The transition to a climate-neutral industry in Europe is essential to combat the climate crisis. At the center of this industrial transformation is the production of steel, cement and chemicals. A new study by Fraunhofer ISI for the EU Commission has examined the impacts of the industry transition on the European energy system in different scenarios. The study shows that Europe’s industry in 2050 will need substantial amounts of green hydrogen and a corresponding transport infrastructure, even with strong electrification of process heat. In the interview, the study’s author, Dr. Tobias Fleiter, explains the results and reveals where the green hydrogen for our industry could come from in the future.
What could Europe’s energy system look like in 2050?
Tobias Fleiter: The good news is that our analysis shows that a greenhouse gas reduction of at least 95 percent is possible for European industry by 2050. But a lot has to happen for this transformation to succeed. For example, we need to implement the circular economy, achieve higher energy and material efficiencies, and rapidly introduce and disseminate climate-neutral production processes in many sectors, in some cases even before 2030.
The European energy system 2050 will be characterized by a much higher demand for electricity and hydrogen. In industry alone, the electricity demand could rise from just over 1,000 TWh in 2019 to between 1,500 and 1,850 TWh in 2050, depending on the scenario. The demand for hydrogen could be between 1,350 and 1,800 TWh in 2050, depending on the degree of electrification. The demand for hydrogen could be significantly lower if the basic chemicals and steel industries relocate individual energy-intensive production steps outside of Europe. However, total energy demand, which includes many fossil energy sources today, will be lower in 2050 than it is at present because of increasing energy efficiency.
We use the energy system model METIS in the study to examine a CO2-neutral European energy system. Our focus is on the role of CO2-neutral industrial production and its impacts on the hydrogen and electricity systems. The modeling is based on a cost optimization of the system. The future demand for electricity and hydrogen is given exogenously, and the model then calculates the system with minimal overall costs, including the expansion and use of renewable energies, transport capacities between countries, and storage systems.
What influence will the transformation of industry have on the energy system?
Tobias Fleiter: CO2-neutral industrial production will require large amounts of CO2-neutral hydrogen and electricity, especially to provide process heat, replace the natural gas used today, and supply the chemicals industry. A few intermediate chemical industry products (and steel production) are responsible for a large proportion of the hydrogen needed. At the same time, it is very uncertain how the chemical industry will set up CO2-neutral value chains globally in the future. This is why we calculated a scenario variant in which we assume that intermediate products like ammonia, methanol, and ethylene, as well as sponge iron, are imported to Europe. This would lower the demand for hydrogen by about 900 TWh.
Which countries could produce green hydrogen for Europe’s industry at the lowest cost?
Tobias Fleiter: The results paint a relatively clear picture: The key prerequisites for the CO2-neutral system are large amounts of photovoltaic and wind power deployed at the best locations in Europe. Our model sees the biggest green hydrogen production capacity in France, Spain, the United Kingdom, and Norway. If the hydrogen scenario occurs, Finland could also become one of the major hydrogen exporters to meet the demand in Europe. If renewable energies are not located cost-optimally in European countries, importing hydrogen from North Africa or the MENA region would be economical to meet Europe’s demand. Green hydrogen is produced using electrolysis, mainly in regions with high renewable energy potential and low energy demand. The hydrogen is then transported to the demand centers via a pipeline network. These demand centers include, for example, Germany and the Netherlands, which have high population density and a basic chemicals industry.
According to the study, under this cost-optimal perspective, there would be no significant production of green hydrogen in Germany because other countries have better production conditions. Should Germany give up on producing its own green hydrogen?
Tobias Fleiter: When interpreting the study, it is important to remember that the scenarios are based on a purely techno-economically optimized development of the CO2-neutral energy system in Europe, in other words, without considering any political and societal restrictions to its implementation. In this respect, this study is in no way a prediction and cannot be a direct template for policymaking. But it can be used as input to develop strategies. And the key message for the EU and its member states is that integrating the European system (through the trading of electricity and hydrogen) has cost advantages over national solutions.
It should not come as a surprise to anyone that it is more cost-efficient to produce green hydrogen at locations with high potential for wind and solar energy. Nevertheless, policymakers have to weigh up how much Germany, for example, wants to and should be dependent on other (European) countries. If, in addition, there are expectations that the expansion of renewables in many countries will not proceed as quickly as calculated, Germany should, of course, still try to produce its own green hydrogen. Systemic resilience is, therefore, the key buzzword here and should not be neglected. In the end, the good news is that, in theory, Europe fulfills the prerequisites to supply itself cost-efficiently with green hydrogen independently of third countries.
Link to the study: “The impact of industry transition on a CO2-neutral European energy system.”
Read the original article about Green hydrogen in Europe’s industry on The Fraunhofer Institute for Systems and Innovation Research ISI.
TOBIAS FLEITER, COORDINATOR OF BUSINESS UNIT DEMAND ANALYSES AND PROJECTIONS
Tobias Fleiter has been a research associate at Fraunhofer ISI in the Competence Center for Energy Technologies and Energy Systems since 2007. Since 2012, he has been leading the field of demand analysis and projections. He completed his studies in industrial engineering with a specialization in “Energy and Environmental Management” at the University of Flensburg. He obtained his Ph.D. from the University of Utrecht 2012 on energy efficiency in companies.
Tobias Fleiter has provided consultancy services to various stakeholders in different consulting projects, including the EU Commission, ministries, authorities, and companies from both domestic and international sectors. He has extensive experience in coordinating larger research and consulting projects in an international context. His research focuses on modeling and analyzing the energy system from the energy demand perspective, particularly in the transformation of the industrial and heating sectors.
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