European Commission takes risk on hydrogen pipelines

The European Commission is placing a big bet on hydrogen pipelines and infrastructure, potentially fast-tracking pipeline projects that could obtain favourable financing and subsidies. Critics warn the Commission’s decision places too much faith in a costly technology that faces a high degree of risk of not panning out, saddling Europe with more gas infrastructure, stranded assets, and a delayed energy transition.

On November 30th, the European Commission unveiled a list of 235 cross-border energy projects that will receive priority designation — so-called “Projects of Common Interest” and “Projects of Mutual Interest.” The objective is to build out interconnections across European countries to improve energy security and affordability. The listed projects could receive fast-track permitting and favourable financing.

Included on the list are around 100 hydrogen pipeline and electrolyser projects, representing around 80 billion euros in investment.

“Energy infrastructure is not only the backbone of our Energy Union — it is the foundation of a strong and prosperous Europe,” Dan Jørgensen, European Commissioner for Energy and Housing, said in a statement. “The projects we have chosen to support will play a vital role in delivering cleaner, cheaper and more secure energy to our citizens and businesses.”

But hydrogen carries a great deal of financial and technical risk, and the market for green hydrogen remains immature. The EU’s support for hydrogen infrastructure may also require heavy demand-side subsidies to establish a green hydrogen market.

“The economics of the EU’s hydrogen infrastructure plans simply don’t stack up,” said George Verberg, the former CEO of Dutch network operator Gasunie and also the former president of both Eurogas and the International Gas Union.

“With low market readiness, investment in long distance hydrogen pipelines is premature. It will further raise the costs of the necessary energy transition in such a way that there is a high risk the citizen or taxpayer will lose their trust in the energy transition policy of the EU.”

Green hydrogen is expensive, difficult to move over long distances, and is in short supply. It is still an early-stage technology with low market penetration.

There are technical problems as well. Hydrogen leaks from pipelines much more easily than natural gas. Pipelines carrying hydrogen are also prone to embrittlement, which can lead to cracks and ruptures, raising serious safety concerns. Specialised pipelines are needed, but those are more costly. 

Given these significant shortcomings, experts say the Commission is making a mistake.

“Clean hydrogen is eye-wateringly expensive and will remain in short global supply for the foreseeable future. It must be reserved for high-priority uses without other decarbonisation options,” said David Cebon, co-founder of the Hydrogen Science Coalition and a professor of mechanical engineering at the University of Cambridge. “This means that hydrogen will be produced and used locally in industrial clusters, with minimal long-distance pipeline infrastructure.”

EU support for the large-scale buildout of “hydrogen-ready” pipelines may simply result in an increased transmission of fossil gas. Or, the projects chosen may ultimately carry fossil-based hydrogen, bolstering the use of fossil gas — either way, it would lock in the use of fossil fuels and delay the transition to low-carbon energy. 

“Though the pipelines on this list may be built to transport hydrogen, it is most likely that they will never transport anything but natural gas,” Paul Martin, a chemical engineer and a co-founder of the Hydrogen Science Coalition, said.

“The EU simply doesn’t need a sprawling hydrogen pipeline network. Throwing money at haphazard hydrogen infrastructure will turn out to be a very expensive mistake,” Cebon said.

(Writing by Nick Cunningham; editing by Sophie Davies)