(Bloomberg) -- The European Union’s plan to rapidly expand its green hydrogen market is “overly ambitious,” according to the bloc’s spending watchdog.
The 27-nation bloc has put green hydrogen — made using renewable electricity — at the center of its drive to decarbonize the economy, particularly in heavy industry. But the EU is unlikely to meet its goal of creating a 20 million-ton market — split evenly between local production and imports — by the end of the decade, according to a report by the European Court of Auditors.
The ECA, which monitors the EU’s finances and can influence policy-making, said the current hydrogen plan isn’t based on robust analysis, but political will. Funding of almost €20 billion through 2027 is scattered among different programs, making it difficult for companies to access, the report said.
“The EU’s industrial policy on renewable hydrogen needs a reality check,” said Stef Blok, the ECA member in charge of the audit.
The report compounds doubts over the EU’s hydrogen plans — forged during the height of the energy crisis — and whether the fuel is a realistic solution to cutting greenhouse gas emissions, particularly in the short term.
The watchdog said there are challenges all along the hydrogen value chain, as well as the “chicken and egg problem” of supply depending on demand and vice versa.
Demand won’t even reach half of the EU’s 20-million-ton target by the end of the decade, according to the auditors. In 2022, hydrogen accounted for less than 2% of Europe’s energy consumption, with the largest share of demand coming from refineries.
The European Commission said there were 254 renewable hydrogen projects in the EU, after it had put in place regulatory framework and provided investment support.
“Our work is far from finished,” the commission said in an emailed statement. “We now have to accelerate the deployment and uptake of renewable and low-carbon hydrogen in Europe and further develop this emerging market.”
©2024 Bloomberg L.P.
