Study on hydrogen in ports and industrial coastal areas released

According to a new study on hydrogen in ports and industrial coastal areas, the European Union needs to drastically speed up the deployment of hydrogen production, import terminal, reconversion, storage, transportation, and consumption infrastructure capacity in port ecosystems to meet its 2030 renewable hydrogen targets.

Through 2050, it is anticipated that port ecosystems will be essential to the development of the European hydrogen market. In addition to investing in specialised infrastructure to generate, import, store, and distribute hydrogen to numerous end-users in the larger port regions and/or into the hinterland, energy transit hubs also serve as centres for the import of hydrogen and its distribution.

In recent years, the EU’s energy transition policies have solidified their prominent position for hydrogen, particularly green hydrogen, which is anticipated to play a crucial role in replacing fossil gas, coal, and oil in transportation and hard-to-decarbonize industries like refineries, ammonia, steel, and chemicals (i.e., heavy duty road freight, shipping, aviation).

The REPowerEU Plan states that to increase the demand for renewable hydrogen in Europe to 20 million tonnes per year in 2030, “the development of port infrastructure and their linkage to both industrial and transport customers in the region will be of essential importance.” By 2030, REPowerEU aims to produce 10 million tonnes of renewable hydrogen in the EU and import 10 million tonnes of renewable hydrogen.

For the Clean Hydrogen Partnership, Deloitte Belgium’s Energy and Climate practice conducted a thorough study using a scenario-based methodology. The study offers detailed outlooks of the potential hydrogen demand and supply in European ports and coastal areas in 2030, 2040, and 2050, as well as the necessary infrastructure for the hydrogen value chain and a roadmap for no-regrets investment in the development of hydrogen activities and infrastructure there. The research also gives a general outline of the many functions that ports might play in the hydrogen economy of the future in Europe.

The study’s main takeaway is that rapid investment in specialised infrastructure in port areas is necessary to deliver hydrogen to numerous end users in the larger port areas and/or into the hinterland to achieve REPowerEU’s ambitious target and continue to grow the European hydrogen market through 2050.

The whole hydrogen demand in the EU in 2050 might be found in port regions to the extent of up to 42% (22 Mt, or 730 TWh).

In the most ambitious market-driven demand scenarios, the yearly demand for hydrogen in the EU is projected to rise dramatically by 2050, reaching roughly 53 Mt (or 1,764 TWh), with port areas accounting for 42% (22 Mt, or 730 TWh) of this demand.

According to Bart Biebuyck, executive director of the Clean Hydrogen Partnership, “our study reveals it is a vital step towards creating the hydrogen economy to accelerate the hydrogen infrastructure in ports and their ability as hydrogen transit hubs. While 42% of the EU’s yearly hydrogen consumption is predicted to come from ports and industrial coastal areas, we must collaborate to create a “European Hydrogen Ports Roadmap” that can fully realise the decarbonization potential of these locations.

Industries and the global shipping industry are predicted to account for 42% and 31%, respectively, of the total demand for hydrogen in port areas in 2050 Europe.

At the EU level, the demand scenario increased significantly (+174%) from the most aspirational market-driven scenario for 2030. It also coincided with the market development route envisioned by the REPowerEU plan (11.6 Mt). The consumption of green and, to a lesser extent, blue hydrogen (see note below) in port areas as a replacement for fossil-based fuels has the potential to significantly reduce CO2-eq emissions in 2050 (up to 360 Mt of CO2-eq, or 8% of all European GHG emissions in 2019), as well as have additional positive effects on the environment (e.g., reduction of toxic atmospheric emissions, water pollutants, solid waste, and noise emissions).

Ports are anticipated to be crucial energy transit hubs on the supply side, permitting the import of hydrogen and subsequent transfer to numerous end-users in the larger port districts and/or into the hinterland.

Deloitte’s cost optimisation model, which sought to achieve the economic optimum based on the Levelized Cost of Hydrogen (LCOH), predicts that the share of imported hydrogen in the EU’s total hydrogen consumption could range between 25% and 70% in 2050, largely depending on the ability of Member States to very rapidly increase the annual rate of deployment of domestic renewable energy production capacities (solar PV and onshore wind).

In all scenarios, it is anticipated that the region with the highest hydrogen demand (Belgium, the Netherlands, Denmark, and northern Germany) will rely heavily on the import of green and blue hydrogen (between 40% and 80% of total hydrogen consumption), primarily from North Africa (Morocco, Egypt, Algeria), the Middle East (Oman, Saudi Arabia, Qatar), and even further afield (e.g., such as Australia). Also, certain intra-European hydrogen imports and exports are anticipated (e.g. from Spain to France).

Finally, for each scenario, demand cluster, and timeframe, the necessary production, import terminal, conversion, storage, transportation, and consumption (such as refuelling stations and bunkering) infrastructure capacities as well as associated investment costs are provided to match future hydrogen supply and demand.

Key insights from the study (EU scope)

1. Mainly driven by industries and the international shipping sector demand for clean hydrogen in the vicinity of European ports could reach 22 Mt (730 TWh), or 42% of total hydrogen demand in the EU expected in 2050. This would represent a six-fold increase compared to the current demand for hydrogen near European ports (3.8 Mt, or 126 TWh).
2. This extremely fast and large uptake of clean hydrogen consumption in port areas as a substitution of unabated fossil-based fuels has the potential to lead to up to 360 Mt of CO2-eq abatement in 2050 (or 8% of total European GHG emissions in 2019) as well as additional environmental benefits (e.g., reduction of toxic atmospheric emissions, water pollutants, solid waste, and noise emissions).
3. On the supply side, the share of hydrogen import in total hydrogen consumption in the EU is expected to range between 25% and 70% in 2050, depending mostly on the ability of Member States to very rapidly increase the annual rate of deployment of local renewable energy production capacities over the next decades, EU ports are expected to play a key role as energy transit hubs in facilitating the import of hydrogen and subsequent transportation to multiple end-users in the wider port areas and/or into the hinterland.
4. Using Deloitte’s cost optimization model, the North-western European region (Belgium, Netherlands, Denmark, and North of Germany) is expected overall to heavily rely on hydrogen import (between 40% and 80% of total hydrogen consumption), mainly coming from North Africa (Morocco, Egypt, Algeria), the Middle East (Oman, Saudi Arabia, Qatar) and even further (e.g., such as Australia).
5. Creating and rapidly expanding the European clean hydrogen market through 2050 requires accelerated investment in production, import terminal, conversion, storage, transportation, and consumption (e.g., refuelling stations and bunkering) infrastructure capacities in port areas to deliver hydrogen to multiple end-users in the wider port areas and/or into the hinterland.
6. At the EU level, the demand scenario aligned with the market development pathway envisioned by the REPowerEU plan (target of 20 Mt of green hydrogen consumption in 2030, of which 10 Mt imported from non-EU countries) represents a considerable ramp-up (+174%) from the most ambitious market-driven scenario for 2030 (11.6 Mt) and is associated with a significant acceleration of investment in dedicated infrastructure in port areas.
7. As hydrogen demand hubs and transit corridors, port ecosystems are uniquely positioned to harness the opportunities arising from the nascent European hydrogen economy, with the potential to create a competitive advantage. A cascading set of strategic choices, from “aspiration” to “where to play”, “how to win” and “how to configure”, will help each port ecosystem define the right strategic directions in a well-structured way.

Download the full report here.