The European Union aims to achieve net-zero emissions of greenhouse gases in the next thirty years. A goal required for becoming climate-neutral that Spain shares, and which will not be easy to reach. The commitment to net-zero emissions demands from Europeans much more than merely cutting down the use of coal power plants – which they are already doing. Europe must double the speed of emission reductions in the industrial and energy sectors, quadruple it in residential and commercial uses (e.g., heating), and reverse the trend in transport. This is a colossal effort for the energy transition that has a bedevilling feature. The recipe for success: to stop burning fossil fuels, while misleadingly simple, becomes harder to achieve with each step towards it. After cutting emissions more than 20% since 1990, Europe wants to develop new industries to confront the challenges of the energy transition’s next phase.

GHG emissions in the European Union by economic sector between 1990 and 2017. Source: European Environment Agency, 2019.

In October 2017, the European Commission launched the European Battery Alliance, an industrial strategy pursuing the development and manufacturing of batteries within the Union. Batteries are indeed essential for tackling two core challenges: removing all emissions from power generation, and deepening electrification. However, batteries will not suffice for achieving climate neutrality. There are energy uses that are difficult, expensive, or just impossible to electrify. There is an old promise that has haunted the global energy system for over half a century for decarbonizing these uses whose hour might have finally arrived: hydrogen.

That’s what the International Energy Agency thinks. In June 2019, the IEA published a report on the future of hydrogen calling on OECD countries to ramp up their support for the energy vector. This call did not fall on deaf ears. By March 2020, the European Commission announced it would be launching the European Alliance for Clean Hydrogen sometime in summer 2020. If this initiative resembles the battery one, it will involve the participation of dozens of countries, hundreds of companies, and mobilize private and public investments in the billions of euros. Even before the COVID-19 crisis, this was a fantastic opportunity for Spain, which has strategic advantages for the development of renewable hydrogen. In the context of a lengthy recovery from the pandemic, the emergence of a hydrogen industry in Spain could be a historical chance for economic development.

It is convenient to take a step back and ask: Why is the European Alliance for Clean Hydrogen necessary? Before learning why Spain poses strategic advantages for hydrogen. There are two main reasons. First, hydrogen needs to decarbonize. Hydrogen is not freely available in nature. The production of hydrogen requires the transformation of another substance. Currently, about 98% of global hydrogen production relies on the conversion of natural gas and coal. The consequence is that, annually, hydrogen production emits the equivalent of Indonesia and the United Kingdom together. Today’s hydrogen is not useful for reducing GHG emissions. Even though the technologies for producing low-carbon hydrogen have existed for years, its use is marginal, mainly, because of their high costs. Policies supporting the production of clean hydrogen could accelerate the reduction of technology costs through economies of scale and learning. Second, currently, hydrogen’s demand is mainly as a feedstock for chemical processes than as an energy vector. The technologies required for fueling vehicles or generating power with hydrogen are well known. Still, their diffusion is minimal because there is no infrastructure to distribute hydrogen and fossil alternatives remain much cheaper. Governments can stimulate demand for hydrogen addressing structure needs and through economic incentives. These two reasons, the need to decarbonize hydrogen supply and to increase demand for substituting fossil fuels, make a case for the Alliance. But why has it to be European? Among other reasons, because hydrogen can help the Union stop being the largest importer of fossil fuels on the planet and reducing its energy dependence from about 70% for natural gas and 90% for crude oil and derivates.

In this context, the report published this month (March 2020) by the Harvard Kennedy School of Government about the geopolitical and market implications of renewable hydrogen indicates the favourable conditions of Spain for developing into a regional hub for hydrogen. According to its level of renewable energy resource and water endowment as well as its infrastructure potential, Spain is classified as a potential regional leader for renewable hydrogen. Producing large amounts of renewable hydrogen through electrolysis, splitting water into hydrogen and oxygen using electricity from solar or wind energy, could be cheaper than in nearby countries. Besides, Spain has the economic muscle to create a grid for transporting hydrogen to its domestic consumption centres. But Spain’s advantage does not end there. The authors of the study, Fridolin Pflugmann and Nicola de Blasio, consider that Morrocco has the potential to become a world champion of renewable hydrogen. Should Europe’s hydrogen demand grow beyond what it can produce economically within its borders, Spain would be the entry route for clean gas from the North of Africa, boosting the economic relevance of the hydrogen sector in the country.

Achieving a European Union with net-zero emissions in three decades faces formidable challenges but also offers unique economic opportunities. For Spain, the European Alliance for Clean Hydrogen is one of the latter. Spain’s National Energy and Climate Plan already acknowledges the potential of hydrogen but only as something to be realized in the longer term. The most recent economic estimations and the international agencies argue the contrary: now is the time to act. Spain should develop an industrial strategy for clean hydrogen and try to lead projects within the Alliance – as the Netherlands and Germany already aim at doing. Spain needs to get on board of a nascent industry that will play an essential role in the energy transition.

This article was initially published in Spanish for Agenda Pública on 26 March 2020.

Suggested citation: Nuñez-Jiménez, Alejandro, 26 March 2020. Why Spain could be a leader of renewable hydrogen in Europe, Agenda Pública, http://agendapublica.elpais.com/espana-puede-liderar-el-hidrogeno-renovable-en-europa/.

Cover photo by Aqua Mechanical.