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Executive Vice-President Frans Timmermans' and Commissioner Kadri Simson's press remarks on the energy sector integration and hydrogen strategies

Met dank overgenomen van Europese Commissie (EC), gepubliceerd op woensdag 8 juli 2020.

Exectuive Vice-President for the European Green Deal Mr Frans Timmermans

Thank you very much.

Hello, wherever you are.

Commissioner Simson and I are very excited today to present to you two strategies that I believe are crucial for our Green Deal.

They are ambitious, they are necessary to make Europe's green recovery a reality, and they put us firmly on the path towards climate neutrality. I am talking about our Energy System Integration and Hydrogen strategies. They are also strategies that will allow the EU to retain global leadership in clean tech, and provide clean, secure, and competitively priced energy to our citizens and industries.

Countries across Europe face deep recessions as a result of COVID-19. Commissioner Dombrovskis talked about this today in College and you saw Commissioner Gentiloni's press conference yesterday.

As we continue to battle the pandemic, we must also keep focus on our long-term challenges. This is why the Green Deal, as a growth strategy, remains our compass throughout this recovery. The Green Deal, digitalisation and increasing our resilience. And this fits all into that.

If we want to become the first climate neutral continent by 2050, our energy system needs to switch from fossil fuels to clean energy.

As we work to include more renewables in our energy mix, the system must follow suit. It is not just about creating renewables, it is about creating a new system. We need to break the silos between separate flows of energy production and use. In fact, we need a complete overhaul of the current energy system, which is quickly becoming a relic of the past: way too wasteful and way too rigid to be fit for a sustainable future.

Just a simple example: today many of our heating for houses is run on individual gas boilers, or coal boilers, or wood. We could start to circulate hot water from industrial waste heat in our district heating systems, or use heat from the many data centres that are going to be built and that are going to generate a lot of heat. This is just one example.

We need to stop transferring the wrong energy carriers in the wrong way to end users.

Much of the energy transition will focus on direct electrification. However, in sectors like steel, cement, chemicals, air traffic, heavy-duty and shipping, we need something else: continued development of carbon capture and storage, as well as energy carriers that can be stored longer and transported more easily over longer distances.

This is why scaling up the use and production of clean hydrogen in Europe is such an important piece of the puzzle.

Clean hydrogen is key for a strong, competitive, and carbon-free European economy. We are leading the world in this technology and we want to stay ahead, but we need to make an extra effort to stay ahead because the rest of the world is quickly catching up. You saw perhaps the announcement of the new facilities going to be built in Saudi Arabia and they are talking about gigawatts not megawatts in terms of production. We really need to keep up Europe.

The hydrogen strategy, and the investment plan that comes with it, will not only bring more jobs in hydrogen and related matters, it will also propel European industry into the 21st century. A century, where the production of green steel becomes possible. So we avoid creating stranded assets by doing this. We want to maintain steel production in Europe. That is essential for our Industrial Strategy. But it has to be green steel. With hydrogen, we can make it happen. We can make it happen and relatively quickly.

Just four years from now, we want have at least 6 gigawatts of renewable hydrogen electrolysers installed in Europe. That is 6 times what is in place today. And for 2030, our target is to have a capacity of at least 40 gigawatts.

Current production of hydrogen is too much fossil-based. It emits 70 to 100 million tonnes of CO2 a year. Therefore, our entire strategy is geared towards supporting clean hydrogen as much as possible and as soon as possible. This is our priority. To boost its development, renewable hydrogen will receive premium support.

To reach our goals, we need to create a market of scale, enable hydrogen to grow out of being a small niche market. Getting there will mean going through a transition where we temporarily continue to support low-carbon production of hydrogen, for example via carbon capture and storage. This will also help us to replace dirty hydrogen. We need to act on the three fronts: the production, the storage and transport and the end-use. And for that we need this transitional phase.

To capitalize on the investment plans in the hydrogen strategy, this afternoon we will both join Commissioner Breton to launch the European Clean Hydrogen Alliance. This alliance, which brings together industry, NGOs and other stakeholders, will help build up a pipeline of viable investment projects to make sure the most promising projects can get up and running fast.

Today's strategies underline how the European Green Deal is a strategy for a sustainable recovery. Over the coming years, clean tech will be a global growth engine.

That is why the strategy gives particular attention to cooperation with our neighbourhood. By working with partners to the East and to the South, the industry ambition is to add an additional 40 GW of electrolysers by 2030. We will have 2x40 GW by 2030.

With the state of technology in Europe, the economics, and the policy instruments at hand, the European Union can take the lead globally. I believe there is so traction for this, this has become the rock star for new energies all across the world, especially in Europe. Since we are leading on this, we should never leave that lead behind and continue to lead on this and much more.

I am now happy to give the floor to Commissioner Simson. Over to you.

Commissioner for Energy Mrs Kadri Simson

At the beginning of this year, I visited an off-shore wind park in Denmark. What struck me was the difference between the first turbines and the new ones - in just 30 years, they have become four times bigger and 20 times more powerful. The fact is that today, Europe is a global leader in this technology.

30 years is exactly the amount of time we have to reach climate-neutrality. Fortunately, my Danish experience was not the only one: since last December, I have spoken to hundreds of experts in the energy sector and learned about and visited many innovative projects. The technologies and solutions that would get us to net zero emissions - in a cost-effective way - already exist, but need to be developed and deployed at a larger scale.

What I also learned is that

  • being ambitious brings new, different challenges; µ
  • and you cannot build the energy system of the future using the policies and frameworks of the past.

We must rethink today's model built around rigid, isolated value chains that run from an oil rig to a conventional car, or from a coal mine to a factory, wasting and polluting along the way.

And so, today it is my pleasure to present the Strategy for Energy System Integration that provides a new model for the energy system of the future.

The strategy has three pillars:

  • First, we can be much more efficient, circular and consume less resources. For example, using waste heat from data centres or industry to heat buildings or using agricultural residues to produce biogas.
  • Second, we need to massively increase the share of renewable energy in our system. This is easiest to do through direct electrification, as the power sector is far ahead of others in decarbonisation. Where we can go electric, we should, using renewable electricity to power our cars and heat pumps in buildings, for example.
  • Third, where electrification is not possible or is too costly, we need clean gases and fuels - like hydrogen, biofuels and biogas, in this way we gradually phase out natural gas.

Today's strategy sets out concrete steps to achieve these three goals. All of our upcoming energy initiatives this year - the Renovation Wave, the Offshore Energy Strategy and the TEN-E revision, will contribute.

In the coming days, we will launch the process to review the energy efficiency and renewables directives, which will help us to implement several measures outlined in the strategy.

In 2021, we will propose new gas market rules, to reform our gas markets just as we did for our electricity markets - to ensure that our legislative framework pushes the gas sector to become green as fast as possible.

This brings me to the second topic of the day - Hydrogen. There are several CO2-heavy sectors where viable alternatives to fossil fuels do not yet exist - some areas of transport and industry in particular. Without a solution, our goal of net zero emissions will remain out of reach.

The most promising answer is renewable hydrogen. Today's strategy lays out our vision and concrete roadmap for the role of hydrogen in our future energy system.

It is an ambitious plan, but it is achievable: going from very little renewable hydrogen to 10 million tonnes by 2030 and around 13% of clean hydrogen in our energy mix by 2050.

To make this happen, we have to boost both supply and demand. On the production side, we most urgently need more and bigger electrolysers. Many are already in the works in Europe: this Monday, I was in Cologne where a consortium supported by the EU is building the world's largest PEM hydrogen electrolysis plant that will use only renewable electricity.

But we need much more. Later this year, we will launch a call for a 100 MW electrolyser as part of the European Green Deal call under Horizon 2020 and we have already launched an Innovation Fund call including hydrogen technologies last Friday.

To create sufficient demand for clean hydrogen, we will work on common standards, certifications and terminology and pilot a Carbon Contracts for Difference programme to facilitate the use of clean hydrogen in steel and chemicals production. Quotas for specific sectors and direct market-based support schemes for renewable hydrogen may also be needed to scale up the use.

We also know that clean hydrogen will have a chance only if there is a market. This means that for the transitional period, we need other forms of low-carbon hydrogen, to respond to a growing demand. Today, there is 9.4 million tonnes of fossil-based hydrogen in our system that needs to be replaced by cleaner alternatives.

To connect the supply and demand, we need infrastructure fit for this fuel of the future. By the end of this year, we will revise the Trans-European Energy Networks Regulation with hydrogen in mind.

Our hydrogen strategy also has an important international dimension that Frans already mentioned. Europe has a strong position in electrolyser production, and should take advantage of the global surge in interest in renewable hydrogen. At the same time, hydrogen provides an excellent opportunity to cooperate, especially with our neighbours in the East and South. This will both contribute to their sustainable development and improve our security of supply.

Ladies and gentlemen, if we continue with the status quo, we will reduce greenhouse gas emissions by roughly 46% by 2030 and 60% by 2050. And that means we fall short of our increased ambition for 2030 and reaching net zero by 2050 is not feasible.

The strategies we have adopted today are the energy sector's contribution to achieving our climate goals and recovering from the crisis, in the context of the proposed EU budget and the Next Generation EU recovery plan.

So, we are sending a clear signal to the Member States, industry and the world, that we are determined to transform our energy sector and supporting the recovery through green investment.

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