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Prospects for a hydrogen alliance after Ukraine’s victory

The European Union needs hydrogen imports as never before, hence Ukraine could be the new source, Poland a transit country and Germany the destination market. The condition for such co-operation, however, would be a Ukraine without Russian troops killing Ukrainians on its territory.

March 30, 2022 - Anastasiia Zagoruichyk Wojciech Jakóbik - Analysis

Photo: rezoff / Shutterstock

The whole world is now turning away from Russian oil and gas due to Russia’s war of aggression against Ukraine. The United States and the United Kingdom have already imposed an embargo on Russian energy imports, while Europe is still deciding. It can be said that the time for forced de-carbonisation has come. But if Europe will not get enough resources for generation of green electricity, there will be a return to the Middle Ages, to coal. Germany is already considering such a scenario. The important thing is to prevent this.

Of course, the prospect that we describe below will be possible only after the complete withdrawal of Russian troops from the territory of Ukraine and after the restoration of Ukraine, which is quite a real scenario.

There is a large potential for hydrogen co-operation between Germany, Ukraine and Poland. The European Union needs hydrogen imports as never before, hence Ukraine could be the source, Poland a transit country and Germany the destination market. Those issues could be addressed by a common EU-Ukraine policy created with an active co-operation between Germany, Ukraine and Poland.

EU hydrogen strategy and hydrogen imports

In 2020, the EU presented the Hydrogen Strategy, the main priority of which is to promote the use of hydrogen produced during the electrolysis of water from renewable energy sources. According to the roadmap, it is planned to produce one million tons of hydrogen by 2024, 10 million tons by 2030 and by 2050 clean hydrogen should become a self-sufficient and widespread energy source, which should be combined with significant development of renewable energy sources.

In recent years, hydrogen has gained popularity around the world, particularly in the chemical and oil refining industries, which is stimulating demand. Before the war, hydrogen demand in the EU was forecasted to grow to 2,250 terawatt hours in 2050. The numbers will only grow because of today’s situation.

However, the development of hydrogen in Europe faces problems that neither the private sector nor the member states can solve. Critical investment (180 to 470 billion euros by 2050), a favourable regulatory framework, continuous research and innovation in technology, and a large-scale infrastructure network are needed to overcome the turning point in the development of hydrogen. All this can be ensured by co-operation with other countries, including Ukraine and Poland.

Hydrogen strategies in Germany, Poland and imports from Ukraine

Germany aims at huge green hydrogen imports and that is why it is promoting a hydrogen diplomacy idea. Poland could become a hydrogen transit country in case of co-operation with Ukraine on import to Europe.

Germany’s hydrogen strategy was presented in June 2020, even before the EU published its own. It is one of the tools for Germany to move away from dependence on Russian fossil fuels and to reach climate neutrality by 2050 by reducing CO2 emissions not only in the energy sector but in the whole economy. Hydrogen could play an important role as another means of renewable generation back-up apart from energy storage and conventional power plants: fossil-fuel based (emitting) or nuclear (non-emitting).

Germany aims at green hydrogen produced with electrolysers with demand between 90 and 110 TWh a year by 2030. The production could reach 15 Twh with a need to provide extra renewable generation for 20 Twh.

The new coalition agreement is even more ambitious. It is about reaching renewable share in energy mix up to 80 percent in 2030 supported with 10 GW of electrolysis capacity. That is why the Renewable Energies Act from 2021 is zeroing levy for electricity generation for the purpose of green hydrogen production. There is also an idea of Carbon Contracts for Difference which are to support hydrogen projects.

However, to supply such a high demand for green hydrogen there is a need for imports with the use of existing gas infrastructure. Specific regulation is to describe the amount of hydrogen which is safe to be mixed inside the pipelines. That means that most of the hydrogen in Germany could come from sources other than electrolysers fuelled with renewable energy.

There is also an option that a big part of green hydrogen for German needs would be imported and that is why Germany is proposing to create an international hydrogen market and leading so-called hydrogen diplomacy to cooperate with foreign countries for the sake of green hydrogen deliveries to the European Union. Germany’s hydrogen strategy assumes that it will import from 76 to 96 TWh of green hydrogen in 2030.

The German government announced the hydrogen diplomacy initiative in January 2022 and is willing to open offices in Ukraine and Nigeria to support co-operation with those countries in this sphere. Other sources could be countries like Chile, Morocco, Spain or the Netherlands on condition that they are able to produce enough fuel by themselves. Also, recently German vice-chancellor Robert Habeck has secured several hydrogen co-operation contracts with the United Arab Emirates (UAE), with the first blue hydrogen expected to be shipped to Germany in 2022.

The federal government last year launched a new funding program called H2-Global with a budget of 900 million euros. German industry is ready to use green hydrogen produced with green electricity in the steel and chemical industries. This requires a large amount of renewables, so the hopes are pinned on windy and sunny regions, such as Australia, Latin America or North Africa, because Germany itself cannot generate so much “green” electricity, especially in the context of abandoning Russian “natural” gas and switching to hydrogen.

However, co-operation with Ukraine is one of priorities from the point of view of common foreign and security policy inside EU and NATO, and from the point of view of security of supply, as Ukraine is the main gas transit country for Europe and could become one of the main sources of green hydrogen.

Ukrainian hydrogen potential

Europe sees Ukraine as a partner in the hydrogen alliance, arguing that Ukraine has favourable wind, sun and biomass resources, as well as space for large-scale renewable energy production. The potential for pure hydrogen production is much higher than the needs of the domestic market, so it is expected to have a surplus in the country.

According to the Green Hydrogen Initiative for the European Green Deal 2×40 GW, the EU expects that 10 GW of green hydrogen production capacity can be set up in Ukraine. According to a report by Ukrainian scientists, Ukraine has the technical potential to create 500-700 GW of capacity based on renewable energy, which can produce about 500 billion cubic meters (45 million tons) of hydrogen, which is half of what is used in the world today.

Ukraine is a region neighbouring the European Union, which makes it possible and profitable to transport hydrogen by pipeline to the EU. Because transporting hydrogen by pipeline is cheaper than by ship or hydrogen energy by power cables, Ukrainians have a competitive advantage in this regard. Germany may become one of the most interested countries in importing hydrogen from Ukraine, as this country does not have enough free land to build facilities for the production of pure hydrogen. German Foreign Minister Annalena Baerbock, during her visit to Ukraine, stated that Germany intends to open a hydrogen diplomacy office in Ukraine to implement relevant projects.

Ukrainian companies have already begun testing how hydrogen will “behave” in everyday life. In 2023, a pilot project of the “Regional Gas Company” was to start in two villages, where it is planned to supply a gas mixture of 20 per cent hydrogen for heating homes and household purposes.

Of course, there are many obstacles to the production and free use of hydrogen. The first thing is to defeat Russia, of course. But also to modernise Ukraine’s 350,000 km gas distribution networks, which will cost 10-15 billion euros, and to build large capacity renewable energy storage systems or highly manoeuvrable power plants to balance the energy system.

Therefore, in the development of hydrogen potential, Ukraine will need a strong and experienced ally, which can be Poland.

“Given the rapid development of renewable energy sources and the path of decarbonisation, the deepening of Ukrainian-Polish cooperation in the transportation of renewable gases such as hydrogen, biomethane and synthetic methane has significant potential. Solving the problem of converting pipelines to hydrogen transportation will help the presence of several parallel lines running in one corridor. This will allow re-equipment to be carried out in stages, limiting the impact on capacity”, notes Oleksandr Riepkin, an adviser to the minister for foreign affairs of Ukraine on the Hydrogen Economy.

Polish hydrogen potential

Poland has its own hydrogen strategy from December 2021. It is claimed to be technology neutral so it is not giving a priority to green hydrogen. Poland wants to produce up to one million tonnes of green hydrogen until 2024 and 10 million tonnes by 2030 with an adequate use of hydrolisers for six GW and 40 GW respectively. It is already a third producer of grey hydrogen coming from oil refineries in Europe with 1.3 million tonnes of capacity. In spite of those plans Poland would also lack green hydrogen capacity which could be provided from external sources and hydrogen transit through Poland is another way of reinventing existing gas grid purposes in future.

Poland could become a new transit country for green hydrogen in case of fruitful co-operation between Berlin, Kyiv and Warsaw in the wider context of common European climate and energy policy. As a country with borders both with Germany and Ukraine it is a natural partner for hydrogen transport. Poland is already a transit country for gas deliveries through Jamal-Europe gas pipeline reverse on the border with Germany and for deliveries of LNG from Świnoujście terminal to Ukraine on the basis of the Polish PGNiG and Ukrainian ERU co-operation. The existing gas grid is to be partially adjusted for hydrogen transportation and there is a possibility for new interconnections like Gas Pipeline Poland-Ukraine (GPU) under consideration that was mentioned during Polish Prime Minister Mateusz Morawiecki’s visit to Kyiv on February 1st 2022. According to the European Hydrogen Backbone report created by 12 European gas transmission system operators including Polish Gaz-System, hydrogen networks in Europe could include links between Germany, Poland and Ukraine. EU funding could ensure that GPU could be hydrogen-ready or even dedicated to hydrogen transport.

Conditions for co-operation

The condition for such co-operation would be a safe international environment without Russian troops killing Ukrainians on the territory of a peaceful country. Therefore, it is very important to ensure more military support and co-operation between the NATO, EU and Ukraine as soon as possible.

Anastasiia Zagoruichyk is a Ukrainian journalist.

Wojciech Jakóbik is an energy analyst at the Jagiellonian Institute and editor in chief of biznesalert.pl

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