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Europe will fail to hit clean hydrogen targets without approval of projects

Europe will fail to hit its targets for clean hydrogen production unless the “action to ambition” gap is closed and large projects are sanctioned in the next couple of years, according to the former head of Italy’s gas grid operator.

Marco Alverà, who left Snam, one of the world’s leading energy infrastructure operators, earlier this year, said boosting green hydrogen use from a standing start to 20mn tonnes by 2030 — the equivalent to 70bn cubic metres of gas — required a very steep acceleration from “now”.

“The action to ambition gap continues to widen, ” Alverà, who has set up his own clean energy company, said in an interview with the Financial Times. “We are never going to get there, if we don’t have policies and the financial investment decisions.”

Russia’s war in Ukraine has spurred the EU to speed up its adoption of alternatives to fossil fuel, which it has been pursuing as part of its Green Deal climate goal to reach zero carbon emissions by 2050.

Under a plan announced in May, the European Commission said it was targeting an additional 15mn tones of renewable hydrogen production by 2030 on top of the 5.6mn tonnes already envisaged under an earlier initiative. Half of 20mn tonnes will be produced domestically and the rest imported.

Green hydrogen is produced from the electrolysis of water using renewable electricity. It does not produce carbon dioxide when burnt, supporting claims it could help solve some of the world’s dirtiest energy problems.

However, a large hydrogen project has yet to be sanctioned in Europe even though there is a huge pool of capital chasing clean energy investments. Analysts say increased policy support and greater clarity around regulatory frameworks is needed to attract backing from big investors.

In a report published this week, DNV, a technical adviser to the global oil and gas industry, warned that hydrogen was at risk of being the “great” missed opportunity of the energy transition” without more supportive policies.

“No one is taking the final investment decisions (FID),” said Alverà, who will be appearing at the FT Commodities Hydrogen Summit on Thursday.

“To get to an FID you need a bankable project. And to get a bankable project you need the policies, the capital and the companies to put together supply and demand.”

Alverà said the EU needed to agree on a standard for green hydrogen and put in a place contracts for difference, a mechanism that is used to support renewable energy generation by guaranteeing a minimum price.

“The commission is rushing to get the policies out there. They are working really hard,” he said.

Alverà was speaking ahead of the launch of his new clean energy company Zhero, where he revealed its first investment would be in a huge gas terminal at the German north seaport of Wilhelmshaven, which he will also oversee.

Tree Energy Solutions will initially receive imports of liquefied natural gas to help reduce Germany’s reliance on Russian fossil fuels before switching to green hydrogen and synthetic methane produced with renewable energy in countries where there is abundant solar and wind power such as in the Middle East. The EU imported 155 bcm of Russian gas in 2021.

Paddy Padmanathan, chief executive of ACWA Power, is also joining Zhero as non executive director.

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