Background and request for advice
Interest in hydrogen is increasing, both in the Netherlands and internationally. The Council for the Environment and Infrastructure (Rli) therefore addresses the following questions in this advisory report:
- What is the significance of climate-neutral hydrogen as a feedstock, fuel and/or energy carrier in a sustainable Dutch economy?
- How realistic are the forecasts with regard to hydrogen and are the blueprints for the future consistent with them?
- What is the strategic importance of hydrogen for the Netherlands?
- What does the strategic importance of hydrogen mean for the efforts of the Dutch government and others?
Hydrogen is becoming essential to ensure the supply of energy and feedstocks
The Council's conclusion in this advisory report is that hydrogen is a vital link in the future climate-neutral supply of energy and feedstocks. The contribution of oil, natural gas and coal will be greatly reduced over the long term. Many more processes will be electrically powered. Wind and solar power in particular will be used as sustainable energy sources. But electricity cannot meet all energy needs. The cost of transporting electricity are higher while its transport capacities are lower. Moreover, there are periods when the wind and the sun simply do not deliver enough energy in Northwest Europe. Clean climate-neutral hydrogen offers a solution to these problems.
The hydrogen market will not materialise automatically
However, the hydrogen market that is needed for this purpose will not materialise automatically; it will require the active commitment of government to creating demand for hydrogen. The government's role is to invest in the infrastructure, but also, for example, to garner public support. Its active commitment is needed not only to make the Dutch economy more sustainable, but also because it contributes to the Netherlands' earning potential. In this advisory report, the main message is further elaborated on the basis of the questions posed in the report. The Council's ambition in this advisory report is to adopt a holistic approach to the subject, to provide an overview and to sketch out a realistic picture.
Recommendations to government
1. Invest in the establishment of a mains transport network for hydrogen with import and export facilities in the short term
An essential precondition for the creation of a hydrogen market is the presence of storage facilities, import and export facilities and a transport network linking these facilities to the industrial clusters.
2. Emphasise safety and public support more explicitly in policy
The safety of new hydrogen technologies must be carefully and comprehensively investigated in advance. The government must make a budget available for this. In addition, the government should actively focus on garnering public support for hydrogen.
3. Stimulate demand for climate-neutral hydrogen
The government must ensure that climate-neutral hydrogen can compete with non-renewable alternatives. Only then will there be a demand for hydrogen that is consistent with the blueprint for the future of various sectors of the Dutch economy.
The best way to create this demand is by pricing carbon emissions. The consequence is that the price level of fossil fuels will rise, making climate-neutral alternatives more competitive. In the case of climate-neutral hydrogen, a carbon price of well over a hundred euros per tonne would currently be needed for it to be able to compete. It is important that carbon emissions pricing is done at EU level. The Netherlands should push for a further tightening of the European carbon emissions trading system, so that the price industry has to pay for its carbon emissions will rise further. The Netherlands should also make a case in Brussels for an import tax on products from outside the EU based on their carbon footprint.
At national level, government can make hydrogen competitive through specific measures in each sector. In aviation, shipping and the built environment, a physical or administrative blending obligation for suppliers of fossil fuels will be the most effective way of achieving this. Tax incentives or a requirement to use climate-neutral hydrogen will work better in other sectors. In the longer term, it is expected that the rising ETS price combined with the falling cost of climate-neutral hydrogen will provide sufficient momentum to make climate-neutral hydrogen competitive.
4. Do not exclude any forms of hydrogen production when developing a hydrogen market
The production of "blue" hydrogen, made from natural gas and industrial waste gases with carbon capture and storage, will be an important transition technology for the next fifteen to twenty years and could contribute to security of supply after that time. Imports of hydrogen will also play a role, but complete dependence on hydrogen produced outside the EU is undesirable because of the importance of maintaining security of supply.
5. Provide financial support for production and other technologies that promote the creation of a Dutch market for climate-neutral hydrogen technology
Various hydrogen technologies could contribute to the creation of a Dutch climate-neutral hydrogen market: combined carbon capture and storage, combined power generation and hydrogen production from wind at sea, hydrogen storage in salt caverns and the production of hydrogen-based fuels. The government should provide financial support to ensure the ongoing development of these types of technology. This could be done by, for example, drawing up "contracts for difference", under which manufacturers of products made using these relatively expensive technologies are refunded the price difference by the government.
6. Actively pursue cooperation in the EU and with neighbouring countries and develop a stronger international orientation
When it comes to securing a meaningful position in the hydrogen market, the Netherlands has the advantage over other countries that it is already an international energy hub. To capitalise on this advantage and help make Europe more sustainable, active efforts must be made to promote European cooperation. In particular, cooperation with Germany and Belgium, North Sea countries and Northwest Europe should be further intensified to ensure a coordinated roll-out of the hydrogen market and a high degree of security of supply.
On 25 January 2021, the Council presented its advisory report to the Dutch government's Director-General of Climate and Energy, Sandor Gaastra, at a public online presentation.
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