Hydrogen and the EU
Avoiding nuclear energy
The recommendations for the transition period leading to a hydrogen economy is of great importance, as this path will lay the foundation for what energy Europe will look like in the distant future. Decisions regarding infrastructure investments are especially critical, and may favourise certain technologies and energy systems.
Nuclear sources of hydrogen is included in these recommendations. The report says:
In the medium term (to 2020)..[ ]..develop and implement systems for producing hydrogen from..[ ]..advanced nuclear.
In the long term (beyond 2030)..[ ]..use both electricity and hydrogen together..[ ] to progressively replace carbon based energy carriers by the introduction of..[ ].. improved nuclear energy.
An analysis performed by Bellona, based on data from the IEA publication World energy outlook 2002, shows that there is a significant renewable energy gap to be filled by other sources of energy, when substituting fossil fuels with hydrogen in the EU transportation sector. The gap is still significant when taking into account more efficient energy use. The results are displayed the figure below.
The conclusion to be drawn from this is that the nuclear capacity of today needs to be increased by a factor of 4 to fill this gap, when only taking into account the transportation sector. This will impose an unacceptable risk to society, rooted in radioactive waste handling and the risk of terrorist attacks, and can not be defined as a sustainable solution.
Using CO2 storage instead
The EU should focus on the potential of CO2 storage options, both offshore and onshore, to ensure a clean fossil energy chain. The build up of a CO2 infrastructure is one important step in the right direction. An CO2 infrastructure enables extensive storage of CO2 from stationary sources, such as fossil power plants, processing industries, natural gas reforming and coal gasification, will ensure a clean energy chain. This way, existing capacity as well as newer can be decarbonised. The infrastructure could also enable the EU to handle the long-term climate challenges, beyond the first Kyoto period.
With present technologies for CO2 capture, CO2 can be delivered for Enhanced Oil Recovery at a cost of 30-35 $/tonne. For comparison, the costs of present governmental climate policies are in the range of 30-120 $/tonne. In addition to this, CO2 for EOR purposes will have a value of about 15 $/tonne for the oil companies, and the cost of emission allowance (in the future EU emission trading market) is approximately at 10 $/tonne. The cost gap identified here can however be further decreased by innovation and economics of scale.
The strategy beyond the transition period should be renewable energy deployment together with efficient energy use.
The need for a stronger market pull
Still, a major focus of the high level group report is R&D, and especially by public funding. Quoting:
Public funding is very important, symbolising government commitment to the technology and generating leverage for private finance, the main engine.
Although Bellona acknowledges the importance of R&D, the time is now right for the creation of markets to stimulate deployment.
One of the reasons that hydrogen, as a transportation fuel, is getting such great attention within a broad range of industries, is the fact that a range of energy sources and different technologies can produce hydrogen. At the same time, hydrogen can satisfy a variety of end users. No other alternative transportation fuel has been given such broad attention so far. The attention and acceptance would give a unique momentum. Why not use this momentum to introduce private finance at an early stage? This would boost deployment as well as R&D, as companies search for cost-effectiveness and novel solutions.
To exemplify the challenges ahead Bellona has calculated the deployment of fuel cell vehicles with a starting point in the 5% substitution goal proposed in a communication from the commission on alternative fuels for road (COM 2001, 547). The results show that fuel cell vehicle must dominate passenger car sales within 2020. Current sales are about 14 mill. vehicles pr. year. Given the implications to a wide range of industries ranging from energy producers to manufacturing goods and the car industries its clear that no public funding project could accomplish this task in the limited timeframe.
Although the high level group does not comment on the proposed 5% goal, it is included in the analysis to exemplify the situation ahead. Goals or milestones on the deployment of hydrogen technologies is also lacking in the report.
The benefit of stable external conditions
As stated in the comments on the draft paper by Bellona, extensive direct public funding has a tendency to vary with the political climate. These variations will make it hard to develop long term business plans, and might result in hibernating markets. Rather than focusing on public funding, the high level group should consider other means of creating activity.
Bellona has good experience with certificate systems like green certificates on electricity and the ZEV-mandate in California. In this way, conditions are independent from public budgets, resulting in stable conditions. The ZEV-mandate gave the automotive industry a stable goal to reach for years and are known for have given the electric and hydrogen cars a tremendous push forward.
We recommend the HLG to stronger discuss how it is possible to get the work with means started, and how it best can organise the work to make good sets of means.