US hydrogen rules could decide fate of EU electrolyser industry.

 

While Europe has opted for stringent standards to produce renewable hydrogen, upcoming US regulations may prove decisive for the EU electrolyser industry.

 

Electrolysers, which turn water into hydrogen, are considered a cornerstone of a future net-zero world. As such, the technology has been at the heart of the EU’s green industrial policy push, the Net-Zero Industry Act.

 

However, as of 2023, “electrolyser manufacturing for use in hydrogen production is still a nascent industry,” notes the International Energy Agency, which projects that US, Chinese and European manufacturers will dominate the world market by 2030.

 

But who will take the lead?

 

Already, Europe is expected to produce more electrolysers than it aims to install, setting the scene for exports.

 

Jorgo Chatzimarkakis, the lobby chief of Hydrogen Europe said:

 

EU electrolysers are among the best in the world.

 

Yet, European electrolyser manufacturers warned in January that China and the US threatened to eat their lunch. “Already, the first electrolyser project with stacks made in China has been installed in Europe,” an industry coalition warned. 

 

Three technologies

 

The business environment remains uncertain, with three technologies competing to dominate the electrolyser market.

 

Broadly speaking, cheaper Alkaline electrolysers work best uninterrupted, while Proton exchange membrane (PEM) electrolysers are more expensive but can operate more flexibly. Solid oxide cell electrolysers – the third variant – rely on high-temperature waste heat from industry to be efficient.  

 

China has focused its production on the cheaper Alkaline variant, while Europe opted for the more expensive but flexible PEM sort.

 

In the EU, manufacturers of PEM electrolysers received a boost when Brussels adopted production standards for hydrogen made from renewable electricity.

 

However, as of 2023, “electrolyser manufacturing for use in hydrogen production is still a nascent industry,” notes the International Energy Agency, which projects that US, Chinese and European manufacturers will dominate the world market by 2030.

 

But who will take the lead?

 

Already, Europe is expected to produce more electrolysers than it aims to install, setting the scene for exports.

 

Jorgo Chatzimarkakis, the lobby chief of Hydrogen Europe said:

 

EU electrolysers are among the best in the world.

 

Yet, European electrolyser manufacturers warned in January that China and the US threatened to eat their lunch. “Already, the first electrolyser project with stacks made in China has been installed in Europe,” an industry coalition warned. 

 

Three technologies

 

The business environment remains uncertain, with three technologies competing to dominate the electrolyser market.

 

Broadly speaking, cheaper Alkaline electrolysers work best uninterrupted, while Proton exchange membrane (PEM) electrolysers are more expensive but can operate more flexibly. Solid oxide cell electrolysers – the third variant – rely on high-temperature waste heat from industry to be efficient.  

 

China has focused its production on the cheaper Alkaline variant, while Europe opted for the more expensive but flexible PEM sort.

 

In the EU, manufacturers of PEM electrolysers received a boost when Brussels adopted production standards for hydrogen made from renewable electricity.

 

Some US companies argue that opting for a similar standard as the EU would choke the nascent industry. On the other hand, environmentalists insist that strict rules are needed to prevent electrolysers from capturing scarce renewable electricity capacity that could otherwise be fed straight into the grid.

 

Europe has a lot to win. If the US rules are aligned with those set out in the EU, “European companies will have a technological edge as they have been working on getting their products to operate more flexibly to comply with provisions in EU regulation such as hourly correlation,” says Flis.

 

“However, should the US Treasury decide on lax rules such as annual temporal matching, then cheap but inflexible electrolysers like those produced by Chinese companies would be well positioned to benefit,” he added.

 

India’s standards for green hydrogen, for instance, favour cheaper electrolysers due to its wholesale approach of simply setting a lax limit of 2 kg of CO2 per kg of hydrogen.

 

The treasury declined to comment for this story.

 

New research

 

Meanwhile, new research has questioned the positive climate impacts of stringent hydrogen regulation.

 

Oliver Ruhnau, professor of energy market design at University of Cologne and research scientist at EWI, told EURACTIV:

 

Europe’s decision to insist on matching renewables to hydrogen on an hourly basis comes at the cost of economic efficiency.

 

As a consequence, he added that investors would invest in overcapacity to meet their hydrogen production targets. This would be costly, both for businesses and taxpayers, who are subsidising the nascent industry.

 

In a case study in Germany, Ruhnau found that green hydrogen without hourly matching does not necessarily lead to increasing power sector emissions. Similar results should be expected in other EU countries, he noted.

 

Source:HydrogenCentral