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How hydrogen hype puts the EU’s climate goals at risk

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The natural gas industry wants to secure its future in a net zero carbon world, but is the hydrogen economy it promotes all that it’s cracked up to be?

The case for the hydrogen economy seems simple and effective. When hydrogen produces electricity in a fuel cell, the other output is water, and any harmful gases involved in producing the hydrogen can be captured.

It seems to fit perfectly into the EU Commission clean energy roadmap – just what it needs to hit its climate goals; it’s no wonder Europe’s politicians find hydrogen irresistible.

Yet those who have studied the politics are more sceptical. “It’s terrifying how good these lobbyists are,” says Pascoe Sabido, researcher for the Corporate Europe Observatory (CEO). The hype is at its peak. The Brussels-based Hydrogen Council, the largest industry-led effort to develop the hydrogen economy for Europe, declared “tremendous momentum globally” for the hydrogen economy in its February report. Governments worldwide have earmarked more than $70bn in public funding for 228 hydrogen projects, most of them in Europe.

There are various ways to make hydrogen for energy but 95 per cent of it is obtained from natural gas through the process of steam reforming, which releases large amounts of CO2. One tonne of hydrogen will produce between 9 and 12 tonnes of CO2, researchers from Milan have calculated. This is known as ‘grey’ hydrogen, or ‘blue’ if the CO2 is captured and stored underground. To qualify as ‘green’, the hydrogen has to be produced by electrolysis of water using electricity from renewable sources.

Critics stress that by including ‘blue’ hydrogen in its plans, the EU invites the gas sector into Brussels’ public funds as well as private sector support. It could lead to prolonged dependency on gas infrastructure that risks jeopardising climate goals, they say. Once a new infrastructure project is completed, gas operators will want to use it for decades and even after 2050, when we want to be climate neutral, Michael Bloss, a member of the European Parliament for the Greens group (Alliance 90/The Greens party) tells E&T.

EP Plenary session - A WTO-compatible EU carbon border adjustment mechanism

The gas lobby has massive influence on the EU hydrogen strategy, Michael Bloss MEP for the German Greens told reporters last year: “Money is being sunk into a fossil billion-euro grave,” he warned. (Photo by Philippe BUISSIN, European Parliament Multimedia Centre, EP Plenary session)

Image credit: Philippe BUISSIN, EP media centre

The strategy will make EU governments dependent on the gas industry for longer when there is no time to waste, says the Green MEP. “Relying on fossil gas will continue to lock Europe into a dependency on external imports, unsustainable resource exploitation and continued climate emissions due to the methane emissions along the value chain”, he said.

Meanwhile, the gas lobby celebrates Europe’s progress. The EU Hydrogen Strategy launched last year is one of such events. James Watson at Eurogas, one of Europe’s largest gas lobbying groups, said that ramping up hydrogen is a “future-proof solution to achieve climate neutrality and provide Europeans with millions of jobs in clean technologies made in Europe”. Watson tells E&T his association “holds an established commitment to 2050 carbon neutrality and 55 per cent carbon dioxide emissions reductions by 2030. It’s committed to meaningful dialogue with all serious players who share our solutions-focused approach to the energy transition.”

There is a conflict of interest in how these projects are financed and receive political support through the Trans-European Energy Networks (TEN-E), Sabido explains. TEN-E allows clean technologies to be plugged into the energy system, “including offshore wind and hydrogen”, EU Executive Vice-President for the Green Deal Frans Timmermans said last year.

New revisions of the TEN-E legislation are travelling through the EU Parliament at the moment. Observers note a development away from gas project funding and towards hydrogen projects. Among other energy projects, the TEN-E regulation accepted new gas pipeline proposals, putting the gas sector in the driving seat, Pascoe Sabido says. “Then they go off and build them with money from the European Commission as well as public banks and the public report”. This has been a huge conflict of interest, Sabido says, because those proposing them should not be building them and cashing in from the deals with funds administered by the EU Commission.  The Commission says the latest revision will not include new fossil gas pipelines. But the gas industry is still going to be in charge of putting forward new projects, via hydrogen, so Sabido says there is a good chance of seeing ‘hydrogen ready’ pipelines that will be used for fossil gas until the hydrogen arrives – if it ever does, he adds.

The process of how the Commission comes up with projects is faulty, too. New hydrogen projects proposed through the Clean Hydrogen Alliance, an industry-led and driven process, are based on calculations of demand on how much gas infrastructure is needed. This calculation is artificially “inflated”, says Sabido. The effect is that the gas sector’s demand for infrastructure projects is higher than actually needed. “There have been quite a few meetings and we saw our fears confirmed, in the fact that they are dominated by the fossil fuel industry,” Sabido says.

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The hydrogen lobby in Europe declared a combined annual expenditure of €58.6m, according to calculations by Corporate Europe Observatory (CEO). Its supporter says the EU hydrogen strategy is an attempt to manage Europe’s clean energy transition (image: Dreamstime)

Image credit: Dreamstime

Climate change risks

There are broader climate change risks in Europe’s fossil fuel-friendly hydrogen strategy. As well as the generation, non-green hydrogen has issues with gas leaks and unproven technology to store CO2 and capture methane, according to researchers and politicians. A concerned gas industry struggles under an increasingly hostile anti-fossil-fuel environment.

So-called blue hydrogen is produced from natural gas when split into hydrogen and CO2 via steam methane reforming or auto thermal reforming. CO2 is captured and then stored. But blue hydrogen, now included in EU’s Hydrogen Strategy, leads to more emissions and is more harmful to the environment as natural gas extraction produces emissions and the storage of the emissions is risky and expensive, says Professor Claudia Kemfert, professor for energy economics and energy policy at Leuphana University and former head of the department of Energy, Transportation, Environment at the German Institute of Economic Research. “The fossil business models here are not in line with the Paris climate agreements. The possible support should exclusively refer to green hydrogen. Blue hydrogen should be excluded”. To up green electricity, expanding renewable sources is needed quickly.

Experts say making CCS work is easier said than done. Moreover, it fails to address leakages of other greenhouse gases along the supply chain. “The natural gas-based hydrogen [production processes], even with CCS during processing, almost always have upstream emissions, so they are not properly carbon neutral”, says Professor Cameron Hepburn, director at Smith School of Enterprise and the Environment at the University of Oxford. “To make them carbon neutral you would need to capture the extra leaked CO2 from the air and store it, which would add to the cost of the fossil hydrogen.

CCS is not enough, says Sabido. The hydrogen is made from natural gas. There are carbon emissions. The primary emissions take place during drilling and transport. Large amounts escape. Fossil gas is made up of methane. Methane is a hundred times worse for climate change in a ten year period than CO2. Over 20 years, it is still 84 times worse. “It means that even if we put carbon capture storage in place, it’s still going to be a disaster”, he says.

Therefore, setting up the gas network to produce hydrogen is not much different from the current gas extraction sites in America's Midwest and Argentina's fracking sites, leaking large amounts of methane: “This is what comes with the fossil fuel economy and what we’re trying to move away from”.

EU’s €750bn recovery plan, a response to the coronavirus crisis, worries climate activists. Hydrogen projects are a key part in all of the national recovery plans. Changes in the EU’s state aid rules mean fossil fuel companies can now access funding that wasn’t previously available to them. With the recovery fund classified as an ‘important project of common European interest’, hydrogen projects can now bypass state aid rules, as national governments are allowed to provide EU funds issued by Brussels directly to fossil-fuel businesses, Sabido explains.

MEP Bloss argues the hydrogen economy must not become a route for the fossil fuel industry to continue extracting and burning fossil fuels. He says the EU Commission argues that supporting fossil hydrogen now will lead to more renewable hydrogen in the future but “the technology to produce fossil hydrogen is completely different to producing renewable hydrogen, and providing financial support to fossil hydrogen now would only delay the desperately needed fossil fuel phase-out.”

Who is behind the lobbying?

Lobbying analysts say the messages surrounding Europe’s MEPs struck a chord because they were propagated through a number of channels. Research by the think tank InfluenceMap finds that oil and gas lobbying to weaken climate policy is accompanied by a large public-facing campaign to capture the narrative on climate change: “These efforts are increasingly sophisticated and nuanced and use a range of targeted arguments and communications strategies – be it through social media or sponsoring high-profile events – to maintain social license for a highly polluting industry”, a spokesperson said.

One of the largest lobbying groups alongside Hydrogen Europe is the Hydrogen Council, which counts leading oil and gas firms such as Aramco, Shell, BP, Total, among its members. “The Hydrogen Council represents more than 100 companies across the entire hydrogen value chain, and members have a comprehensive, long-term vision for hydrogen solutions that will help meet climate goals, increase energy security, and integrate hydrogen as an important part of the future energy mix,” a Hydrogen Council spokesperson told E&T.

FTI Consulting, which helped set up the Hydrogen Council, promotes the fossil fuel industry’s efforts to sell natural gas as a climate solution. FTI Consulting Belgium is an important lobbyist by itself. In 2019, it spent over €6.75 million on the cause and met 54 times with high-level EU commission officials, according to data from Lobbyfacts, a transparency data-sharing platform. In America, FTI came under fire last year when press reports stated that it promoted misleading claims about methane reductions in the Permian Basin. FTI spokesman Matthew Bashalany denied that the firm was concealing its involvement with influence campaigns, telling reporters: “We hide behind no one”.

A report published by Corporate Europe Observatory (CEO) and others suggests that FTI Consulting designed, staffed, and still runs Hydrogen Council. Despite citing the client relationship in EU transparency documents, FTI is more than just a client. “FTI [Consulting] banks up to €800,000 each year for its role”, research states. FTI worked the same way with Hydrogen Europe, a hybrid body partnering with the European Commission via FCH JU (Fuel Cells and Hydrogen Joint Undertaking), while having considerably grown its lobbying arm in recent years.

Next to Exxon Mobil and other major fossil fuel firms, the EU Commission’s transparency register lists Hydrogen Council among FTI Consulting clients. However, the relationship is more intimate – Hydrogen Council maintains the same Brussel-based address as FTI Consulting.  “Hydrogen is an issue that we have worked on in Europe and globally for over a decade. We are public, proud and transparent [via the EU Commission transparency register] about our work for the Hydrogen Council”, an FTI Consulting spokesperson told E&T.

Why did EU policy makers buy into the fossil fuel hydrogen hype?

A 2020 EU Commission policy paper concluded that hydrogen is essential “to support the EU's commitment to reach carbon neutrality by 2050 and for the global effort to implement the Paris Agreement”.

MEPs are promised that by keeping the definition of hydrogen broad, clean hydrogen technologies - including carbon capture and storage, pyrolysis, electrolysers – could be accessed sooner. Lobbying efforts are focused on misrepresenting fossil gas [for hydrogen production] as ‘green’ and promoting fledgling technological solutions and riskier routes to mitigating climate change to safeguard a longer-term role for fossil fuels, says Faye Holder, InfluenceMap’s programme manager for the oil and gas sector.  Hydrogen lobbyists spent nearly €60m in lobbying costs to shift Brussels’ view on hydrogen and saw leading officials recruited into the private law firms, according to CEO.

The latest victory by the EU fossil fuel hydrogen lobby is the EU Commission’s inclusion of an entirely new fossil gas category for district heating and co-generation, which Greenpeace criticised in March. In October, a letter signed by the European gas industry and 57 energy companies was sent to leaders of the EU Commission demanding changes including using European gas resources to decarbonise the economy “in a fast and cost-effective way… and by creating a level playing field for commercially mature technologies”. By meeting these demands at the end of 2020, the Commission lowered the threshold for emissions savings to produce hydrogen. More recently, a group including ArcelorMittal, CEZ, EDF, Engie, Fortum and Uniper, signed a letter calling for a weakening of the CO2 thresholds for producing hydrogen sustainably, Edward Collins at Influencemap says.

Types of hydrogen

Image credit: CEO, media reports

Ultimately, MEPs’ enthusiasm for fossil fuel hydrogen comes also from the price competitiveness argument. In a report, the EU Commission states that “today, neither renewable hydrogen nor low-carbon hydrogen, notably fossil-based hydrogen with carbon capture, are cost-competitive against fossil-based hydrogen”.

The difference in costs could shift sooner than EU policymakers expect. Professor Hepburn says while fossil hydrogen is currently cheaper than green hydrogen, it seems clear enough that green hydrogen will be “the winner on cost, eventually”.

“It might win sooner than expected if the sort of investment and technological progress happens in electrolysis as we have seen in solar and batteries”, he says. As such, there need to be very good reasons to invest in fossil hydrogen. Such reasons exist, such as in limited industrial clusters where much of the other infrastructure is already in place or it’s complementary. However, in the long run Hepburn’s guess is that fossil hydrogen’s benefits will be relatively limited.

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