In May, the European Commission published its proposals for concrete regulations on how to incentivise the market to achieve the rapid scaling-up of renewable energy and green hydrogen, known as “REPowerEU”, which was announced in March. Its goal is to increase the volume of green hydrogen before 2030 and for consumption to reach 20 million tonnes by 2030, of which half will come from EU-based production and the other half will come from imports. The share of renewable power in the energy system will be doubled to 45% by 2030, and the share of solar and wind in the energy system will increase from 33% today to 67%. Blue hydrogen (“low-carbon hydrogen”) will also be prioritised up to 2030, given that it’s carbon footprint is 70% lower than today’s grey hydrogen. The regulations that were presented in May initially addressed the transport sector, but it is expected that the regulations will also cover other sectors in the future, such as industry. Today, the EU consumes around 10 million tonnes of hydrogen per year, most of which is produced using steam methane reforming without carbon storage (grey hydrogen).

Investments will increase

Compared to “Fit for 55”, which was launched less than a year ago, the European Commission assumes that total investments through REPowerEU will increase to €300 billion by 2030, but that it will see savings of almost €100 billion per year which is currently spent on energy imports from Russia. Increased imports of natural gas from other countries will not be enough to compensate for the shortfall in Russian natural gas by 2027. It is therefore assumed that the use of natural gas in industry will see a reduction of almost 40% from 92 to 57 bcm per year, while consumption of oil and coal is expected to increase somewhat. Total energy consumption will nevertheless be reduced by about 5%. The European Commission will find the money to finance these changes through a reprioritisation of funds and the sale of quotas that have so far been held back from the quota market, amongst other things.

This is a part of the CCS environmental analysis, written by Gassnova’s analysis team. Please visit our CCS dictionary if there are professional expressions or abbreviations in this text you are not familiar with.