Released May 21, 2024 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Union's (EU) target for green hydrogen production has been labeled "impossible" by the chief executive officer of French energy major TotalEnergies SE (NYSE:TTE) (Courbevoie, France).
Citing an eightfold price difference between the cost of green hydrogen and the more common gray hydrogen (made using fossil fuel), Patrick Pouyanné said the EU's goal of making 10 million tonnes of green hydrogen by 2030 is not possible. Talking at a special meeting of the World Economic Forum, he explained that his company has a tender out for 500,000 tonnes of renewable hydrogen for use in its refineries but that costs are far higher than expected. "If we get 500,000 tonnes at an average of 8 euro [$8.62] per kilogram--this is more or less the average of the offers, so it's not 3 or 5 euro ($3.20-5.40)," Pouyanné told Hydrogen Insight. "Don't dream: today it's 8 euro and 8 euro for the best. If I'm paying 8 euro per kilogram, compared to 1 euro ($1.07) [for gray hydrogen], you know there is something to be absorbed. For hydrogen, [the cost of] gray hydrogen to blue hydrogen is 1:2, to green hydrogen it's supposed to be 1:3." He added: "Honestly, I don't know how these targets have been set--10 million tonnes, 20 million tonnes, probably they don't understand what they are speaking about."
The EU wants to produce 10 million tonnes and import 10 million tonnes by 2030. In 2022, hydrogen accounted for less than 2% of Europe's energy consumption and was primarily used to produce chemical products, such as plastics and fertilisers. 96% of this hydrogen--gray hydrogen--was produced with natural gas, resulting in significant amounts of CO2 emissions. The EU wants to kickstart a green hydrogen market by using it to help decarbonize industrial sectors like steel, cement, chemicals and refining while also kickstarting a wider shift to hydrogen use in transport. Industrial Info is tracking more than 940 European green hydrogen-related projects across all sectors worth more than US$100 billion in potential investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.
Pouyanné said the costs will remain high as long as the use of green hydrogen is restricted to niche markets. "To be clear, there is no way to really have the cost down on green hydrogen if only these niche markets, I would say the hard-to-abate industry, refineries, etcetera, are targeted. If we don't have a market for hydrogen for transportation, it will be very difficult to scale the cost down. That's not a given at all, because the more I'm looking [at] the evolution in transportation, [it is clear that] electricity, batteries are making huge progress for EVs, even for trucks, so what will be really the place, the space for hydrogen?"
Pouyanné also called into question the relative immaturity of electrolyser technology. Referring to the world's largest operational electrolyser project--the 260-megawatt (MW) Kuqa facility in China--he said that it is still only capable of making 50,000 tonnes of green hydrogen per year, and because there is no 1-gigawatt (GW) sized plant yet operational, the technology is "quite immature". "Let's recognise that we are at an infant stage and stop talking about 10 million tonnes, 20 million tonnes."
Pouyanné's doubt has been echoed in others circles. Last month, global financial services firm PricewaterhouseCoopers (Pwc) (London, England) stated that there is major gap in the green hydrogen sector between what is happening and what is needed. PwC noted that 205 GW of projects have been announced in the EU but that only 3 GW have reached a final investment decision or started construction--which will take on average three to five years to complete. It estimates that 120 GW of electrolysers need to be installed over the next six years in order for the EU to hit its targets. In addition, there will also need to be a major ramp up in solar and wind power to power them. "Around 500 terawatt hours (TWh) of electricity would be needed to produce 10 million tons of renewable hydrogen, so based on one wind turbine producing 20 gigawatt-hours (GWh) of electricity per year, 25,000 new turbines would be needed to cover the electricity requirements for electrolyzers alone," the company stated.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Citing an eightfold price difference between the cost of green hydrogen and the more common gray hydrogen (made using fossil fuel), Patrick Pouyanné said the EU's goal of making 10 million tonnes of green hydrogen by 2030 is not possible. Talking at a special meeting of the World Economic Forum, he explained that his company has a tender out for 500,000 tonnes of renewable hydrogen for use in its refineries but that costs are far higher than expected. "If we get 500,000 tonnes at an average of 8 euro [$8.62] per kilogram--this is more or less the average of the offers, so it's not 3 or 5 euro ($3.20-5.40)," Pouyanné told Hydrogen Insight. "Don't dream: today it's 8 euro and 8 euro for the best. If I'm paying 8 euro per kilogram, compared to 1 euro ($1.07) [for gray hydrogen], you know there is something to be absorbed. For hydrogen, [the cost of] gray hydrogen to blue hydrogen is 1:2, to green hydrogen it's supposed to be 1:3." He added: "Honestly, I don't know how these targets have been set--10 million tonnes, 20 million tonnes, probably they don't understand what they are speaking about."
The EU wants to produce 10 million tonnes and import 10 million tonnes by 2030. In 2022, hydrogen accounted for less than 2% of Europe's energy consumption and was primarily used to produce chemical products, such as plastics and fertilisers. 96% of this hydrogen--gray hydrogen--was produced with natural gas, resulting in significant amounts of CO2 emissions. The EU wants to kickstart a green hydrogen market by using it to help decarbonize industrial sectors like steel, cement, chemicals and refining while also kickstarting a wider shift to hydrogen use in transport. Industrial Info is tracking more than 940 European green hydrogen-related projects across all sectors worth more than US$100 billion in potential investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.
Pouyanné said the costs will remain high as long as the use of green hydrogen is restricted to niche markets. "To be clear, there is no way to really have the cost down on green hydrogen if only these niche markets, I would say the hard-to-abate industry, refineries, etcetera, are targeted. If we don't have a market for hydrogen for transportation, it will be very difficult to scale the cost down. That's not a given at all, because the more I'm looking [at] the evolution in transportation, [it is clear that] electricity, batteries are making huge progress for EVs, even for trucks, so what will be really the place, the space for hydrogen?"
Pouyanné also called into question the relative immaturity of electrolyser technology. Referring to the world's largest operational electrolyser project--the 260-megawatt (MW) Kuqa facility in China--he said that it is still only capable of making 50,000 tonnes of green hydrogen per year, and because there is no 1-gigawatt (GW) sized plant yet operational, the technology is "quite immature". "Let's recognise that we are at an infant stage and stop talking about 10 million tonnes, 20 million tonnes."
Pouyanné's doubt has been echoed in others circles. Last month, global financial services firm PricewaterhouseCoopers (Pwc) (London, England) stated that there is major gap in the green hydrogen sector between what is happening and what is needed. PwC noted that 205 GW of projects have been announced in the EU but that only 3 GW have reached a final investment decision or started construction--which will take on average three to five years to complete. It estimates that 120 GW of electrolysers need to be installed over the next six years in order for the EU to hit its targets. In addition, there will also need to be a major ramp up in solar and wind power to power them. "Around 500 terawatt hours (TWh) of electricity would be needed to produce 10 million tons of renewable hydrogen, so based on one wind turbine producing 20 gigawatt-hours (GWh) of electricity per year, 25,000 new turbines would be needed to cover the electricity requirements for electrolyzers alone," the company stated.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
