Article Published in www.vs.lv
There are several companies in the country that consume large amounts of energy, and certain conditions exist for “green” production and consumption.
The EU has reached an agreement on the procedures for investing in hydrogen infrastructure.
Talk of a hydrogen economy has been circulating for quite some time, especially in the context of climate and green energy policies. Hydrogen has the potential to become precisely the energy carrier that, in the long term, could at least partially replace imported natural gas in Europe while also being “green.” Admittedly, looking ahead to the coming decades, the necessary investments are quite astronomical. Nevertheless, in the European Union (EU), several key prerequisites have been established in literally the last couple of weeks, making it possible to consider the potential emergence and development of a hydrogen economy in the future.
The Four Unknowns
First, it is worth noting the agreement reached by EU policymakers in late November regarding the procedures for investing in hydrogen infrastructure. This would help lay a solid foundation for the hydrogen economy. Thanks to the emerging clarity regarding how the investment mechanism will work (who will be able to invest and in what manner), interested companies can begin to build the hydrogen economy.
Admittedly, there are still some questions that will need to be answered in the near future. The first concerns property rights—specifically, who will be allowed to own hydrogen infrastructure. The second, no less important aspect, concerns how to regulate relations with the biogas market and its objectives. There is also a lack of clarity regarding potential joint EU procurement of hydrogen.
Second, Germany—the country hardest hit in terms of energy—is working with Italy on a truly astronomical project: the creation of the so-called Southern Corridor for gas and hydrogen. To guarantee Germany a stable energy supply and greater security, the plan calls for the construction of a new pipeline across the Alps from Bavaria to Tunisia. The goal of this initiative is to ensure the import of millions of metric tons of hydrogen into Germany by 2030. The implementation of such a project is another important prerequisite for us to begin discussing the first stable outlines of a hydrogen economy across the entire European Union.
The third key prerequisite for stimulating the emergence of a hydrogen economy in Europe is another EU decision adopted in recent weeks. Specifically, a political agreement has been reached on a partial ban on the import of renewable energy technologies from countries outside the EU, targeting China in particular. This means that imports of technology from China—including in the fields of hydrogen, solar panels, and other renewable energy sources—could become significantly more restricted.
Fourth, another significant development should be noted. Recently, the “green” hydrogen coalition—which includes interested businesses from EU member states—has appealed to the finance ministers of the 27 European Union member states, calling on them to support the adoption of hydrogen technology. The authors of the letter emphasize that the first and crucial wave of European “green” hydrogen projects is close to becoming a reality. However, they note that many projects will only move forward if strong support from member states is guaranteed, which is why swift and bold action is needed right now.
It can therefore be concluded that European businesses have signaled their readiness and have begun actively planning their investments.
Run or Not to Run?
In Estonia and Finland, the possibilities for developing a hydrogen economy have been explored over the past couple of years. Estonians are active in the field of innovation and skillfully utilize marketing tools. They are discussing the creation of a potential “hydrogen valley.” This is a sound and commendable approach from the perspective of attracting investment and national marketing. Other EU countries are also conducting preliminary studies and planning efforts to launch large-scale investments in the development of a hydrogen economy. Consequently, even in smaller EU member states, including Latvia, experts and the business community are asking whether we are keeping pace with innovation leaders and considering the development of a hydrogen economy.
So—should we run with the others or not? Latvia could limit itself to merely facilitating transit between Lithuania and Estonia, and vice versa. However, certain conditions exist for hydrogen production and consumption in our country as well—if not tomorrow, then in the medium term. There are several companies in Latvia that consume large amounts of energy.
Over the past couple of years, such companies have been under significant stress due to volatile energy prices. One need only look at the actions of Germany’s industrial leaders: these companies are frantically seeking every new opportunity that would help them both reduce their energy costs and use more and more green energy. Hydrogen, especially “green” hydrogen, could eventually offer certain advantages, namely the use of zero-emission energy in manufacturing. Currently, the price of such energy is very high, but we can hope that as the technology advances, the price will drop significantly.
Of course, this won’t happen overnight. However, companies are conducting research into alternative energy carriers that could be used to meet their energy needs, as well as to decarbonize their operations in a cost-effective manner and at a suitable pace, without losing their competitive edge.
In the new version of the National Energy and Climate Plan, the Latvian government has mentioned hydrogen, thereby signaling to businesses that, in principle, a hydrogen economy could also be developed in Latvia. Much depends on both the sentiment within the business community and the interest of companies that would like to produce and/or consume hydrogen. Favorable regulations and access to EU subsidies will also play a major role. In any case, the question—to go for it or not—has become a pressing one in Latvia as well, and the answer should likely be a resounding “yes.”