By Elana Knopp, Senior Content Writer, Edison Energy
In this second of a two-part series, François Paquet, Impact Director at the Renewable Hydrogen Coalition (RHC), discusses new market opportunities for renewable hydrogen across the most carbon-emitting sectors, including steel production. Paquet, who drives RHC’s advocacy outreach, has years of experience in EU Public Affairs, industry interest representation and EU association management in Brussels. His areas of expertise include energy, climate change, resource efficiency, and circular economies.
New market opportunities
Renewable hydrogen, which is produced from renewable electricity sources like wind and solar, has seen renewed and rapidly growing attention both in Europe and globally, primarily due to its versatile uses and potential applications across industry, transport, and power, according to the EU Commission.
According to the Renewable Hydrogen Coalition (RHC), renewable hydrogen will be key to reaching carbon-neutrality in Europe, particularly in energy-intensive industries and hard to decarbonize sectors like aviation and shipping.
Beyond decarbonization, renewable hydrogen offers major potential for utilization across the most carbon-emitting manufacturing sectors like steel production, which currently accounts for 25 percent of Europe’s industrial CO2 emissions.
“Renewable hydrogen is creating new market opportunities for sustainable products,” Paquet said. “A lot lies on the shoulders of renewable hydrogen to deeply decarbonize new sectors and enter new markets that are yet to be created. Steel produced with renewable hydrogen is not just steel; it is green steel. Such green steel can replace more polluting conventional steel in an incredible number of products such as cars, while goods or infrastructure with an environmental footprint immensely reduced.”
According to Paquet, these new market opportunities represent a “reset” of the economy, particularly as consumers increasingly seek out more sustainable products and are ready to pay a higher price for them.
“Looking at various studies, products like cars would increase in cost by less than one percent if produced with renewable hydrogen, so it’s not a huge increase to have a sustainably manufactured product,” he said. “The potential not only lies in decarbonization, but also in a complete reset of industrial structures and new opportunities for green products, bringing long-term competitiveness for early adopters.”
Last year, Swedish manufacturer Hybrit made headlines with the world’s first customer delivery of green steel – produced without using coal – to automaker Volvo as a trial run before full commercial production in 2026. In October, Volvo announced that it had produced a prototype of what will be the world’s first vehicles made of fossil-free green steel.
Major offshore wind developers have also taken notice of green hydrogen’s vast potential. Last year, wind giant Orsted announced plans for its SeaH2Land project, a 2 GW offshore wind farm combined with a 1 GW onshore electrolyzer. The project aims to help decarbonize industry in the Dutch-Flemish North Sea Port cluster–one of the largest fossil hydrogen consumption centers in Europe.
“In Europe, 96 percent of the hydrogen consumed comes from fossil natural gas, without carbon capture and storage,” Paquet said. “This hydrogen is highly polluting and is not a solution for the future. We are trying in Europe to create this shift from 96 percent fossil-based towards 96 percent renewable-based in as little time as possible. And what we’ve seen is an unprecedented interest in renewable hydrogen just over the past months.”
The business case for going green
Increased interest in renewable hydrogen has been driven by several factors, including the falling costs of renewables like wind and solar and lower pricing around electrolyzer technologies.
In November, the European Union announced that the cost of producing renewable hydrogen with renewable energy is slated to drop further, while the capacity to produce it in Europe will likely surpass the current 40 GW target of installed electrolyzer capacity by 2030.
The rise of natural gas prices coupled with a drop in renewable hydrogen prices—now lower than fossil-based hydrogen—has significantly shifted the business case for renewable hydrogen versus other alternatives.
Last year, Norway-based company and RHC supporter Nel Hydrogen announced that it was on track to produce hydrogen from renewables like solar and wind for a record USD $1.50 per kilogram by 2025. This would be a game-changer for renewable hydrogen, making it competitive with hydrogen produced from fossil fuels and triggering a rapid increase in deployment.
Europe now boasts a pipeline of 750 renewable hydrogen across the entire value chain including hydrogen production, transmission, and distribution, as well as applications in industry, transport, and energy systems, with 200 of these projects announced in 2021 alone.
“We attribute this growth to several factors, including more stringent climate policies,” Paquet said. “I think companies and corporates really grasp the urgency and role they play, so this is a change in paradigm that is drawing investments in the right direction. It’s also been driven by the rising cost of carbon, which in Europe reached unprecedented levels over the last five months. And then there is the price of renewables going down while the price of fossil fuels is going up.”
The push for renewable hydrogen is not limited to Europe. In February, the Biden administration announced the launch of major clean hydrogen initiatives included in the bipartisan infrastructure law.
“I think Europe has to watch what others are doing and make sure that it doesn’t forget to be clear in its priorities,” Paquet said. “In Europe, we are very good at creating technologies in labs, but we are not the best at bringing these innovations to mass production. We should make sure we don’t repeat mistakes like with the PV sector that is now massively manufactured in China, for example.”
Europe has taken major steps towards establishing itself as the global leader in mass renewable hydrogen production. This includes the EU Commission’s proposed binding targets to replace 50 percent of Europe’s grey hydrogen– produced from fossil fuels– with renewable hydrogen in hydrogen-consuming industries and raise the share of derived e-fuels to 2.6 percent in transport modes such as aviation and shipping by 2030.
“These binding targets in priority sectors are a great first step to creating the demand for renewable hydrogen and the market that we need,” Paquet said, adding that “these targets now need to go with dedicated support instruments to allow these sectors make the switch with no delay and at least cost”. “When you are an investor and looking at the most promising solution without the potential risk of having an uncompetitive investment in the coming years, I think it’s clear that renewable hydrogen is the safest investment to be made now to make sure that you have the competitive advantage over the next decades. The world has come to realize that climate change is happening–we cannot wait for another 20 years for technologies to get to the market the way it did for the solar and wind industry. We need to move from words and pledges to very concrete actions, and we need to do it now.”