Paul Rodden • Season: 2023 • Episode: 272
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Welcome to The Hydrogen Podcast!
In episode 272, Will the geopolitical climate in the EU help or hinder the South H2 Corridor? I’ll go over this crucial project and give my thoughts on today’s hydrogen podcast.
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Transcript:
Will the geopolitical climate in the EU help or hinder the South H2 Corridor? I’ll go over this crucial project and give my thoughts on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where’s capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen. And this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
Before I begin today, I just wanted to reach out to all of my listeners and say two things. One, thank you all who take time out of your day to listen in. Getting feedback from you helps me realize that what we’re doing to advance the hydrogen economy is having an impact. And two, I want to make 2024 an impactful year, and one in which we can leverage our resources and this platform to help make connections between growing companies looking for investments, and those looking to invest. Or if your organization has seen the potential of hydrogen and is looking for a way to get involved, I want to help. So to all of you listening, reach out and let us know what type of projects your company is looking into. And let’s see how we can help you. 2024 is primed to be a monster year for hydrogen.
Let’s see if we can make it even bigger. And now for today’s news. In an article in oil price.com Francesco Sassi writes, will this crucial hydrogen corridor become reality? He writes, could the Mediterranean Sea become the new energy hub to strengthen energy security and accelerate the energy transition in Europe? Considering the current geopolitical and geo economic scenario? This is a matter of the utmost importance. The issue has also recently been discussed in an economist editorial depicting the Mediterranean region as a future powerhouse of green hydrogen and carbon free revolution. The answer to the many questions arising from this topic may be coming from the recent agreement between the Italian and German governments about building a new gas and hydrogen ready pipeline across the Alps, the so called South h2 corridor.
According to Rome and Berlin, the pipeline will deliver green molecules from North Africa to the industrial heart of Europe, a political and economic agreement to invigorate Italy’s geostrategic position at the center of the Mediterranean Sea and long awaited recognition of its role as an energy hinge between Europe and Africa. The idea has been repeatedly asserted in the so called plan Mattei. A crucial development in Italy’s foreign policy towards Africa devised by Prime Minister Giorgia Meloni. The plan is Rome’s natural response to the shifting of the European energy supply Axis from an East West model, which is focused on Russia, to one pointing to north south connections North Africa and Norway.
On the other side, Germany’s Chancellor Olaf Schultz is leading a political coalition that continues to invest in the prowess of the country’s Heavy Industries, Berlin aims to maintain the competitiveness of its economy with other global economic powers. However, is that possible for these two strategies to coexist in such a destabilized European and fragmented global scenario. With a projected demand of 20 million tons per year of green hydrogen by 2030. The European Commission expects at least half of this to be produced within the EU through extensive investments in solar and wind technologies and electrolyzers. The other 10 million tonnes a year would be supplied through imports through six major corridors, including the South Central h2 supply corridor.
A network involving seven members of the EU, those being Italy, Austria, Germany together with Slovenia, Croatia, Slovakia and Czech Republic and able to slash nearly 55 million tons a year of co2 emissions by 2030. The message from Meloni and Schultz to Europe has been delivered. Indeed, Brussels has included the four grids of a 166 projects list responding to the Green Deal criteria, fast tracked permits, shorter impact assessment procedures and the financial assistance provided by the connecting Europe facility or CEF are just some of the major advantages to the infrastructures included in the Union list of so called projects of common interest or PCI’s, and projects of mutual interest. PMIs.
Other public and private funds will likely come from the billions allocated for the important projects of common European interests or IPCEI . The International Energy Agency has labeled hydrogen as a critical component to curtail emissions from hard to abate sectors in advanced economies, however, the sector is suffering because of obstacles in the supply chain delays and creation of economies of scale and slow development in technologies and regulatory frameworks. These discussions are a vivid element of cop 28. Meanwhile, environmental activists have described the EU list of Green Deal aligned projects as a wish list of oil and gas majors simply allowing natural gas to continue being transported through the same pipelines and silently delaying the phase out of hydrocarbons and the European energy mix.
Nevertheless, this is not stopped the EU commission from launching with great fanfare the first auction of the European hydrogen bank to support the production of renewable hydrogen in Europe funds that, according to the Commission will help reduce the existing gap between the production costs of green hydrogen and the prices citizens are willing to pay for it. Only time and continuous political support for the industry will tell if this works. The challenges that the EU is facing are so tremendous that a new approach is needed in order to find common rules to play on the internal markets.
The stiff competition from China and the US makes that a revamping of the European industrial strategy is urgently required. This notwithstanding, the new strategic blueprint will have to face the fact that EU member states have long abandoned industrial policies considered as geopolitical tools against other EU peers. Furthermore, the EU must face this transformation in a new energy reality, almost deprived of Russian gas and still striving to find a new supply equilibrium. Europe aims to use the Mediterranean potential in terms of renewable energy as strategic choice dictating brand new and lavish investments in cross border infrastructures, but also the relocation of industrial clusters closer to areas with higher competitiveness in terms of energy inputs, such as the same Mediterranean regions, limiting costs and public expenditures, read also subsidies to be paid by EU citizens.
According to Italy’s premier Meloni. The action plan with Germany brings bilateral cooperation to a new level and accelerates the inter governmental dialogue after seven years without a proper political platform. With limited economic instruments to prop up the European Green Deal, including the new European hydrogen backbone. The debate about efficient use of financial assistance for decarbonisation will surely feed back into the campaign for the next European elections expected for next June.
A fierce clash will endure for the next six months. On one hand, there is the current political majority headed by President Ursula von der Leyen. On the other the challengers right wing parties belonging to the identity and democracy coalition in the European Parliament, summed up in Florence just a few days ago by the league and Italian Vice Premier Matteo Salvini, notably Salvini directly called the allies and the current Italian government coalition, Forza Italia, European People’s Party and brothers of Italy, European conservatives and reformists to free Brussels and end the extremism of the energy transition supported by the socialists and the Green parties.
A sign of the uncertain times ahead of us is the fact that the future of the South h2 corridor is based on the political agreement between two coalition’s sitting on very opposite sides of the European Parliament, fairly anchored in right wing and conservative ideologies. The Meloni government has focused on the bilateral dialogue with a political partner as important as Germany on energy policies and strategies, probably the most divisive argument in the European political spectrum. Together with migration policies. The German coalition led by SPD together with Die Grünen and FDP is a political alliance deeply characterized by environmental goals and the acceleration of the energy transition as a strategic element to face the challenges of a fragmented global economy. One thing to note is that Germany is the country investing the most in Europe on the future of hydrogen.
As we approach the European elections in mid 2024. These paradoxes will inevitably fuel the debate and the political implications could be dramatic for the future of the South h2 corridor, investors could be financially impacted and suffer consistent delays in the project implementation. Nonetheless, what is at stake here is much more fundamental, meaning the credibility of the EU energy security and transition strategies. Okay, so a great piece by Francesco on the current geopolitical issues impacting the future of hydrogen development in Europe. Now on the last podcast, I talked about the importance of what SNAM is doing to develop the hubs in Italy and Germany has been mentioned several times in the last few months on this podcast. And last week, I also mentioned this South h2 corridor as a critical piece needed to secure and move the hydrogen economy forward, not just in Europe but globally. And much of the same political dilemmas currently impacting the EU hydrogen development.
It’s also being felt here in the US, will the next election cycle spur further development, or will a party shift derail the investments that have to date been allocated to hydrogen development? Now, the US and the EU are not the only hydrogen markets in the world. And I believe regardless of the political climates in the EU and the US, we will still see development surging forward in the BRIC countries as well as Australia and Japan. And don’t forget, there is still a market for hydrogen derivatives that is growing at an accelerated rate.
So I don’t believe we’ll be seeing any type of massive pullback and hydrogen development, regardless of who gets elected as the raw facts still remain. Energy Needs are increasing globally, the EU will not backtrack on their pursuit of renewable development, ammonia demand will continue to rise and corporations will still be looking to lower their carbon footprint. And so all of these facts point to continued hydrogen market growth. So with that said, the hydrogen economy will move forward. The question remaining is how?
All right, that’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple, podcast, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at info@thehydrogenpodcast.com. So until next time, keep your eyes up and honor one another. Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would even subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.
