Auditors call for a revision of the strategy and better access to funding.
Green hydrogen is a crucial part of the European Union’s climate protection goals; the environmentally friendly energy source is intended to replace fossil fuels, particularly in heavy industry and transportation. According to EU plans, ten million tons of renewable hydrogen in each case are to be produced locally and imported by 2030. However, this ambitious target is unlikely to be achieved by the bloc, according to a new report by the European Court of Auditors, which monitors the EU’s finances and can influence policy.
Although the auditors recognize that the right steps have been taken, there are still challenges, especially in terms of public and private financing. As the exact EU definition of renewable hydrogen has been unclear for too long, partly due to the potential role of nuclear power, many investment decisions have been postponed. Project developers are also hesitant because supply depends on demand and vice versa. Meanwhile, EU funding – estimated by the auditors at 18.8 billion euros between 2021 and 2027 – is scattered across several programs, making it difficult for companies to access.
Targets “Driven by Political Will”
The EU hydrogen targets, the report concludes, were not based on a “robust analysis” but driven by political will. The auditors are therefore calling for a revision. This should create precise market incentives and better prioritize “scarce EU funding” and parts of the value chain.
The European Court of Auditors’ report is in line with previous analyses that have addressed various challenges on the path to the hydrogen economy (not only in Europe). Management consultancy Roland Berger, for example, pointed out the urgent need to expand the number of electrolysers used to produce hydrogen. This also requires securing the supply chains for the necessary raw materials, such as iridium, whose production is highly regionally concentrated and cannot be ramped up at will. Last fall, the National Hydrogen Council, an advisory body appointed by the German government, even warned of “drastic effects” on the hydrogen market in view of an impending iridium shortage. In its latest report, the European Court of Auditors also sees supply chain disruptions and dependence on certain raw materials among the challenges.
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