Europe is at risk of losing its lead in hydrogen technology. China and the USA are advancing faster, warns a study by Boston Consulting Group (BCG). Europe still benefits from earlier advantages in materials, efficiency, and longevity of plants. However, this lead is diminishing.
China is overtaking Europe in developing a green hydrogen value chain, and the USA also shows better progress. Sebastian Schrapp, a BCG study author, emphasizes the threat to Europe’s competitiveness. Particularly, Europe’s industry and innovation sector are at risk.
Europe has set ambitious goals for hydrogen but falls short on implementation. BCG’s study reveals less than two percent of announced green hydrogen production capacities for 2030 have moved beyond the planning stage. Green hydrogen is vital for the industrial shift to climate neutrality, especially where the direct use of renewable electricity is challenging.
The EU’s intricate subsidy systems complicate the promotion of green hydrogen. Lengthy approval processes for Important Projects of Common European Interest (IPCEI) delay critical initiatives. The added requirement for green hydrogen to use new renewable facilities, coupled with tight timing regulations for production, imposes further constraints.
US Advances Swiftly
In contrast, the US offers up to three dollars per kilogram of hydrogen produced from renewables, with fewer strings attached. This straightforward incentive system encourages investment in the US, while Europe’s stringent criteria lead to delays and additional costs.
Need for Adaptive Strategies
Responding to years of criticism, German Economy Minister Robert Habeck recently urged the EU to provide longer transition periods for strict criteria compliance. Nonetheless, opinions on effectiveness vary. Schrapp advocates for smaller, scalable ecosystems and simplified subsidy procedures. He suggests leveraging climate protection contracts and guarantees to link producers and consumers.
