Policy Insight | Is renewable hydrogen a silver bullet for decarbonisation? | CEPS

Clean hydrogen will offer decarbonisation solutions for sectors where direct electrification would be either technologically impossible or too costly, though future demand should not be overestimated. Hydrogen will most likely be used in hard-to-decarbonise industrial processes, some segments of the transport sector, as well as for long-term energy storage. For hydrogen to contribute to decarbonisation, it needs to be produced with minimal greenhouse gas emissions. Therefore, hydrogen obtained through electrolysis using renewable electricity will represent the priority for the EU. However, this does come with a set of trade-offs, all of which are explored at length in this report. A key challenge will be the interaction with the already-strained electricity market. New renewable energy installations are facing deployment obstacles, therefore the decarbonisation of the electricity mix and the deployment of renewable hydrogen need to be developed together to avoid tensions. This report also focuses on two other potential hydrogen sources. Nuclear hydrogen could create more opportunities for producing low-carbon hydrogen from electricity, whilst imports could cover potential supply deficits and provide further access to inexpensive renewable hydrogen for domestic consumption. Robust criteria will be needed for certifying the renewable nature of hydrogen, based on clear temporal and geographical connection requirements between the electrolyser and the renewable installations. However, the separate certification of low-carbon hydrogen produced from electricity that meets similar emissions savings requirements should also be established, without labelling it as renewable.

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