Hydrogen Valleys and The New EU/Russia partnership

Across the world, the ‘energy transition’ has seen the rise of many alternative fuels, power generation technologies and carbon-reduction processes – all which have required significant investment to reach the scale that would make these commercially viable. One gas has emerged as the leading fuel to power the future – Hydrogen. With multipurpose capabilities; from industrial use to EV fuel cells to domestic home heating, 53 countries have begun developing a capacity to supply hydrogen and demand hubs to minimize the transportation of hydrogen (one major limiting factor).

Hydrogen Valleys or clusters will be essential in developing an integrated value chain, in doing so encouraging action alongside competitors more so than against. Industrial valleys are a proven method for embedding the necessary capital and knowledge transfers required for rapid growth of a sector.

Ahead of The Energy Council's inaugural European Hydrogen Conference, we have taken a look at the important energy relationship between the European Union and Russian Federation.

All Hydrogen on the Western Front

Mission Innovation is a global network of 24 countries and the European Commission, that has sought to identify areas and methods to bring about a net-zero society. Part of this multinational initiative is the Hydrogen Valleys (H2Vs) project that has so far invested over €29 billion in developing 31 hydrogen valleys across 17 countries, most of which are in Europe.

An ambitious plan by the European Union to integrate a new hydrogen ecosystem into and alongside the continent’s current energy infrastructure will seek to embed the low-carbon fuel as a central component of the EU’s future energy supply. Mission Innovation is part of a wider €480 billion funding scheme until 2050 that seeks to kick start a European hydrogen economy and ecosystem, one which will maximize the sectorial integration capabilities of peripheral industries.

One of Europe’s biggest H2Vs will be the €9,7 billion ‘Green Octopus’ project, aiming to become the backbone of hydrogen supply and transmission across Netherlands, Belgium and Germany. The hydrogen production facilities will be constructed along the main port cities of the Netherlands and Germany, allowing for ease of access to water (needed for electrolysis) and transportation. Aiming to produce up to 800 tonnes of hydrogen per day (T/day), these sites will feed the major chemical production and refining sites in Northern Europe, along with the steel industry, EV fuel cell sector and the fueling of trucks.

Green Octopus will be powered predominantly by solar PV and offshore wind turbines, but also utilizing the ‘blue’ and ‘grey’ hydrogen in periods of low renewable generation. Any carbon dioxide produced is expected to be captured and stored in underground caverns, as well as intending to re-purpose existing gas pipeline infrastructure for hydrogen transmission.

With 30 other hydrogen valleys ready to meet the challenge of future energy demands, the success (or failures) of these developments could yet prove a decisive moment in the energy transition.

From Russia With LNG

While hydrogen provides a great hope for the future of low-carbon (or even carbon-neutral) energy production, the current reality still requires significant fossil fuel resources to maintain economic growth and industrial capacity. The European Union and Russian Federation have been developing the much awaited NordStream2, the cross-continental gas pipeline to service the EU’s growing demand for natural gas. Gazprom are expecting to export 200 Billion cubic meters a year to Europe by 2030.

As the EU struggles to define if natural gas is indeed a transitionary fuel or not, the benefits of the existing natural gas infrastructure can yet prove useful in view of a future shift to hydrogen. Russia has similarly been developing their own hydrogen roadmap, a short term vision until 2025 that will provide the time to implement legislation and fiscal policies, and to fund research into hydrogen uses and production process.

The financial activism that has led to growing restrictions on fossil fuel production means that Russia will have to consider an uncertain future for gas exports to Europe past 2035. The potential to utilize NordStream2 for hydrogen exports will be chief among the Russia’s considerations.

Russia’s vast landmass and northern coastline will help the state diversify into solar and wind generation could prove useful for green hydrogen production. But it is the process of ‘turquoise’ hydrogen, whereby natural gas is separated into carbon and hydrogen, appears the most effective use of Russia’s extensive gas sector. The roadmap has targeted 2 million tonnes of hydrogen for export by 2030, predominantly to serve European demand.

Back to the Future

The tenuous political relationship that has defined the EU/Russia interactions in recent years shows little sign of softening, but this friction is often overlooked in the energy discussions. The soft power back-and-forth has even been kept at bay by this mutually beneficial demand and supply for gas.

If Russia’s natural gas exports are compromised by a restriction from capital markets and investors in Europe and Europe’s demand switches to hydrogen, then producing ‘turquoise’ and ‘yellow’ hydrogen (nuclear) would be an erstwhile endeavor to fill the supply/demand gap. Or, if Russia’s compromised gas exports led to a more volatile international actor – then replacing their export supply with gas-produced hydrogen would continue to provide the necessary buffer to the political tensions.