The EU Commission’s Hydrogen Prescription for System Integration

New strategies launched pushing energy efficiency and targeting sectors difficult to decarbonise

The European Commission’s new hydrogen strategy and energy system integration strategy have been launched. The two strategies work together. The hydrogen strategy is about developing an additional tool to improve the energy system integration (or smart sector integration as it is sometimes called). The challenge is to break down the silos between transport, industry, gas and buildings – each with separate value chains, rules, infrastructure, planning and operations.

The goal is that by 2050 we’ve achieved a net-zero Europe and have an energy system where the electricity that fuels your car comes from the solar panels on your roof, while your home and office are kept warm with heat from a nearby factory, and the factory is fuelled by clean hydrogen produced from off-shore wind energy.

Sounds nice, right?

The energy system integration strategy has three pillars:

  1. Energy efficiency – the EU Commission will need to identify concrete actions where ‘energy efficiency first’ principles can be applied. Crucially for cities, there is a focus on using local energy sources more effectively as well as using waste heat from industrial sites, data centres and other sources. The Renovation Wave will be an important part of these reforms
  2. More electrification –  As the power sector has the highest share of renewables, we should increasingly use electricity where possible: for example for heat pumps in buildings, electric vehicles in transport or electric furnaces in certain industries. A network of one million electric vehicle charging points will be among the visible results, along with the expansion of solar and wind power
  3. Hydrogen and low-carbon fuels –  for those sectors where electrification is difficult, the strategy promotes clean fuels, including renewable hydrogen and sustainable biofuels and biogas. The Commission will propose a new classification and certification system for renewable and low-carbon fuels.

There is a lot of talk in the strategies about heat pumps and district heating as key technologies. District heating can expect to benefit from stronger requirements to connect to district heating networks to make use of waste heat. And where there currently is no provision for district heating, investment will accelerate.

It’s unfortunate that geothermal potential was left out of the conversation, especially given its potential when paired with district heating. Solar thermal energy was also neglected.

Overall, these are strong strategies that incorporate a lot of what Energy Cities has been advocating for – especially allowing cities to make use of, first and foremost, their local energy potential. The hydrogen strategy has a clear goal of becoming carbon-free, but the interim focus on creating hydrogen twinned with CCS does risk locking in fossil fuel use in the longer term.

The one glaring area of concern for Energy Cities is the European Clean Hydrogen Alliance, which brings together the fossil fuel industry, the European institutions and national ministers. Currently, there is no seat at the table for local authorities.

This is in spite of the inclusion of so-called “Hydrogen Valleys” – regional, remote areas that will develop local production of hydrogen based on decentralised renewable energy production and local demand, transported over short distances.

What comes next?

There is a dizzying array of next steps – especially in the next 18 months. Everything from the offshore wind strategy by the end of this year, reviewing the Energy Efficiency (EED) and Renewable Energy Directives (RED) by next summer, reviewing the Energy Taxation Directive and State Aid rules and much more.

The EED and RED will be reviewed primarily to align them with more ambitious 2030 targets. But it is also a golden opportunity to move away from business as usual consumption and incorporate sufficiency goals that could slash energy demand.

One opportunity for cities that we’ll be watching closely is the financing of flagship projects of integrated, carbon-neutral industrial clusters producing and consuming renewable and low-carbon fuels, through Horizon Europe, InvestEU and LIFE programmes and the European Regional Development Funds from next year .