Outlining six policy dimensions, climate migration, green industrial developments, just transitions in partner countries, geopolitics, security of supply, and economic feasibility, the report has made recommendations for European policymakers when developing international partnerships within the hydrogen economy.

Against the backdrop of “increasing geo-economic competition with China and the Russian Invasion of Ukraine” the report has said that hydrogen demand in the EU and Germany is expected to exceed domestic production capacities, seeing imports from EU and non-EU countries post 2040 come as a leading source of hydrogen supply in Germany.

With the hope of developing an international hydrogen economy in the context of broader decarbonisation efforts in the EU, the paper sets out nine policy messages:

Message one: Preference should be given to renewable hydrogen capacity development in the European Union and its immediate vicinity.

The FES and RIFS Potsdam report says that hydrogen supply in the EU and its immediate vicinity has important security of supply advantages, noting that those countries are “;less likely to abandon the EU market for other buyers.”

It says that European neighbourhood partners should be integrated into regional hydrogen production clusters, which could reduce the cost of renewable hydrogen production, transportation, and offtaking.

Read more: Hydrogen Valleys to double to 50 ‘and cover whole of EU’

Message two: The EU needs a hydrogen pipeline infrastructure, including interconnections between Spain and France, for trade among member states and with the European neighbourhood, as well as shipping terminals to diversify imports.

It suggested that such infrastructure would be important for enabling the supply of hydrogen from the EU’s northern, southern, and eastern neighbours, alike. Adding in the early stages focus should be on supply areas with high industrial demand such as refineries, steel, ammonia, and the chemicals industries.

France, Spain, and Portugal in December (2022) announced plans to establish the H2Med pipeline, which looks to carry up to two million tonnes of hydrogen per year from southern Europe to France. Under new Franco-German commitments, the H2Med pipeline is set to be extended to Germany.

Read more: Germany joins H2Med under new Franco-German hydrogen commitments

Additionally, to support diversification, the report says, “it will be essential to equip major European ports for handling hydrogen and hydrogen-based synthetic fuel.” Over the past two years, ports such as the Port of Rotterdam, Netherlands and the Port of Wilhelmshaven, Germany have been at the centre of multiple hydrogen import and production projects.

Message three: Regional trade in hydrogen should not replace ambitions to increase electricity trade with countries in the European neighbourhood but should complement it.

The report said, “the potential for regional trade in electricity should not be neglected politically. Rather, efforts should be renewed in parallel or possibly even integrated with those aimed at the hydrogen sector. An integrated approach would offer the additional benefit of realising potential synergies.”

Message four: Partnerships for the promotion of hydrogen trade need to be embedded in broader green industrial development partnership aimed at supporting socio-economic development and decarbonisation of the partner economy.

 It says that it appears that hydrogen projects in regions such as the Middle East and Africa are “most tangible” when they have domestic value-creation in mind, highlighting recent developments in countries such as Morocco and Egypt.

Read more: Policy Pillar: Focus on Africa

The report said the projects have, “supported investments in renewable hydrogen supply as the basis for the production of green ammonia, seeking to position these countries as producers and potential exporters of climate-friendly fertilisers.”

It added that the formation of green industrial alliances represent a “crucial ingredient” in the process of ramping up domestic climate action over time.

Message five: Sustainability certification schemes are needed to enable the ramp-up of renewable hydrogen production and should promote increasing sustainable production practices over time.

Highlighting concerns such as electrolyser efficiency and land use for hydrogen production, the reports says, if not managed properly, the issues could translate into “significant negative impact on local populations.”

It therefore stresses the need for international hydrogen trade certification schemes, suggesting that a phased approach to the implementation of sustainability certification schemes could offer an entry-point for enabling the scale-up of investment, while ensuring that sustainable production practices are established over time.

 Message six: The EU needs to develop joint principles for its hydrogen foreign policy.

In order to meet the major investments required for hydrogen production and transportation infrastructure, the report highlights the need for “clear and credible” policy signals to provide certainty.

It says partnerships between potential importers and exporters will need to be established for the creation of policy frameworks and financing. Adding that differing economic stakes in the hydrogen economy across EU member states have already started to “undermine the development of such a common approach” on promoting an international hydrogen economy.

The report has said the economic mismatch among member states has “weakened the attractiveness of the EU market” and its ability to influence global hydrogen standards, continuing that it should be an important goal to establish an EU-level hydrogen policy.

Message seven: The EU should seek to align its promotion of a global hydrogen economy with the US and other G7 countries.

 SEF and RIFS Potsdam said that a joint approach across G7 economies would significantly augment the weight of international hydrogen standards, saying it is on the interest of the EU to compromise with the G7 on issues such as blue hydrogen and carbon capture and storage (CCS) to retain its influence on global developments.

Message eight: In pursuit of their hydrogen partnerships, Europe and Germany need to actively tackle the challenging questions related to blue hydrogen and in this context, CCS.

 The report has said that the EU and Germany should clarify the conditions under which blue hydrogen and CCS should be part of their pathways to climate neutrality, by establish a benchmark for the maximum level of greenhouse has (GHG) emissions per unit of fossil-based hydrogen.

Additionally, it stresses that EU will need to define how long it intends to use blue hydrogen as a bridge fuel before switching to renewable hydrogen,  and consequently a phase-out strategy for blue hydrogen.

Message nine: The use of hydrogen-based synthetic fuel will require international co-operation and dialogue for the sustainable deployment of technologies for carbon capture and transport. 

It noted that hydrogen-based synthetic fuels, if produced exclusively with renewable energy, will play an important role in hard-to-electrify segments for transport such as aviation, and will require infrastructure to be developed.

Stressing that carbon dioxide will need to be capture during the production process, the report says the phase-in of synthetic fuels will “require the swift establishment of a C02-related infrastructure for C02-capture and transport. Adding, that policy will need to support technological upscaling and commercialisation.