green hydrogen and its derivatives in heavy industry and transportation (road, aviation and maritime), creating a guaranteed market for hydrogen producers. National hydrogen strategies, published by several European countries, outline long-term goals for hydrogen production, infrastructure development, and market creation, providing a clear roadmap that attracts investment and fosters industry growth.

The U.S. is beginning to adopt similar policies, though we need final rules for green hydrogen certification. At the federal level, the Inflation Reduction Act includes a $3/kg tax credit tax credit for green hydrogen production, the largest incentive in the world. But we still aren’t certain how to qualify.

Moreover, the U.S. Department of Energy is investing in research and development for hydrogen technologies, aiming to reduce costs and enhance the efficiency of hydrogen production and storage.

It’s still spring training for the U.S. green hydrogen industry, and opening day is coming soon. Unless you’re a Mets fan, now is not the time to give up, but to build your team.

We need a final framework for green hydrogen qualification, and it’s not surprising that investors are sitting on the sidelines while we wait for clear rules. Those rules are coming soon, and the season is just getting started. We’ll be ready.