The Netherlands needs to increase demand certainty for hydrogen through obligations and industrial decarbonisation strategies, according to a new International Energy Agency (IEA) report.
The European country must also secure investments in new electricity generation, reduce grid congestion and manage the transition away from natural gas, which has long been a cornerstone of its energy system, the IEA adds.
The Netherlands has set an ambitious target of increasing capacity from 5 GW today to 35 GW by 2035 and 70 GW by 2050, along with a 3-4 GW hydrogen electrolysis capacity target by 2030, and the government has allocated up to €7.5bn in support.
“This requires a stable framework for long-term offshore wind development in co-ordination with the build-out of hydrogen production, which will consume much of the electricity generated,” the report states.
While demand for low-emission hydrogen is potentially large, both domestically and for export – Dutch industry already consumes 1.5 million tonnes of hydrogen annually, and it could produce 1,500 kT of green hydrogen by 2030 – investors want more certainty and final investment decisions for electrolyser projects are lagging, according to the IEA.
Of 93 projects under consideration for hydrogen production by 2030, 15 are operational and only 11 more have reached FID.
Around two-thirds of hydrogen is consumed in refineries and as feedstock in ammonia production.
The 2035 decarbonisation target for the electricity sector means that existing natural gas power plant infrastructure must be ‘transformed or decommissioned’ within the next decade.
For chemicals, refineries and basic metals operations, the main options for reducing emissions are carbon capture and storage (CCS) or replacing fossil fuels with low-carbon hydrogen. The CCS option for hydrogen production will be a useful complement to hydrogen from electrolysis ‘but should not replace it’.
The most advanced projects aim to collect CO2 from industries in the Port of Rotterdam and store it in depleted North Sea fields, while fertiliser plant Yara is looking to ship carbon to Norway and store it within the Northern Lights project. Other key projects include Holland Hydrogen 1 and NorthH2. Direct Air Capture projects are also coming to the fore.
The Delta Rhine Corridor aims to build CO2, hydrogen and ammonia networks connecting German cities with Chemelot and Rotterdam, and possibly Antwerp. Germany’s hydrogen strategy also provides large export opportunities for the Netherlands.
In a positive move, a subsidy for hydrogen in mobility has been introduced, but the use of biofuels also needs to increase to meet 2030 targets, the report states.
