This is an extract from a recent briefing by Clifford Chance titled “Focus on hydrogen: Belgium announces hydrogen vision and strategy as part of energy transition plan”
The Belgian Hydrogen Vision and Strategy (the “Belgian Strategy”) was approved by the Council of Ministers on 29 October 2021 in the broader context of government-focused ambitions to promote the development of a hydrogen market in Belgium, as well as its 2030/2050 energy and climate objectives. The Belgian Strategy assumes that the current demand in Belgium for both hydrogen and its derivatives will reach between 125 and 175 TWh/year by 2050 (including bunkering fuels). The Federal Government considers its Strategy as an essential policy tool to improve the security of supply and the cost-effectiveness of the energy system. It is based on four pillars, and it builds further on the ambitions of the European Commission to reduce greenhouse gas emissions by at least 55% by 2030 and to achieve climate neutrality by 2050.
Renewable or low-carbon hydrogen?
The Belgian Strategy addresses both “renewable” and “low-carbon” hydrogen, akin to the distinction made by the European Commission in its Hydrogen Strategy, without relying on the typical taxonomy of “green” or “blue” hydrogen.
The dichotomy between renewable and low-carbon hydrogen is perhaps more pronounced in the hydrogen strategies of other EU member states, and notably of Germany and France. While France commits itself to invest in renewable and low-carbon hydrogen with the emphasis on renewable hydrogen in particular, the German strategy takes the view that “only hydrogen produced on the basis of renewable energies is sustainable in the long term”.
The Belgian Strategy seems closer to the German model of only using low carbon hydrogen on a “transitional basis”. For example, it emphasises that to achieve climate neutrality, the large-scale deployment of hydrogen in the long term only makes sense if it is produced from renewable energy sources. In fact, the Belgian Strategy contemplates that only renewable hydrogen will form a part of Belgium’s energy mix by 2050. As a transitional measure, however, it takes the view that low-carbon hydrogen will still play a role in accelerating the reduction of CO2 emissions and kick-starting the market. As such, the Belgian Strategy aims at a phased approach to achieve the lowest possible carbon emissions, whilst at the same time establishing a level playing field for hydrogen in the current economic context. One of the low-carbon alternatives that could be explored during this transition phase is hydrogen produced by pyrolysis from fossil methane.
The Federal Government identifies three main sectors in which renewable hydrogen can help achieve carbon neutrality by 2050:
Industry: Hydrogen could serve as a sustainable alternative to fossil fuels in the production of steel, cement, ceramics or glass – but also in the recycling of plastics, etc.
Transport: The transport sector today still relies heavily on fossil fuels, making electrification a top priority. The benefits of renewable molecules in terms of recharging time, autonomy or weight and volume for energy storage in the vehicle should nevertheless justify the energy losses and higher costs of renewable molecules such as hydrogen. Potential uses of hydrogen in the transport sector include cars and trains, the road freight transport, inland navigation shipping as well as the aviation sector.
Flexibility of the power grid: Hydrogen and its derivatives have physical properties that make them suitable for storage of large amounts of energy in the medium to long term. Hydrogen can be used as a complement to batteries to store excess production from intermittent renewable energy sources (e.g. wind or solar) and make such energy available at times of shortage. Although the Belgian Strategy acknowledges that Belgium has relatively limited potential for underground hydrogen storage, the authorities wish to develop at least some storage capacity for security of supply purposes.
The Belgian’s Strategy’s four pillars
The Belgian Strategy intends to position Belgium as (1) an import and transit hub in Europe for clean hydrogen, (2) a global leader in hydrogen technologies, (3) a robust hydrogen market, via the implementation of an open access hydrogen transportation backbone and (4) a convener for the various stakeholders (industries, regions, neighbouring countries and third-party exporting countries) to join forces and share expertise.
The publication of the Belgian Strategy is a significant step for Belgium in its ambition to reach carbon neutrality by 2050 and to position itself as an import and transit hub for clean hydrogen in Europe. The Belgian Strategy is based on four pillars, all of which are backed by specific targets and policy actions. At the same time, the devil is in the detail. These general policy ambitions will need to be translated into a legislative framework that is consistent both on a federal and regional level. This will require close cooperation between the different political actors. Furthermore, the Belgian Strategy is currently rather silent on wider aid mechanisms supporting the business segments where renewable hydrogen can be deployed most efficiently, such as the energy intensive industries situated in the most important ports of Belgium. In this respect, it will be interesting to see whether Carbon Contracts for Differences will be deployed in the short and medium term to bridge the existing cost-gap between renewable and low-carbon hydrogen, on the one hand, and fossil-based hydrogen, on the other hand.
The Belgian Federal Government has demonstrated a willingness to deliver on its hydrogen ambitions. All eyes in the coming months will be on the legislative steps that must now follow, including the public consultation on the legislative framework for the hydrogen transportation backbone. As always, the proof of the pudding will be in the eating.
The complete report can be accessed here