Fears grow that fossil fuel firms will capture booming hydrogen industry

The EU is polishing off legislation to accelerate an emerging multibillion-euro green energy industry — hydrogen gas. Yet experts warn new rules under development may put the new sector in the hands of oil and gas giants.

Negotiators are meeting Friday in Brussels for what could be the final round of talks on one of the bloc’s flagship green energy policies, the hydrogen and decarbonized gas package. If EU capitals, the European Parliament and the EU’s executive can strike a deal, the initiative would kickstart as soon as next spring an EU-wide web of hydrogen producers, which harness solar and wind power to split water molecules and generate the gas.

Backers say the legislation would be a boon for Europe’s renewable aspirations as it seeks to zero out carbon emissions by 2050.

Jerzy Buzek, the Polish MEP leading the Parliament’s work on the initiative, called it "great news for our energy security — especially in circumstances of the brutal war which [Russian President Vladimir] Putin continues against Ukraine, where energy is one of his weapons." Harnessing renewable electricity to produce hydrogen will cut reliance on imports of natural gas from countries like Russia.

However, a proposal to put the new industry — which is being created virtually overnight — under the auspices of the regulatory body that already oversees natural gas pipelines is causing consternation.

The debate might seem technical, but energy industry specialists say it could have profound implications for how the industry ends up working. Many of the major players investing in the new hydrogen market are energy giants with decades of experience in natural gas, giving them the resources and technological know-how to swiftly design a clean energy alternative.

For many, it’s a sign that renewable energy can be profitable, opening the door to a market-based solution to climate change. But for some green activist groups, it’s an irritating sign that the companies they blame for the current crisis will be the only ones to now earn cash from it.

That has led to calls to create a totally new oversight body to help erect the hydrogen industry.

To some, “it seems like why should you have two organizations if you could have it all in one? They will want to be more pragmatic, to reduce costs and so on,” said Daniel Fraile, Hydrogen Europe’s chief policy officer.

“We understand these concerns, but we do think that overall having a dedicated body focusing only on hydrogen will be more beneficial in the long term, and it will remove any potential conflict of interest.”

Who stands where?

The EU’s executive, the European Commission, has joined with the majority of EU countries to push for a new oversight body, dubbed the "European Network of Network Operators for Hydrogen." The network would set standards for the hydrogen industry and help plan and deliver the massive infrastructure it will require.

But Buzek and several other MEPs want to give that jurisdiction to the body already overseeing natural gas pipelines — the "European Network of Transmission System Operators for Gas." The reasoning is that in many cases, existing natural gas pipelines could be used to transport hydrogen, creating an obvious crossover.

The Spanish EU presidency has proposed a compromise, where a new body overseeing the hydrogen industry could be phased in, breaking off from the existing natural gas one over time.

Slovenian MEP Klemen Grošelj, who oversees work on the file for the centrist Renew Europe group, has been backing an independent hydrogen entity. But he said the compromise may be acceptable, as “it takes into consideration the conditions for development of the hydrogen market, at the same time ensuring the necessary 10-year infrastructure development plan coordination among the main regulators.”

However, according to Esther Bollendorff, a senior gas policy expert at Climate Action Network, there’s a risk that natural gas regulators could still be “coming in with incumbent interests” and steering the development of hydrogen infrastructure in a way that benefits fossil fuel companies, rather than new market entrants.

While the EU has ambitions to produce 10 million tons of green hydrogen domestically by 2030 and import the same volume from producers abroad, eager hydrogen investments from companies like Shell, Exxon Mobil and BP have proven divisive.

“Hydrogen has an important role to play in decarbonization and it should definitely not be used to give another lifeline to the gas industry, which is what risks happening," she said.