Energy Transitions and Societal Change

CO2-Fußabdrucksgesetzgebung, internationale Gerechtigkeit und Zusammenarbeit

slz — Thu, 28 Mar 2024 13:44:54 +0000

Carbon Footprint Policies and International Equity and Cooperation slz Thu, 03/28/2024 - 14:57

Dr. Nino Jordan

Workshop in Geneva with the aim of comparing four policy instruments in terms of their impact on international justice, cooperation and conflict. N. Jordan

In a world connected by global supply chains, states are hesitant to pursue ambitious industrial decarbonization policies, fearing that strict regulations or high carbon prices could make industries less competitive or that consumers might switch to cheaper products from countries with lax regulation. But there is a solution: Policies that do not just target the emissions that occur within the confines of national or EU borders but that also cover emissions that have accumulated throughout supply chains. Carbon footprint policies target the upstream supply chain emissions that occur throughout the various stages of production.

While border carbon adjustments have received a lot of attention, less research has been conducted on regulatory maximum thresholds for lifecycle carbon emissions for products and on taxation classes based on lifecycle emissions. On 15 March 2024, I led a workshop in Geneva with the aim of comparing the four policy types in terms of their implications for international equity, collaboration, and conflict. The workshop brought together experts from academia, civil society and international organisations: the Advisory Centre on WTO Law, Climate Strategies, the École Polytechnique Fédérale de Lausanne, Friedrich-Ebert-Stiftung, the Institute for European Environmental Policy, RIFS, University College London, the United Nations Conference on Trade and Development, the United Nations Development Programme, the South Centre and the World Trade Institute.

Although the workshop sought to compare the different policy types, discussions tended to focus on carbon border adjustment mechanisms, such as the European Union’s CBAM, where the participants’ expertise was strongest. Nevertheless, the workshop kicked off a process of examining the other policy options and helped participants gain a better understanding of the whole spectrum of carbon footprint policies.

Most attention in this space has been hogged by price-based policies such as the European Union’s Carbon Border Adjustment Mechanism (CBAM). While the introduction of the CBAM is a significant step in the right direction, it is a particular policy instrument with specific strengths and weaknesses – not the only carbon footprint policy available. To accelerate the decarbonisation of globally traded goods, all policy options need to be on the table and thoroughly assessed in terms of their implications for international equity and cooperation.

Next to border carbon adjustments (BCAs), there are other carbon footprint policy instruments available, such as carbon-specific tariff walls, regulatory maximum carbon thresholds for products, and taxation classes based on lifecycle emissions. Border carbon adjustments typically impose taxes, tariffs or the obligation to purchase emissions permits on imports based on their carbon content, aiming to level the playing field by making sure that domestic and imported products are subject to the same carbon price. Threshold-specific tariff walls such as those floated as part of the negotiations on the Global Arrangement on Sustainable Steel and Aluminum (GASSA) use pricing in the form of tariffs. On the other hand, regulatory maximum carbon thresholds set a clear limit on the embodied carbon content of products, such as buildings or batteries, irrespective of origin. Such upper limits amount to bans of products with a particular high embodied or lifecycle carbon content. In addition to this, vehicle taxation schemes could be geared to target lifecycle emissions rather than being based on measures such as horse power or weight.

Carbon footprint policies have the potential to remove major hurdles to greater climate policy ambition. They will also likely lead to cross-border incentives for emissions reductions. However, the cross-border impacts of these policies also have significant international equity and justice implications that make them relevant to the just transitions debate. In addition, such cross-border measures run the risk of being perceived as protectionist and intrusive, potentially provoking international opposition. This concern has become more pronounced against the backdrop of current discussions about a potential fracturing of the international trade system.

In order to wield cross-border measures effectively, states will need to consider multiple – often divergent – perspectives, optimize their sequencing within the wider policy mix, and ensure their international legitimacy. However, the pace of action also matters and waiting for the perfect constellation comes with its own risks.

Workshop 2403_KTF-Nino_Workshop_eng

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Nino Jordan Energy Transitions and Societal Change

Mehr Teilhabe in der Energiewende: Wie Bürgerenergiegenossenschaften neue Zielgruppen erreichen

bsc — Thu, 14 Mar 2024 09:49:17 +0000

Increasing Participation in the Energy Transition: Making Community Energy Cooperatives More Diverse dha Thu, 03/14/2024 - 15:04

Damian Harrison

Democracy

jra

bsc

The term "community energy" can be applied to a variety of projects, some of which are more grassroots-focused ("grassroots movement"), while others are professionally managed, large-scale energy projects. In some towns, for example, it was the members of local environmental initiatives or heritage associations that founded energy cooperatives. Larger projects, on the other hand, are more commonly initiated by companies, banks, public institutions or businesses.

Increased support for community energy projects through feed-in tariffs and exemptions from tendering requirements could lead to a new boom in community energy in Germany. In addition to these measures, the roll-out of compensation schemes for affected communities is set to boost public acceptance of wind and solar projects. On the other hand, these new financial benefit-sharing measures lack the democratic dimension of grassroots projects. This raises the issue of how increased support for community energy is likely to affect efforts to strengthen "energy democracy".

Addressing socially disadvantaged groups

With this in mind, Jörg Radtke from the Research Center for Sustainability - Helmholtz Center Potsdam (RIFS) and Nino Bohn from the University of Siegen examined data gathered in an extensive survey of members from 85 community energy projects in Germany. The results show that community energy does not automatically strengthen energy democracy, says Jörg Radtke: “Political actors and institutions must take steps to ensure that everyone is addressed – including socially disadvantaged groups. In the case of community energy, we are specifically talking about younger, female and non-binary people and low-income households. Special consideration must also be given to population groups that are negatively affected by the transitions to new heating systems and electromobility."

The researchers categorized members according to various characteristics: Age, gender, income, education and personal attitudes – for example, whether membership is motivated by ecological values, financial interest or idea that “energy belongs in the hands of the citizens”. A demographic analysis revealed that men, older citizens and academically educated individuals are strongly overrepresented compared to other population groups.

"This is not a new finding in international research; similar findings have been reported everywhere. However, deeper analysis of the data revealed another, more serious issue: namely, the substantial differences in attitudes towards community energy between the various age, education and gender groups. As a consequence of their underrepresentation, the ideas and views of younger citizens and women are not adequately reflected in the development and design of community energy projects. This would not be an issue if their views were congruent with those of the dominant groups, but this is not the case: younger and female population groups have a different understanding of the concept of “citizen energy” than older men," says Radtke.

The results in detail:

1) Age is the most important factor influencing attitudes towards community energy projects. Older members placed a stronger emphasis on idealistic motives; they understand community energy as a democratic practice that supports the local community. Younger members have a more pragmatic attitude and feel less obliged to the local community.

2) Gender also plays a role: Although men and women have similar motivations and priorities, women place greater emphasis on the value of democratic governance, whereas the financial returns provided by projects are more important to men. Women tend to view community energy projects as social spaces of togetherness and living democratic community. Men, on the other hand, initially emphasise idealistic values, but ultimately prioritise the professional management of projects.

3) Income is another important factor, but is less influential than age and gender. Members with higher incomes are more interested in returns and are less idealistic.

4) The analysis also showed that members with academic backgrounds are more convinced of the benefits of regional value creation, while non-academics tend to emphasise the sense of community created by projects.

To make projects more inclusive and diverse, the authors recommend that community energy projects tailor outreach efforts to target individuals without academic qualifications and build community structures that are welcoming to people who are less informed about energy issues. In addition, projects should seek to offer new members more than just an opportunity for financial investment, without evoking the image of an elite club of altruists. New members should feel represented and be able to identify with the project. To date, citizens involved in community energy projects have rarely made use of their co-determination rights and have tended to give management boards a free rein. However, mentoring and diversity programmes could engage new target groups and promote inclusion.

Radtke, J., & Bohn, N. S. (2023). Mind the gap: Community member perceptions of shortcomings in diversity and inclusivity of local energy projects in Germany. Utilities Policy, 85: 101686. https://doi.org/10.1016/j.jup.2023.101686

Community energy projects offer the opportunity to help shape the energy transition. Shutterstock/gpointstudio

Germany plans to meet 80% of its electricity needs from renewable energy by 2030. Following the amendment of the Renewable Energy Sources Act in 2023, community energy cooperatives are set to become important drivers of a participatory energy transition. However, research shows that some population groups do not participate in or benefit equally from existing community energy projects. If community energy is to become a broad foundation of the energy transition, political actors must do more to improve diversity and gender equality within community energy projects and ensure that they become more responsive to members' preferences. Bürgerenergie

Energy Communities: Structural Policy & Participation (BE:ST) Regional Sustainability Transformations Energy Transitions and Societal Change 0

Europäer wollen dezentrale Stromerzeugung und niedrige Preise

bsc — Wed, 13 Mar 2024 04:07:46 +0000

Europeans Want Decentralized Power Generation and Low Prices bsc Wed, 03/13/2024 - 05:48

Dr. Bianca Schröder

Energy transition

fme

bsc

"We wanted to capture citizens' preferences as realistically as possible and chose a conjoint experiment as our research method, which involves weighing up the options. We refrained from asking people’s opinions on individual aspects such as technologies, location and costs, but rather confronted the respondents with different profile options and then wanted to know how they would decide in each case. This approach acknowledges that people may struggle to provide reliable answers to direct queries regarding a future system they are not familiar with," explains lead author Franziska Mey from the Research Institute For Sustainability – Helmholtz Centre Potsdam. 4,103 people were surveyed in four countries for the study.

Price and share of energy imports matter most

To identify citizen preferences for different types of renewable power futures, the researchers presented six system attributes known to affect project and policy acceptance for the energy transition: the dominant technology, land requirements, the level of electricity imports into the region, household electricity pricing, expansion of transmission grid capacity and the ownership of energy supply assets (i.e. whether assets are publicly or privately owned). The survey revealed that electricity pricing has by far the greatest impact.

"The electricity price attribute triggered the largest effects, with reactions to increasing prices being more than twice as strong as reactions to increasing shares of imports. Follow-up questions confirmed this preference and made it clear that our future electricity system needs to be both cost-efficient and socially equitable," says Franziska Mey. A low share of electricity imports ranked second: If citizens could decide, the future electricity system would be decentralized, based on a supply with a high share of rooftop solar energy, community-owned, and would not significantly rely on imports. When it came to the choice of technology – which ranked third as a priority – respondents preferred solar over wind power, with rooftop solar systems gaining the highest approval.

In Germany and Denmark, which are similarly advanced in the energy transition, very similar preferences were evident. In Poland and Portugal, the import share was rated as less important. Poland differed particularly in terms of price preferences. This is perhaps due to the comparatively low price of electricity in Poland (€0.15/kWh in 2021; Germany: €0.32/kWh in 2021).

Citizens' preferences should be accounted for in energy system models

The findings of this study also show that citizens are willing to make trade-offs. For example, by weighing less preferred aspects such as expanding wind power generation or a high share of imports against lower prices. This makes it possible to develop very different systems with a similar degree of utility.

The findings of this study can be used to improve energy models used to support decision-making on the electricity system of the future. “Today, energy models are often used that focus on technologies and economic aspects but which fail to sufficiently account for social aspects such as citizens' preferences. All too often, people's opinions are surveyed after scenarios have been created. Our research enables the direct integration of citizens' preferences into energy models and thus into the design of scenarios, thereby contributing to a fairer energy transition," says co-author Tim Tröndle (ETH Zurich). As the authors note, opinions change over time and surveys should ideally be conducted at regular intervals.

Franziska Mey, Johan Lilliestam, Ingo Wolf, Tim Tröndle, Visions for our future regional electricity system: Citizen preferences in four EU countries, iScience, 2024, 109269, ISSN 2589-0042,
https://doi.org/10.1016/j.isci.2024.109269.

Wind energy will be an important part of the future European electricity system. Shutterstock/Frame Stock Footage

Although a majority of Europeans support the energy transition in principle, local opposition to necessary infrastructure projects is on the rise. What could be done to smooth the future growth of renewables in Europe? In a new study, researchers have identified the preferences of citizens in Denmark, Germany, Poland and Portugal. In all four countries, citizens expressed a clear preference for low electricity prices, less dependence on electricity imports, and favour solar power. Crucially, the study revealed that respondents were also willing to compromise and were prepared to accept trade-offs if these enabled them to secure more preferred qualities in the energy system. Strompreis

Quo vadis, participation? How participation affects energy projects (BePart) Energy Transitions and Public Policy Energy Transitions and Societal Change 0

Krisen als Wendepunkte für die Dekarbonisierung

bsc — Fri, 02 Feb 2024 09:30:26 +0000

Crises as Critical Junctures for Decarbonisation dha Fri, 02/02/2024 - 11:40

Damian Harrison

Climate Policy

gbe

bsc

In a study published in "Climate Policy" RIFS researchers compare the effects of the Global Financial Crisis (from 2007) and the Covid-19 Crisis (2020/21) on greenhouse gas (GHG) emissions drivers and energy policy in Germany and Spain. In Germany, the financial crisis did not significantly impact the downward trend in GHG emissions, while in Spain the combined effects of the financial and euro crises (2008-2013) led to a drop in CO2 emissions of around 30 percent. The Covid-19 crisis, on the other hand, led to significant reductions in emissions in both countries (12% in Spain and 5.5% in Germany).

Strategic investments necessary to secure long-term change.

“Spain experienced a significant downturn in the construction sector during the Global Financial Crisis and a radical shift away from coal, which was increasingly priced out of the market. Spanish emissions fell sharply during and after the financial crisis as a consequence. In Germany, on the other hand, decarbonization trends continued during the financial crisis, with emissions continuing to fall more or less in line with previous trends," explains lead author Germán Bersalli (RIFS).

During the Covid-19 crisis, the governments of both countries were at least partially successful in aligning their policy responses with the twin goals of short-term economic recovery and long-term decarbonization. While both governments made strategic investments with a long-term perspective, such as infrastructure and technology-specific funding programmes that have a higher potential of delivering structural transformations, these fall short of the ambitions set in the Paris Agreement. This included capital investments in rail infrastructure and low-carbon technologies. Other measures, such as tax relief, did not have a lasting effect on emissions trends however.

Crises offer windows of opportunity for climate policy

In order for a crisis to act as a critical juncture or tipping point for climate policy, the authors conclude, support policies must already be in place and designed in such a way that they can withstand the fiscal pressure that arises in times of crisis. Bersalli offers two examples: "The Spanish feed-in tariff for renewable energies was too dependent on the government budget, which led to its scrapping under the austerity measures implemented during the financial crisis. In Germany, where support for renewables was sourced differently, investment in clean energy continued." The severity of the crisis and the political manoeuvring among actors also influenced emissions trends.

Crises do not automatically lead to structural change, but they do provide windows of opportunity for policy change in the pursuit of long-term climate goals.

Bersalli, G., Tröndle, T., Heckmann, L., & Lilliestam, J. (2024). Economic crises as critical junctures for policy and structural changes towards decarbonization – the cases of Spain and Germany. Climate policy.
https://doi.org/10.1080/14693062.2024.2301750

Crises offer windows of opportunity for more ambitious climate policy. Shutterstock/Lightspring

Economic crises can positively affect efforts to protect the climate. However, policymakers must ensure that energy and climate policies are resilient to the pressures that occur in times of crisis. During crises governments are advised to use green economic stimulus packages to support structural change consistent with the goal of deep decarbonisation. Krisen

Measuring progress in the energy transition from a systemic change perspective Energy Transitions and Public Policy Energy Transitions and Societal Change 0

Erstmals Index für Energiegerechtigkeit im globalen Süden entwickelt

slz — Thu, 01 Feb 2024 09:27:36 +0000

New Energy Justice Index Casts Spotlight on Energy Transition in the Global South slz Thu, 02/01/2024 - 10:36

Sabine Letz

Study

Maria Apergi

slz

Energy transition

The study "An energy justice index for the energy transition in the Global South”, prepared by lead author Maria Apergi and a team of researchers, allows for a standardized, quantitative comparison of the transition processes of different countries. A quantitative measure of the extent to which energy transitions in countries outside the Global North live up to the imperative of energy justice has been lacking to date. The index presented in the journal Renewable and Sustainable Energy Reviews addresses this deficit.

The concept of energy justice

Energy justice is a concept that engages with the fairness of energy systems, taking into account the social and development implications of energy technologies, policies, and projects. A large share of the relevant studies on energy justice published to date focussed on assessing the justice implications of low-carbon transitions and renewable energy. The newly developed index provides an analytical framework for identifying injustices in energy processes and putting forward solutions. The index was composed by assigning various components of energy justice to the three core tenets of Procedural Justice, Recognition Justice, and Distributional Justice.

Fig. 1. The three-core-tenets of energy justice and corresponding components. Source: authors

Study focuses on four countries

The study is based on empirical assessments of four country case studies for the years 2010–2019: Kenya, Jordan, Chile, and Malaysia. These countries were chosen in order to obtain a cross-section of the world regions pertinent to the Global South. In addition, all four countries have to some degree been pioneers in the energy transition in their respective regions.

The analysis highlights the limited availability of secondary data to measure some elements of energy justice and the difficulty of finding information on the processes followed in renewable energy project development, especially in the case of Malaysia. According to the authors, this underlines the need to improve the availability of relevant data.

Injustices in all countries

According to the authors, the results reveal the presence of distributional, procedural and recognition justice issues in the energy transitions of all four case study countries. The index results also show a notable variation of the country scores across the different components and tenets of energy justice.

Fig. 3. Energy justice index for Kenya, Malaysia, Jordan, and Chile: illustration of the different components by tenet in 2019. Source: authors’ calculations

The authors emphasise that the ranking of the countries covered does not always correspond to the level of their economic development. Malaysia and Chile, for example, scored higher in terms of distributional justice, while Kenya and Jordan scored higher in terms of procedural justice. Kenya also scored higher in terms of intergenerational justice and distribution of costs and benefits of renewable energy infrastructure.

Implications for climate policy

The researchers recommend that national governments and transnational players such as multilateral institutions and investors work towards the establishment of policy frameworks and strategies that systematically integrate justice concerns. This concerns regulations addressing due process in the design of energy systems as well as access, affordability, and other distributional considerations. Policies to advance recognition justice through rural electrification programmes and microfinancing, for example, are also indispensable in the protection of vulnerable groups, the authors note. Economic instruments that encourage investment in renewable energies should also include social criteria. In addition, policymakers could benefit from introducing monitoring, reporting and data verification procedures for energy justice related indicators, so as to improve data quality and availability.

The index presented in the study will contribute to the discussion on energy justice and facilitate assessments of energy justice over time and between countries. The results illustrate the multidimensionality and complexity of the energy justice concept, especially when it is applied to the energy transition. Underpinned by a wealth of data and made accessible online, the index can become a valuable tool for researchers and decisionmakers in their efforts to systematically study and improve energy justice – in the Global South and beyond.

Publication:
Maria Apergi, Laima Eicke, Andreas Goldthau, Mustafa Hashem, Sebastian Huneeus, Renato Lima de Oliveira, Maureen Otieno, Esther Schuch, Konstantin Veit: An energy justice index for the energy transition in the global South, Renewable and Sustainable Energy Reviews 192 (2024) 114238. https://doi.org/10.1016/j.rser.2023.114238

According to the team of authors, economic incentives that encourage investment in renewable energies should always include social criteria. Shutterstock/ Fit Ztudio

Energy Can the transition to a zero-carbon society in the Global South propel sustainable development? A team led by scientists from the Research Institute for Sustainability (RIFS) has developed the first quantitative approach to measure the extent to which energy transitions in the Global South incorporate elements of energy justice. 2401_Solar cell system and wind generators

Can the transition to a zero-carbon society in the Global South propel sustainable development? A team led by scientists from the Research Institute for Sustainability (RIFS) has developed the first quantitative approach to measure the extent to which energy transitions in the Global South incorporate elements of energy justice.

Politics and Governance of the Global Energy Transition Energy Transitions and Societal Change 0

How Decarbonization Will Transform the Geography of Industrial Production: New Evidence on the “Renewables Pull” Hypothesis

dha — Fri, 29 Dec 2023 14:30:47 +0000

How Decarbonization Will Transform the Geography of Industrial Production: New Evidence on the “Renewables Pull” Hypothesis dha Fri, 12/29/2023 - 15:30

Laima Eicke

Niklas Kramer

Prof. Dr. Rainer Quitzow

Laima Eicke

Niklas Kramer

Prof. Dr. Rainer Quitzow

Solar panels at a gas storage facility in the Netherlands. Shutterstock / Sander van der Werf

The availability of renewable energy is an important factor for future investment decisions in the chemical and steel industry. This is a key finding of our survey of 300 decision-makers from the chemical and steel industry. 92 per cent of the respondents anticipate that their company will relocate facilities as it seeks to decarbonize production. In addition to low-cost renewable energies, the respondents identify political support as a key factor in investment location decisions.

Renewable hydrogen is an enabler for the decarbonization of energy-intensive industries, such as the chemical and steel sectors. Together these sectors account for almost 15 percent of global greenhouse gas emissions, making their decarbonization an urgent priority to meet carbon neutrality targets by mid-century (IEA, 2013, 2020). The rapid ramp-up of the production of renewable hydrogen is a crucial challenge in this context and raises important questions with regard to the future geography of climate-friendly industrial production. Existing centers of industrial production are exploring options to secure access to sufficient amounts of renewable hydrogen to decarbonize existing production facilities. At the same time, regions with high levels of renewable potential are examining the possibility of utilizing this as an asset to attract new investment in climate-friendly industrial production.

While this debate has remained largely theoretical to date, a new survey conducted by researchers at the RIFS in Potsdam as part of the GET Hydrogen project provides a first set of empirical data on the phenomenon. In the survey, over 300 managers from the 50 largest chemical and steel companies worldwide described how they anticipate the decarbonization of industry will affect investment decisions in the two sectors by 2050. As industry experts and decision-makers, the respondents are not only uniquely positioned to offer insights into current trends, but their expectations will also influence investment decisions in their companies. In other words, the expectations captured in this survey will shape the industrial landscape on the ground.

Against this background, the survey’s findings provide a strong confirmation that the availability of renewable energy resources will be an important driver of future investment decisions. Ninety-two percent of respondents are convinced that the use of renewable hydrogen to decarbonize industrial production in the chemical and steel sectors will significantly alter the geographic distribution of production by 2050 within their own company, and 89 percent state that this will apply to the industry as a whole. Furthermore, the managers were asked to rank the most important factors that will influence their investment location decisions by 2050. Managers in both sectors identify renewable energy potential as the most important factor when it comes to investment location decisions. This is followed by supportive policies and access to subsidies; the role of trade barriers; and geopolitical factors (see Figure 1 for the ranking of factors). All of the above-mentioned factors are seen as more important than the current production sites, proximity to consumer markets, workforce skills and costs, or capital costs and favorable investment conditions (see Figure 1).

RIFS

Figure 1: Manager’s ranking of the five most important factors influencing investments in their sector by 2050.

These findings contribute new empirical evidence to the debate on how value creation might shift as a result of industrial decarbonization. We see three main implications that will be relevant for industrial stakeholders and policymakers alike:

Renewables pull effect: renewables will shape investment location decisions. The ‘renewables pull effect’ describes the potential role that the availability of low-cost renewable energy could have in attracting investment in climate-friendly industries that rely on renewable energy sources. Previous studies have highlighted that coastal areas with favorable wind conditions or regions with high solar irradiation, for example, could see significantly lower marginal costs for renewable energy, which might trigger industrial relocation to those regions to capitalize on this advantage (A. Eicke et al., 2022; Eicke & De Blasio, 2022; L. Eicke et al., 2022; Samadi et al., 2023). However, until now this has been a purely theoretical debate, and it remains an open question what role renewable energy plays in complex investment decisions and how they compare to other important factors, such as labor and capital costs, infrastructure, and network effects in industrial clusters (Verpoort et al., 2023). Our study highlights that managers rate renewable energy sources as more important than these other factors.

Strategic industrial policies can shift investments. Green industrial policy is experiencing a revival, with policy playing a catalyzing role for nascent green hydrogen markets (ISPI, 2023). Such policy frameworks are expected to strongly influence investment decisions in the steel and chemical sectors. This pull effect is demonstrated by increased investment in the US following the passage of the Inflation Reduction Act (Gruenig, 2023), which provides generous tax breaks for investments in various clean technologies. While the rules governing investments in hydrogen production are yet to be finalized, it is certain that they will significantly lower the costs for clean hydrogen producers in the US. This has led several large European companies such as Enel, Volkswagen, BMW, NEL, and Freyr to expand around 20 clean energy manufacturing plants in the US (Collins, 2023; Wessner & Khemka, 2023). The recent RIFS discussion paper series analyzes hydrogen strategies and related industrial policies across key countries worldwide, including China (Gong et al., 2023), the US, the EU (Zabanova, 2023) and several Member States as well as a number of African countries such as Morocco, Algeria (Weko et al., 2023) and Namibia (Cassidy & Quitzow, 2023). A nuanced understanding of country-level assets, including potential for renewable hydrogen production as well as know-how, infrastructure and other factors, will be important in defining specific and strategic industrial policies for different country types, such as potential hydrogen exporters with good resource conditions, industrialized import dependent countries or countries that hope to attract green industries within this transition (Eicke & De Blasio, 2022).

Geopolitical dynamics shape future industrial value chains and vice versa. Geopolitical considerations, ranking third in the survey, are another key factor shaping the geography of future industrial production. Geopolitics plays an important role in ensuring a secure supply of renewable hydrogen and is significantly influencing strategies for the development of hydrogen imports in the EU (Zabanova, 2023) and key EU Member States (Nunez & Quitzow, 2023). However, not only does geopolitics shape investment decisions along industrial value chains, changing value chain dynamics might also create new geopolitical tensions. Large economies such as China, the US and EU have launched costly subsidy schemes as they compete for green technology leadership. Smaller economies in the Global South will face stronger budget constraints when it comes to such policy interventions, raising significant just transition concerns (Eicke & De Blasio, 2022; Eicke & Goldthau, 2021). This is likely to intensify debates around the need for finance and technology transfer to support green industrial development in the Global South.

Decarbonizing Industry GET Hydrogen_ solar panels and gas storage

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lee nkr rqu Geopolitics of Energy and Industrial Transformation Energy Transitions and Societal Change

The Geopolitics and Decarbonization of Fertilizer Supply Chains

dha — Wed, 06 Dec 2023 14:01:18 +0000

The Geopolitics and Decarbonization of Fertilizer Supply Chains dha Wed, 12/06/2023 - 15:01

Tassilo Scalera

Fertilizers are a cornerstone of modern agriculture, silently underpinning the sustenance of 8 billion people daily. RIFS / Tassilo Scalera

In the vast arena of global commodities, fertilizers play a silent yet fundamental role. With a market value of $207 billion, they are a cornerstone of modern agriculture, silently underpinning the sustenance of 8 billion people daily. But this essential industry is at a crossroads, grappling with the enormous challenges of decarbonization, volatile geopolitics, and the imperative of food security. The RIFS research project "Geopolitics of the Energy Transformation: Implications of an International Hydrogen Economy" hosted a series of webinars on the "Geopolitics of Fertilizer Supply Chains" about the complexities of the fertilizer industry and the most urgent challenges facing this crucial sector. While the first webinar explored the repercussions of the Russo-Ukraine War on the global fertilizer industry, the second discussed the accelerating decarbonization of the fertilizer industry and its implications for the African continent. This blog post highlights the key takeaways from both instalments:

A Vulnerable Giant

Accounting for 2% of global energy consumption, the fertilizer industry is intrinsically linked to the energy sector. Laura Cross from the International Fertilizer Association highlighted this connection: "Fertilizers are really what meet in the middle between the energy and the food side of commodities”. Geopolitical shocks, such as the war in Ukraine, have exposed the fragility of global supply chains, triggering disruptions and a surge in energy prices, underscoring the need for a more resilient system.

Decarbonization: The Green Ammonia Promise

Synthetic fertilizer production is a heavyweight emitter, with greenhouse gas emissions rivaling those of major European nations, and the call for decarbonization resonates across the sector. On the demand side, reduction and efficient use are essential to mitigate the negative environmental impacts of fertilizer use. Meanwhile, green ammonia has emerged as a beacon of hope for the production side of the industry. Rupert Simons from Systemiq stated, “Green ammonia is overwhelmingly the fastest and typically also the most scalable method of decarbonizing the production of fertilizer.” Nonetheless, significant hurdles remain, such as cost barriers and the need for policy and investment interventions.

Morocco's Leap Towards Green Industrialization

Morocco and its state-owned fertilizer giant OCP are trying to overcome these challenges. As one of the world's largest ammonia importers, Morocco has devised a hydrogen strategy to reduce its dependency on energy imports and decarbonize one of its largest export industries. This case illustrates how securing supply chains can drive green industrialization. According to Prof. Dr. Margarita Balmaceda from Seton Hall University, Morocco's favorable geographical position could well make it a key player in a greener future for fertilizers.

The African Perspective

Morocco’s green industrial strategy will be followed closely across the African continent, which frequently grapples with severe food insecurity and fertilizer shortages despite its vast renewable energy potential. Charlotte Hebebrand from the International Food Policy Research Institute explains that Africa's small market share makes it particularly vulnerable to supply chain shocks. Its reliance on imports adds to this. However, Sebastian Nduva, Lead of AfricaFertilizer.Org observed that countries like Nigeria are increasingly rerouting their exports to intra-African destinations, promising more extensive regional trade and production networks. According to Dr. Kibrom Abay at the International Food Policy Research Institute (IFPRI), “A central aspect to ensure long-term food security and to withstand crisis is the diversification of fertilizer trade, production, and use.” Whether green industrialization is a suitable option for this remains an intriguing question for the future.

Forging a New Path

In conclusion, the challenges and opportunities in the fertilizer industry reflect a broader narrative in the global push for sustainability and resilience in the global economy. The 'Geopolitics of Fertilizer Supply Chains' webinars organized by RIFS researchers has cast light on this critical industry, highlighting the interplay of geopolitics, decarbonization, and food security. The evolving geopolitical implications of this complex domain demand a research agenda that addresses the interlinked factors reshaping the industry. Comprehending the intricacies of the path ahead is essential for efforts to forge a new path that safeguards nature while feeding the future.

Feeding the Future fertilizer_Scalera

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Tassilo Scalera Geopolitics of Energy and Industrial Transformation Energy Transitions and Societal Change

Schlüsselmoment für die Menschheit: Bedrohungen und Chancen durch Kipppunkte beschleunigen sich

bsc — Wed, 06 Dec 2023 03:44:10 +0000

Pivotal Moment for Humanity as Tipping Point Threats and Opportunities Accelerate dha Wed, 12/06/2023 - 04:55

Damian Harrison

Climate Policy

fme

bsc

The report, to which RIFS researchers contributed, states that current global governance is inadequate for the scale of the challenge and makes six key recommendations to change course fast, including coordinated action to trigger positive tipping points. A tipping point occurs when a small change sparks an often rapid and irreversible transformation, and the effects can be positive or negative. Based on an assessment of 26 negative Earth system tipping points, the report concludes that “business as usual” is no longer possible – with rapid changes to nature and societies already happening, and more coming. With global warming now on course to breach 1.5°C, at least five Earth system tipping points are likely to be triggered – including the collapse of major ice sheets and widespread mortality of warm-water coral reefs. As Earth system tipping points multiply, there is a risk of catastrophic, global-scale loss of capacity to grow staple crops. Without urgent action to halt the climate and ecological crisis, societies will be overwhelmed as the natural world comes apart.

Alternatively, emergency global action – accelerated by leaders meeting now at COP28 – can harness positive tipping points and steer us towards a thriving, sustainable future. The report lays out a blueprint for doing this, and makes the case that bold, coordinated policies could trigger positive tipping points across multiple sectors including energy, transport, and food. A cascade of positive tipping points would save millions of lives, billions of people from hardship, trillions of dollars in climate-related damage, and begin restoring the natural world upon which we all depend. The report was produced by an international team of more than 200 researchers, coordinated by the University of Exeter, in partnership with Bezos Earth Fund.

Dr Steve Smith, at the University of Exeter, said: “Just as with Earth system tipping points, positive tipping points can combine to reinforce and accelerate each other. For example, as we cross the tipping point that sees electric vehicles become the dominant form of road transport, battery technology continues to get better and cheaper. This could trigger another positive tipping point in the use of batteries for storing renewable energy, reinforcing another in the use of heat pumps in our homes, and so on. Many areas of society have the potential to be ‘tipped’ in this way, including politics, social norms and mindsets. Human history is full of examples of abrupt social and technological change. Learning from these examples, we must switch our focus from incremental change to transformative action – tipping the odds in our favour.”

Researchers from the RIFS contributed as co-authors insights from their case study research as part of the Tipping Plus project (EU Horizon 2020 Project GA no. 884565). Their research has focussed on social tipping points, specifically in transitions in coal- and carbon-intensive regions. These regions are under pressure due to the decline and closure of coal mines, power stations, and carbon-intensive industries as well as the associated socio-economic, political and cultural lock-in effects and dependencies. A number of regions in Germany have made considerable progress in transitioning away from coal, with the structural transformation of the Ruhr Region standing out in particular. The research team found that, historically, regional transformations have been driven by incremental changes. Political power was a core variable in this transformation and substantially slowed the pace of change in the Ruhr Region as political actors sought to mitigate social hardship and pursue a just transition.

“The transition in the Ruhr Region was very slow and took about 50 years – but we don’t have this time anymore! Positive tipping points are needed in many transition regions. We found that social tipping points are frequently linked to policy interventions, which can be a cause of policy stasis or change – triggering positive feedbacks either reinforcing self-sustaining cycles or triggering new opportunities accelerating dynamics of change”, says RIFS researcher Franziska Mey.

“Our research shows that it will take a strong political will and interventions to phase-out fossil fuels and dependencies on these industries. In addition, local social tipping points can be triggered in cooperation with communities to instigate changes and develop new visions and narratives for a sustainable future.”

The report includes six key recommendations:

Phase out fossil fuels and land-use emissions now, stopping them well before 2050.
Strengthen adaptation and “loss and damage” governance, recognising inequality between and within nations.
Include tipping points in the Global Stocktake (the world’s climate “inventory”) and Nationally Determined Contributions (each country’s efforts to tackle climate change)
Coordinate policy efforts to trigger positive tipping points.
Convene an urgent global summit on tipping points.
Deepen knowledge of tipping points. The research team supports calls for an IPCC Special Report on tipping points.

Kelly Levin, Chief of Science, Data and Systems Change for the Bezos Earth Fund, said: “Climate change is the defining issue of our time; it is essential that we advance the science on global tipping points to address the threats and opportunities ahead. The path we choose now will determine the future of humanity, and this extraordinary report sets out the Earth system tipping points we need to prevent, the governance we need to urgently implement, and critically the positive tipping points we need to trigger to transform our society and world. Solving the climate and nature crises will require major transitions across most multiple sectors – from shifting diets to restoring forests to phasing out the internal combustion engine. Given the required scale of action, we must target the most beneficial positive tipping points so that change takes off in a way that is unstoppable.”

Parts of the Global Tipping Points Report will be published in a special issue of the journal Earth System Dynamics.

COP28 events (all timings in local Dubai time):

Press Conference: Global Tipping Points Report 2023: Press Conference Room 2, Zone B6, Building 77, Press 2, Blue Zone, Expo City Dubai. Wednesday 6 December 10.00-10.30
Later is too late, UN Action Area event: Al Hur Stage, Action Arena 1, Global Climate Action Area, COP28 Blue Zone, Dubai. Wednesday 6 December, 17:00-18:30 https://rmi.org/event/later-is-too-late/  
Tipping points presentation as part of the World Climate Summit – The Investment COP2023: The Conrad, Dubai. Thursday 7 December 15:50 to 16:00 https://greenfutures.exeter.ac.uk/event/the-world-climate-summit-the-in…

The development of solar photovoltaic technology is one example of a positive tipping point dynamic. The introduction of the German Renewable Energy Act (EEG) – a modest national policy intervention – established a market for renewable power in Germany. This led to an expansion of renewable energy generation, triggering strong learning effects and falling costs that made renewable energies attractive in other countries. Renewables then entered a virtuous cycle of self-reinforcing market growth and global cost improvements.
Shutterstock/Love Silhouette

The world has reached a pivotal moment as threats from Earth system tipping points – and progress towards positive tipping points, accelerate – a new report shows. The Global Tipping Points Report, the most comprehensive assessment of tipping points ever conducted, says humanity is currently on a disastrous trajectory. The speed of fossil fuel phase out and growth of zero-carbon solutions will now determine the future of billions of people. The development of Solar PV technology is one example of a positive tipping point dynamic. The introduction of the German Renewable Energy Act (EEG) – a modest national policy intervention – formed a market for renewable power in Germany.

Identifying Positive Tipping Points towards Clean Energy Transitions in Carbon Intensive Regions (Tipping+) Energy Transitions and Public Policy Energy Transitions and Societal Change 0

The Political Economy of Green Hydrogen in Europe: Reinforcing Regional Inequalities?

dha — Mon, 25 Sep 2023 08:07:44 +0000

The Political Economy of Green Hydrogen in Europe: Reinforcing Regional Inequalities? dha Mon, 09/25/2023 - 10:07

Niklas Kramer

Prof. Dr. Rainer Quitzow

Niklas Kramer

Prof. Dr. Rainer Quitzow

Green hydrogen offers opportunities to develop technological leadership within an emerging net-zero economy. Shutterstock/Anton Zubchevsky

In February 2023, the EU presented the Green Deal Industrial Plan, in which it laid out its strategy for the green transition in industry and energy. Green hydrogen will be an essential cornerstone of this transition. The scale-up of renewable hydrogen production and its use in industry and transport has the potential to achieve decarbonization where direct electrification is not an option. Green hydrogen also offers opportunities to develop technological leadership and economic perspectives within a future net-zero economy.

Against this background, policy debates over the past years have focused on how the EU can compete with ambitious green industrial policies in China and, more recently, the US. With the Inflation Reduction Act, passed in August 2022, the Biden Administration is heavily subsidizing hydrogen production in the US. A key question is, therefore, how the EU can match these generous financial incentives and ensure that it attracts necessary investments in hydrogen-related value chains.

Less attention has been paid to how the EU’s hydrogen policy affects regional imbalances across EU Member States. In its Green Industrial Plan, the Commission argues that a “common response, anchored in EU policies and instruments, will be far more effective than the addition of 27 national approaches.” But does the EU deliver on its own call for an ambitious European industrial strategy for the hydrogen sector?

Firstly, the EU’s hydrogen policy relies on a relatively complex and fragmented approach. As part of the HYPAT project, RIFS Potsdam is developing a database of hydrogen policy in major economies that includes all policy instruments and targets enacted so far. Data collection in the EU reveals a very large number of different instruments, with initiatives within established programs predominating. For instance, the European Commission is providing limited funding for green hydrogen production and use as well as for hydrogen-related research and development (R&D). For this, it has extended the scope of existing funds such as the Modernization and Just Transition funds, which support the transition of those regions and Member States that have the lowest financial capacities. Moreover, governments are now also able to include green hydrogen projects in their Recovery and Resilience Plans, through which countries apply for money from NextGenerationEU, the EU’s crisis recovery package. No new sources of funding have been created. Instead, the EU has incorporated hydrogen-related spending in existing mechanisms. The largest single source of funding so far has been the Innovation Fund, which is financed by revenues from the European Emission Trading Scheme and provides grants for projects investing in green energy and industry. Here, hydrogen is identified as a key target.

In addition to these EU-level programs, the bloc has relaxed state aid rules to give Member States the possibility of subsidizing their national hydrogen industry. Usually, the EU prohibits this form of state intervention to guarantee a level playing field within its Common Market. However, in the face of the pandemic and the war in Ukraine, the EU has had to weaken its stance and now allows Member States to pass national recovery packages. As part of its efforts to foster the energy and industry transitions, the EU has extended exceptions for state aid to “sectors which are key for the transition to a net-zero economy.” The Temporary Crisis Framework, which was introduced to enable Member States to support their economies in the context of Russia’s war against Ukraine, has become the Temporary Crisis and Transition Framework and now allows governments to provide economic aid for the green transition.

In other words, the EU has chosen to rely on relaxing its rules on state aid, while providing only limited EU-level funding to promote the uptake of renewable hydrogen. This shifts the responsibility for making necessary investments in green hydrogen to other actors. Building electrolyzer capacities for the production of renewable hydrogen and achieving decarbonization in the steel or chemical industry will demand not only private but also public money, with national governments supplying most of the latter. Countries with large fiscal capacities such as Germany, the Netherlands, or Sweden will be at a considerable advantage here. Their national governments have significant resources to subsidize industries at home, unlike the governments of countries such as Romania, Croatia, and Greece. For instance, in July the Commission approved Germany’s request to support ThyssenKrupp’s efforts to accelerate the uptake of renewable hydrogen in its steel production by providing up to €2 billion in aid, while another €1 billion subsidy scheme for steel producer Salzgitter was approved in October last year . The Netherlands also got the green light for two hydrogen subsidy packages worth €1 billion in total. Most other Member States cannot afford such measures and rely on EU funds instead.

Existing EU-level funds, however, are also not accessed by all Member States equally. In most cases, governments themselves do not apply for grants. R&D projects are mainly carried out by public research institutions, while investment projects often rely on the initiative of private firms. Moreover, competitive funding programs like the Innovation Fund tend to favor large established companies over small start-ups. Although Innovation Fund calls include a section for small-scale projects, these receive only a small fraction of funding. The third call for small-scale projects provided 100 million in grants, while large-scale projects received 3.6 billion in total. Also, established enterprises have more resources, larger administrative capacities, and better networks. Our data shows that projects in Member States with large existing industrial sectors and an elaborated hydrogen strategy have been the largest beneficiaries of the Innovation Fund. To date, most funding for large-scale hydrogen-related projects has gone to Northern European countries: €320 million went to Sweden, €296 million to the Netherlands, €96 million to Germany, and €88 million to Finland. Countries like Spain, Poland, and Czechia have only received funding for small-scale projects, ranging from €3 to €8 million (see figure below).

Quitzow & Kramer / RIFS

Figure 1: Innovation Fund grants for hydrogen-related projects, 2020 – 2023 (last updated 23.09.23), by project location, in million Euros.

This is, of course, only a fragment of the full picture, as it is difficult to estimate the total amount of funding received by each Member State. Nevertheless, the trend is clear: The largest sums go to those countries that have large industries and high fiscal capacities. Poorer Member States are left with resources provided by cohesion programs such as the Modernization or Just Transition Fund. But these don’t provide dedicated money for green hydrogen.

Currently, there is a strong divergence between governments that have set ambitious targets for green hydrogen supply and demand and others that are at risk of falling behind. To our knowledge, only 15 out of 27 states have published a comprehensive hydrogen strategy. When it comes to implementation, the disparities are even more obvious. According to data from the International Energy Agency, 48 percent of green hydrogen projects within the EU that are currently in operation are based in Germany, another 11 percent in France, and the rest is spread across other Member States. Almost half have no hydrogen projects in operation at all.

These developments also contrast with the distribution of renewable energy potential across the EU, a key asset in the production of low-cost renewable hydrogen. As detailed in a recently published study conducted within the HYPAT project, many of the countries in Eastern and Southeastern Europe that exhibit significant potential for the production of surplus renewable electricity for green hydrogen production are not participating in the current market ramp-up. A renewable hydrogen economy could offer important incentives for firms in the steel and chemical industries to invest in Member States that offer the potential for cost-competitive renewable energy. Countries like Spain, Greece, or Croatia could not only sell renewable hydrogen and its derivatives within the EU but also develop downstream capacities for the production of green industrial products and build green industrial clusters. This could bring jobs and new perspectives to structurally disadvantaged regions, one of the key aims of European cohesion policy. With its Low-Income Communities Bonus Credit program, the Inflation Reduction Act pursues a similar aim. This additional tax credit provides up to 20 percent in additional financial incentives for renewable energy investments in low-income communities in the US.

The EU’s current strategy will, most likely, result in an important bias in favor of richer countries in the Union. Member States with large financial capacities will offer the financial incentives for their industries to stay, eroding opportunities for others to catch up and deepening regional inequalities. A common European approach to the green hydrogen ramp-up is needed to avoid this. In the first place, this would require more dedicated EU funds to be directed toward green hydrogen production and use where the potential is highest, rather than where governments have the biggest budgets. The EU Sovereignty Fund announced by the Commission at the end of last year could have been an important step in the right direction. In June, however, the Commission presented its plan for a Strategic Technologies for Europe Platform, which is supposed to replace the EU Sovereignty Fund. It would mostly reshuffle existing funds and provide only an extra €10 billion. This would not serve to reduce regional disparities.

The Commission also announced the establishment of a European Hydrogen Bank, which will conduct auctions for the deployment of green hydrogen production. This will allow hydrogen producers to bid for subsidies paid in the form of a fixed premium per kg of green hydrogen produced. The Commission has dedicated a budget of €800 million from the Innovation Fund for this purpose. To avoid a bias in favor of countries with strong fiscal capacities, the EU should ensure that these auctions are not combined with other subsidy schemes. An exception to this could be funding from the EU’s Cohesion Policy, which targets the EU’s structurally disadvantaged regions. The same also applies to the planned Carbon Contracts for Difference (CCfDs) to support hydrogen uptake in industry. The idea is to cover the difference between the conventional cost of production, including the CO2 price, and the cost of producing climate-friendly industrial products using hydrogen. The CCfDs would be awarded in a competitive bidding process, just like the production subsidies in the European Hydrogen Bank scheme. However, an official proposal by the Commission on the establishment of CCfDs is still pending. This raises concern that Member States themselves will move forward to implement CCfDs, as is the case in Germany. Then, the support for hydrogen uptake in industry would, again, be restricted to those countries with high fiscal capacities. Additional proposals, for addressing these challenges can be found in the recent HYPAT Working Paper mentioned above.

Finally, money alone won’t do the job. Lower-income Member States may lack innovative firms with the capacity to plan and carry out the projects they could finance. This calls for a more ambitious cohesion policy and for strong investments in infrastructure, education, and regional development, not only to counterbalance inequalities within Europe but also to realize the renewable hydrogen potential in those regions. The EU should acknowledge this as an opportunity to develop a more balanced and more efficient industrial policy for the hydrogen transition.

Gas storage facility with EU flag

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nkr rqu Geopolitics of Energy and Industrial Transformation Energy Transitions and Societal Change

Europa schöpft Wasserstoff-Potenziale derzeit nicht hinreichend aus

slz — Fri, 22 Sep 2023 06:00:00 +0000

Europe Is Not Making Sufficient Use of Its Hydrogen Potential slz Fri, 09/22/2023 - 08:00

Sabine Letz

Study

rqu

slz

Windy and sunny countries with high potential to produce low-cost renewable energy could largely meet Europe’s demand for hydrogen in the future and supply hydrogen to those European regions that do not have sufficient economic potentials compared to the demand expected in the future, such as Germany or the Netherlands, However, the investments made in those countries are currently low compared to Germany. Stronger cooperation at EU level could help to steer investments in the right direction.

The study compares two scenarios for different ranges of hydrogen use in Europe with the regional potentials for producing green hydrogen as cheaply as possible. In its analysis, the study focuses on EU policy measures and data on funding hydrogen production and applications in EU countries. Questions concerning infrastructure (storage and transport) were not part of the study.

Europe has the potential to supply itself with hydrogen in the future

The analysis shows that Europe could largely meet its future demand for hydrogen from domestic production at competitive prices. There is the opportunity, therefore, to make European industry less dependent on imports from third countries. According to the study, the technical potential to produce renewable electricity in Europe in 2050 (EU plus Norway, Switzerland and Great Britain) at costs of up to 40 euros per MWh is large enough to meet the entire demand for electricity, including the electricity needed to produce hydrogen, even assuming a widespread use of hydrogen.

Regions with high potential for solar and wind power would play a crucial role in hydrogen production. The biggest potentials for the production of renewable energy in 2050 are found in Norway (more than 1900 TWh), Spain (more than 1760 TWh) and France (more than 1700 TWh). These countries have more potential than they need to meet their own demand, even with a strong domestic use of hydrogen. Countries whose demand exceeds their own potential, i.e., those with a deficit, will have to import the hydrogen they need.

Germany will be dependent on hydrogen imports despite its ambitious targets for expanding electrolysis

France is currently planning 6.5 Gigawatts of electrolysis capacity by 2030, while Spain recently raised its target from 4 Gigawatts to 11 Gigawatts, putting it in first place in Europe at present. The German government’s National Hydrogen Strategy plans 10 Gigawatts of electrolysis capacity for hydrogen production by 2030. In spite of these targets, Germany will not be able to meet its demand on its own.
According to the study, Germany’s future demand is more than double its potential for expanding renewable energies. In 2050, Germany could be the deficit country with the largest absolute supply gap within the EU: Even with a limited range of applications, there would be a shortfall of more than 550 TWh of renewable energy, according to the researchers (see figure). Conclusion: In the long term, Germany will have to rely on imports of energy and hydrogen to supply its domestic industries. Other countries with larger supply gaps include the Netherlands, Belgium and the Czech Republic.

Technical potential for renewable electricity generation by European country in 2050. Graphik: HyPat

Investments in hydrogen are not optimally distributed

The European Union is not fully exploiting the potentials identified by the study to meet the targets for producing green hydrogen. The researchers point out that investments in hydrogen production and use are failing to include some of the most promising regions. Germany, France and Great Britain are currently investing the most in developing a hydrogen industry. Several projects are currently planned in Spain, but the investment volume at national level falls far short of the potential in the sunny country. The study also criticizes the fact that the EU’s current funding programs, such as the EU Innovation Fund, would only make this imbalance worse.

The study makes a number of proposals that could help to better distribute investments in Europe and provide more targeted support for the market ramp-up of the hydrogen industry in countries with high potential.

Recommendation 1: Scale up EU-level funding for hydrogen projects related to both production and use (for example, green production methods for chemical products based on hydrogen instead of fossil energy sources). Cumulating this funding with national state aid must be avoided, as has already been done in the EU’s hydrogen auctions, which will be starting soon.
Recommendation 2: Enable cross-border auctions for green hydrogen. The “auctions as a service” (AaaS) model, which the EU is promoting as an additional option in its hydrogen auctions, should be expanded to include bilateral, cross-border auctions of Member States in order to support the most competitive projects and hydrogen trading within Europe.
Recommendation 3: Set national expansion targets for renewable electricity in all EU states. This would help the EU to ensure that expanding renewable energies to produce hydrogen does not slow down the decarbonization of national energy systems while additionally supporting particularly ambitious regions, for example through simplified reporting obligations when marketing renewable hydrogen.
Recommendation 4: Develop bilateral or regional hydrogen partnerships between countries with a surplus and those with a deficit. EU renewable targets allow a flexible split between producing and using countries when accounting for hydrogen and its derivatives. Bilateral or regional partnerships could form the basis for collaboration between surplus and deficit countries.
Recommendation 5: Focus hydrogen use in deficit countries on sectors that are the hardest to electrify. In certain sectors of energy-intensive industries, aviation and shipping, future hydrogen use is considered a no-regret option. In order to keep the supply gaps in deficit countries and thus the overall demand for hydrogen as small as possible, both national and EU-wide support for market ramp-up could be limited to these sectors.

The researchers criticize the high complexity of current EU regulations and support programs, which is as a major problem. In comparison to this, the U.S. government’s tax-based funding programs through the U.S. Inflation Reduction Act are much more attractive to investors. The study’s author, Prof. Rainer Quitzow from RIFS Potsdam, comments: “The EU cannot replicate the tax concessions of the U.S. government. With the new auction concept for allocating funding, the EU has created an easy-to-use tool. But this must now be backed by substantial funding. Bilateral cooperation between Member States could provide further impetus so that the potentials in Member States that are less financially strong can still be leveraged.”

Eva Schmid, who heads the HyPat project at the German Energy Agency (dena), assesses the situation: “10 Gigawatts of electrolysis capacity are planned to be installed in Germany by 2030. That is a huge undertaking and there is no time to be lost. In addition to production and transport, this also involves setting up the necessary value chains. Furthermore, up to 70 percent of Germany’s hydrogen demand will have to be imported. Both challenges mean collaboration with international and especially European partners is becoming increasingly important. This HyPat study provides important new insights to this.”

Study author Jakob Wachsmuth from Fraunhofer ISI draws the conclusion: “Hydrogen will be a scarce commodity in the coming years. Greater cooperation between countries will be needed to meet the hydrogen demand of European industry. Especially in large industrial nations like Germany, this could become a problem if the political and financial course for intra-European trade is not charted early enough. In terms of using hydrogen, setting clear priorities for specific applications could help to make efficient use of the existing, limited potentials.”

Background: The HyPat project
The HyPat project is funded by the German Federal Ministry of Education and Research (BMBF) with technical and administrative support provided by the Project Management Jülich. Alongside Fraunhofer ISI as the project lead, eight other partners are involved in the project: Fraunhofer IEG, Fraunhofer ISE, Ruhr Universität Bochum, Energy Systems Analysis Associates – ESA² GmbH, German Institute of Development and Sustainability IDOS, RIFS Potsdam, GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit and the German Energy Agency (dena).

Publication

Rainer Quitzow, Andrea Triki, Jakob Wachsmuth, Joshua Fragoso Garcia, Niklas Kramer, Benjamin Lux, Almudena Nunez: HYPAT Discussion Paper 05/2023: Mobilizing Europe's Full Hydrogen Potential: Entry-Points for Action by the EU and its Member States.

Green hydrogen is considered a promising energy resource. Shutterstock/petrmalinak

Energy To reach climate neutrality, Europe’s industry will need large quantities of carbon-neutral hydrogen in the future. Many European countries, including Germany, are planning large investments to develop and ramp up the hydrogen industry needed for this. Within the HyPat research project, a new study by RIFS Potsdam, Fraunhofer ISI and the German Energy Agency (dena) makes five recommendations to the EU and the Member States. Grüner Wasserstoff

To reach climate neutrality, Europe’s industry will need large quantities of carbon-neutral hydrogen in the future. Many European countries, including Germany, are planning large investments to develop and ramp up the hydrogen industry needed for this. Within the HyPat research project, a new study by RIFS Potsdam, Fraunhofer ISI and the German Energy Agency (dena) makes five recommendations to the EU and the Member States and reveals a significant mismatch between the ratio of current investments and the potentials of individual European regions for low-cost hydrogen production. Furthermore, despite all the efforts made to produce hydrogen domestically, Germany will be an importer of hydrogen in the future.

Geopolitics of Energy and Industrial Transformation Energy Transitions and Public Policy Energy Transitions and Societal Change The Sustainable Development Goals (SDGs) 0