The development of a green hydrogen economy could lead to new dependencies on imports and the associated supply risks. At the same time, this shift away from fossil fuels could lead to new value creation potential in the EU. Green hydrogen and the necessary precursors such as renewably generated electricity and wind turbines, for example, can in principle be produced worldwide.
In the analysis “Geoeconomics of Green Hydrogen: Assessing the EU’s current position in resilience and export potential”, an EWI team looks at the current import dependencies and export potential of European companies along the value chain – from hydrogen and power generation plants to raw materials for plant manufacturing – using data research and four indicators. This provides orientation for the policy measures presented in the analysis to strengthen European competitiveness in a green hydrogen economy. The analysis was funded by the Hydrogen Promotion Initiative of the Gesellschaft zur Förderung des Energiewirtschaftlichen Instituts an der Universität zu Köln e.V..
In an established and comprehensive hydrogen market, the EU would have to import a significant proportion of consumption. Diversifying the countries of origin would be one approach to addressing supply risks. At the same time, domestic production of green hydrogen could be established. There are currently different import dependencies here. The global market for electrolysers is still small and self-sufficiency is possible; in a growing market, the proportion of imports is likely to increase significantly. The situation is similar for wind turbines, which are needed to produce green hydrogen. The current import share for these is low. The possibility of diversifying imports depends largely on global demand.
Relevant import dependencies also exist for modules used to generate electricity from solar energy. The low production capacities in the EU can be attributed to high relative production costs. The analysis assesses the possibility of diversification in the near future as low. Raw materials for the production of electrolysers, wind turbines and PV modules are heavily dependent on imports, partly because the individual materials under consideration are considered to be complementary to one another. Diversification can hardly succeed here, as global raw material deposits are often concentrated locally. “The transition to a green hydrogen economy is likely to lead to new import dependencies for the EU,” says Dr. Philip Schnaars, co-author of the analysis. “The opportunity to diversify future imports exists, particularly for electrolysers and green hydrogen. However, the costs of this are currently still unclear.”
The export potential of European companies and thus the opportunity to create new opportunities for value creation in the EU depends largely on the relative production costs on a global market. The indicators used show that European companies are at a disadvantage at all stages of the value chain. Demand in a successful hydrogen market ramp-up is also likely to exceed current production capacities in the EU. “High production costs and high domestic demand could limit the export potential of European companies along the upstream value chain in a green hydrogen market,” says Schnaars. Differences in quality between products from different manufacturers could maintain or create further niches for European manufacturers.
The EU has implemented a variety of policy instruments to reduce and diversify import dependencies. At the same time, the competitiveness of European companies is to be strengthened. Key components include the establishment of trade partnerships, particularly for hydrogen and raw materials. In addition, subsidies are provided for the establishment and expansion of production capacities.
