How can Europe help build China’s Hydrogen economy?

On 18th November Energy Post, in partnership with the EU-China Energy Cooperation Platform, hosted a series of online workshops under the theme “China: Carbon Neutral by 2060”. The purpose was to understand the Chinese landscape and uncover opportunities for Europe. Here, the moderator for our “Hydrogen” panel, Gökçe Mete, summarises the workshop which included an expert panel discussion and questions from the audience. Taking part were Tudor Constantinescu (Principle Advisor to the Director General, DG ENER), Joachim von Scheele (Global Director Commercialisation, Linde PLC) and Mickael Naouri (Corporate Affairs Director, Air Liquide). The workshop covered blue and green hydrogen, ambitious production targets, investment, innovation, hard-to-abate sectors, heavy transport, hydrogen fuel cells, regulations, fair competition and more. The challenges of giving birth to the hydrogen economy are tremendous, but that has not stopped it entering the decarbonisation plans of both the EU and China.

The hydrogen economy is gaining a lot of attention. It has been cited as a holy grail for 100% renewables, for the power sector and the hard-to-abate sectors.  At the China: Carbon Neutral by 2060 workshop, hydrogen was also cited as part of the solution to address both the Covid19 and the climate crisis.

The Covid19 pandemic impacted global energy investments, with a 17% decline reported by the IEA in Europe in electricity grids investments (with wind and efficiency holding up better than distributed solar PV and oil and gas) and a sharp reduction in private sector investment in 2020-2021.

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All graphics taken from the opening presentation of Tudor Constantinescu (Principle Advisor to the Director General, DG ENER) during the China: Carbon Neutral by 2060 workshop

As a result of the pandemic Green House Gas (GHG) emissions are expected to decline by 8% in 2020 globally compared to 2019, almost to the levels of ten years ago. However, if appropriate actions are not taken to maintain these levels, emissions may rebound to exceed previous levels.

The pandemic offers a once in a generation opportunity to build back better and avoid lock in effects while doing so.

Avoiding carbon lock-in

The “carbon lock-in” problem occurs when investments and policies made in the past or present to build out high-carbon energy systems inhibits the growth of the new green economy.

The European Green Deal announced by EU president Ursula von der Leyen called for the EU to utilise its collective ability, and to transform its economy and society to put it on a more sustainable path. This ambitious and forward looking agenda aims to accelerate massive public investment and increased efforts to direct private capital towards climate and environmental action, while avoiding lock-in into unsustainable practices in the next decade.

The energy sector accounts for 75% of the GHG emissions in the EU. The EU strategies for energy system integration and hydrogen therefore aim to link various parts of the energy system to pave the way towards a more efficient and interconnected energy sector.


Here, hydrogen is envisaged to play a considerable role, in particular in decarbonisation of the natural gas system and of hard to abate sectors. Fossil free hydrogen, however, requires considerable amount of renewable energy and a ramp up of electrolysers.

Also, hydrogen, produced with renewable energy will compete with direct electrification, which should provide almost 50% of the EU’s energy system by 2050, compared to 23% today. Currently, there is not enough renewable energy infrastructure, because they are not being built due to curtailing. Curtailed electricity is inefficient.

Expansion of renewables

While IEA estimates for the expansion of renewables is encouraging for 2021, due to the commissioning of delayed projects and continued growth in markets where the pre-pandemic programmes were robust enough, in certain countries the expiration of certain incentives and support schemes may see a small decline in 2021. In China, for example, certain schemes for onshore wind and solar PV subsidies expire at the end of 2021. The evolution of China’s next policy framework for the period 2021-25 therefore is extremely important.

Globally, the post-pandemic green recovery outlook is in danger of being unsatisfactory. Energy Policy Tracker, which tracks public money committed to energy in recovery packages, reports that 29 major economies pledged $251 billion to fossil fuels, 53% of all public money committed to energy-intensive sectors, compared with 35% committed to clean energy.

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