Policy Instruments Are the Key to Reaching Emissions Targets with the Help of Renewable Hydrogen

As the European Commission looks to achieve the EU’s target of reducing greenhouse gas emissions by 55% by 2030 through the Fit for 55 package, a set of new sub-targets have been proposed for renewable fuels of non-biological origin (RFNBO), which include renewable hydrogen and its derivatives.

In an article for Energy Post, Guidehouse experts Corinna Klessmann, Pia Kerres, and Matthias Schimmel reference their study in collaboration with Agora Energiewende to discuss the policy instruments needed to reach the most recent hydrogen targets set forth by the Renewable Energy Directive (RED) II.

“The new targets imply a substantial increase in demand for RFNBOs,” said Klessmann, a director in Guidehouse's, Energy, Sustainability, and Infrastructure segment. “Industry and long-haul air transport will likely be the main customers for hydrogen, but the fact that additional future hydrogen demand may arise from other sectors such as power generation needs to be considered as well.”

According to the article, renewable hydrogen is seen as one of the promising solutions for decarbonization, but many industries are still not on board because of missing infrastructure and price. Guidehouse’s study shows that renewable hydrogen costs up to 3 times more than fossil-based hydrogen alternatives.

“The big challenge is to develop infrastructure and cut the cost of renewable hydrogen production,” Klessmann said. "With the right policy mix, the region can meet its Fit for 55 goals for renewable hydrogen."