While the energy industry already has a number of answers, potential solutions in other areas must first be tested for their economic viability. In addition to questions related to energy security and mobility (particularly in the areas of heavy goods transport, shipping, or air traffic), it is also important to find answers to the emissions burdens in the construction industry, agriculture, and industry. Emission-free, or at least low-emission hydrogen (read more about hydrogen and its associated potential in the article by Wolfgang Anzengruber), can play a central role in this.

The potential for sustainably produced hydrogen to contribute to emissions reduction in industry makes hydrogen a strategic raw material. Only if industry has access to zero-carbon/low-carbon hydrogen at reasonable costs can industrial sites be secured in a climate-friendly economic environment in the long term. The production of sustainable hydrogen is caught between cost reduction, emission avoidance, and reducing dependence on a small number of producing nations, but also the currently largely ignored avoidance of interference with biodiversity.

Hydrogen strategies in a country comparison

Strategic relevance requires a forward-looking, cross-company and cross-regional industrial policy positioning. Depending on their strengths and weaknesses, the various industrialized nations have developed hydrogen strategies and determined whether they want to position themselves as import or export nations, as well as as nations with a focus on green and/or blue or turquoise hydrogen.

Germany

• long-term focus on green hydrogen
• More than 1 billion euros in financial support for decarbonization (focus on steel production, chemicals, transport and heating industries)
• additional funding for scaling the technology (7 billion euros)
• Partnerships with producer nations (North Africa, Arabian Peninsula but also the Baltic States, the North Sea and Southern Europe)

France

• 1 billion euros in financial support for decarbonization
• Construction of electrolysers taking violet hydrogen into account
• Focus in decarbonization through hydrogen on mobility (heavy traffic), refineries and chemicals
• Focus on domestic production

Netherlands

• Focus on mobility and decarbonization of industry through hydrogen and the heating industry
• Use of capacities for green and blue hydrogen
• Strengthening import capacities and positioning as an energy hub for the import of hydrogen
• Strengthening the infrastructure with the possibility of using existing infrastructure
• Creation of a certification system

Spain

• Focus on decarbonization (especially temperature-intensive production processes), heavy traffic, shipping, rail and air traffic, but also use of hydrogen as an energy storage medium
• Creation of an EU-wide market for hydrogen with a uniform certification system

Great Britain

• Focus on decarbonization of industry and the heating industry
• Use of capacities for green and blue hydrogen
• Establishment of a GBP 240mln Net Zero Hydrogen Fund

Norway

• Evaluation of the conversion of shipping to hydrogen
• Use of green and blue hydrogen capacities (taking into account CO2 storage capacities in the North Sea)
• Incentivizing decarbonization through hydrogen by gradually increasing the CO2 tax (+5 percent annually until 2025)

Austria's role in the hydrogen economy

 
What role can Austria play in a hydrogen economy? This is especially true given that the (theoretically) available renewable generation capacities in Austria are primarily needed to cover general energy demand.
 
Austria lies at the intersection of the gas connection between East and West and North and South. With the Central European Gas Hub AG ("CEGH"), Austria has the leading hub for gas trading in Central and Eastern Europe. CEGH is owned by OMV (65 percent), the Vienna Stock Exchange (20 percent), and Eustream (15 percent).

Assuming that approximately 50 kilograms of hydrogen are required to produce 1 ton of steel, and that the production of one kilogram of hydrogen requires 50-55 kWh of energy, this translates to approximately 100 terawatt hours of renewable electricity demand for the 42 megatons of steel currently produced in Germany, or a 20 percent increase in additional generation capacity (Briefing Paper for the European Parliament – ​​The potential of hydrogen for decarbonizing steel production). Applying this logic to the 1,6 million tons produced by Voest Stahl Donawitz alone, Austria's renewable generation would have to be increased by almost 9 percent. This would only cover a small portion of domestic hydrogen demand (Note: for the 2020/21 financial year, the Voestalpine Group reported approximately 6,9 million tons of crude steel at the Group level).
 
Furthermore, the need to import hydrogen also arises from the higher cost structure of producing green hydrogen. Even taking into account the cost reductions expected by the end of this decade due to future developments, it can be assumed that hydrogen produced using offshore wind power or inexpensive solar energy in sunny European countries could be up to a quarter cheaper than green hydrogen produced using conventional electricity. Since transport costs are only marginal given the expected volumes, the potential cost savings from sunny non-European countries are even greater.
 
However, this does not take into account any potential impact on biodiversity. Since sunny countries generally have to meet their water needs through desalination, hydrogen production would lead to a further intensification of water abstraction and desalination. This will have to be taken into account in any sustainable economic evaluation and could shift it in favor of European countries with offshore or water-rich countries with attractive photovoltaic potential.

In order to create appropriate import solutions at economically viable costs, Austria needs to be successfully positioned and be open to the use of existing infrastructure.

Jürgen Prumetz

This dependence on imported solutions for climate-friendly hydrogen requires the creation of an attractive framework that enables the Austrian gas industry to position itself for the future transport and trade of hydrogen. However, the expansion of the CEGH trading platform, which has already been successfully introduced in the gas trade, for a future hydrogen economy also requires a certain openness to the various lower-emission hydrogen production methods.
 
Trading can only be successful if a platform can offer sufficient liquidity. Whether this can be achieved in its early stages solely with green hydrogen is doubtful. The production costs of green hydrogen are estimated to be around four times those of gray hydrogen and around 2,4 to 2,7 times those of blue hydrogen. Even taking into account the expected cost reduction by the end of the decade, the costs of producing green hydrogen using offshore facilities are estimated to be approximately 2,4 to 2,7 times those of blue hydrogen. Given these considerations and in light of the capacity constraints and biodiversity issues mentioned above, it must be assumed that the decarbonization of the industry will also require access to blue and turquoise hydrogen in the medium term. This would have a positive impact on liquidity, especially in the early stages of a hydrogen trading platform. As the use of green hydrogen progresses, green and other climate-friendly or CO2-free hydrogen could be traded separately.
 
Creating appropriate import solutions at economically viable costs requires Austria's successful positioning and openness to the use of existing infrastructure. If the possibility of blending gas flows with hydrogen is ruled out, there is a risk of losing the competition in the creation of a future hydrogen infrastructure. The initiative presented by the transmission system operators of Ukraine, Slovakia, the Czech Republic, and Germany at the end of September regarding the construction of a Central European gas infrastructure bypassing Austria represents such a risk. Due to the close connection between trade and infrastructure, this would also jeopardize the long-term position of the CEGH. This would expose Austria to the risk of losing its strategically advantageous position in the Central and Eastern European gas trade and of being unable to succeed in the hydrogen trade. Any required hydrogen could then only be acquired via further detours and thus at potentially higher transport costs.
 
Given the strategic importance of hydrogen, the creation of an appropriate framework is therefore necessary. Existing resources must be considered, as must the involvement of representatives from the production, logistics, and consumption sectors, as well as partnerships with academics and regulatory representatives. Nationwide, rather than regional, solutions create the necessary prerequisites for scalability.
 
 

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Jürgen Prumetz oversees Verbund and OMV at ÖBAG and has extensive cross-sector transaction and financing experience. Prior to joining ÖBAG, Jürgen Prumetz worked for almost 14 years at Erste Group Bank AG, including more than two years as Head of the Corporate Finance Team in Poland. Most recently, he wrote an analysis on the topic Recycling.