The Race for Green Hydrogen: Europe, US, and China

As the world accelerates its efforts to decarbonize, the race for green hydrogen is becoming more critical. This clean energy source has the potential to revolutionize industries such as steel, cement, and shipping, as well as reduce global carbon emissions significantly. The competition between Europe, the United States, and China is intensifying, with each region vying for dominance in green hydrogen production and technology. This article examines the current state of play in the green hydrogen race, comparing the strategies and progress of Europe, the US, and China.

The Role of Electrolysers in Green Hydrogen Production

A key component in green hydrogen production is the electrolyser, a device that extracts hydrogen from water without producing any planet-warming emissions. Electrolysers come in various forms, each with its own advantages and drawbacks. Chinese companies primarily produce alkaline electrolysers at low costs, but they require more electricity per kilogram of hydrogen compared to other technologies.

On the other hand, US and European firms tend to focus on solid oxide and proton-exchange membrane (PEM) electrolysers that cost more initially but use less energy. This is a major incentive for areas where electricity is expensive. As the race for green hydrogen heats up, the competition between these different electrolyser technologies will be a crucial factor in determining the dominant players in the market.

Europe's Green Hydrogen Ambitions and Challenges

Europe has set ambitious goals for green hydrogen production, with the European Union (EU) proposing a target of creating 10 million tons of green hydrogen by 2030. However, the EU has not yet established what practices are deemed "green," resulting in corporate investment in hydrogen production lagging and making it difficult for companies to commit.

Some within the European Union are concerned that it hasn't done enough to solidify its plans and fear that the electrolyser business sector will be lost to countries outside Europe if an effective plan isn't implemented soon. Analysts anticipate that China will soon catch up with US and European technology as they have already begun producing electrolysers for various industries, such as polysilicon production for solar cells, on a monumental scale.

International Cooperation and Partnerships

Europe recognizes the importance of international cooperation and partnerships in the hydrogen industry. For example, Germany has initiated an exchange focused on the energy transition with China and is confident that it will be intensified. An energy partnership with China has already existed since 2007, in which cooperation on hydrogen technologies plays a role and will play an even greater role in the future.

Europe's hydrogen industry also stresses the crucial role of international cooperation. Hydrogen Europe's CEO, Jorgo Chatzimarkakis, has stated that their vision is for hydrogen to develop into a globally traded commodity. He further explained that hydrogen won't ever become a real commodity if it's just an internal EU thing, emphasizing the need for international cooperation, especially in sectors such as shipping and aviation.

United States' Green Hydrogen Strategy

The United States is also investing heavily in green hydrogen production and technology. President Joe Biden's Inflation Reduction Act showers money on domestic hydrogen production and geared-up subsidies will help ensure local suppliers remain afloat. This is a clear indication that the US is determined not to let China control the new energy boom.

US companies like Plug Power Inc. are developing unique green hydrogen production plants across the country and localizing their design. The US incentive system is also more convenient than the EU's, spurring companies like Topsoe A/S in Denmark to invest in a 500-megawatt factory for producing solid-oxide electrolysers. These advanced machines work at higher temperatures and provide greater efficiency than other types of electrolysers.

China's Green Hydrogen Production and Expansion

China is rapidly advancing its green hydrogen production capabilities, with over 40% of all electrolysers made today coming from China according to BloombergNEF. Chinese electrolysers are less efficient than those made in the US and Europe, but their lower cost provides them with a competitive advantage in the market.

Chinese manufacturers are embracing PEM electrolysers and perfecting their alkaline products in preparation to penetrate foreign markets. Longi Green Energy Technology Co., the world's biggest solar equipment maker, has built 1.5 gigawatts of electrolyser manufacturing capacity within China and is aiming for foreign sales to exceed half of their total within three years.

Lessons from the Solar Market

The solar market of a decade ago serves as a cautionary tale for Western clean tech veterans. China's low prices dominated the market, wiping out Western competitors just as worldwide demand for panels began to soar. There is a growing concern that the same scenario may unfold in the green hydrogen market, with Chinese electrolyser manufacturers undercutting their Western counterparts.

The Need for Government Support and Subsidies

Government subsidies that have fostered growth in China's solar industry have not been allocated to the up-and-coming hydrogen sector. Despite these obstacles, hydrogen producers remain optimistic that with their new state plan in place, they may soon get the economic backing they need.

Similarly, in the US and Europe, government support and subsidies will play a crucial role in ensuring that their renewable technology industries remain competitive and can withstand the pressure of Chinese low-priced manufacturing.

The Potential for Cooperation and Collaboration

Despite the commercial rivalry, green hydrogen offers opportunities for cooperation between EU countries and China. As previously mentioned, Germany has already initiated an exchange focused on the energy transition with China. Furthermore, Europe's hydrogen industry emphasizes the importance of international cooperation for hydrogen to develop into a globally traded commodity.

With the Russian invasion of Ukraine, it has become glaringly obvious that Europe needs to be able to produce its own fuel sources. Hydrogen has been put at the forefront of Europe's ambitions for self-sustainability. Therefore, there is a shared interest in advancing green hydrogen technologies and production capabilities among Europe, the US, and China.

The Importance of International Standards and Regulations

For green hydrogen to become a globally traded commodity, international standards and regulations will be crucial. The EU has not yet established what practices are deemed "green," which has had a negative impact on corporate investment in hydrogen production. Establishing clear criteria for green hydrogen production and promoting international collaboration on regulations will be essential for the hydrogen market's growth and success.

Conclusion

The race for green hydrogen is heating up, with Europe, the US, and China all vying for dominance in this burgeoning industry. Each region has its own strengths and weaknesses, but the ultimate winner will be determined by a combination of factors, including technological advancements, government support, and international cooperation.

While competition is fierce, there is also great potential for collaboration and cooperation in the green hydrogen industry. Establishing international standards and regulations, as well as fostering partnerships, will be crucial for the global success of green hydrogen as a clean energy source. As the world continues to decarbonize, the race for green hydrogen will play a pivotal role in shaping our clean energy future.