European perspective on energy - third post

THIS WEEK IN BRUSSELS AND AROUND

This week the European Commission will be meeting heads of state of the Western Balkans. The President of the Commission Ursula von der Leyen receives today Serbian President Aleksandar Vucic, on Thursday Kosovo Prime Minister Albin Kurti. North Macedonia's President Stevo Pendarovski will meet Enlargement Commissioner Oliver Varhelyi and the High Representative Josep Borrell. Let’s keep in mind that coal accounts for 70% of Western Balkans’ energy needs.

The Commissioner for the Environment Virginijus Sinkevicius participates in the ministerial meeting on the Environment between the EU and China. Worthy of mention is also the work of Timmermans who, besides receiving today the South Korean Minister of Commerce Yoo Myung-hee, will attend meetings in preparation for COP26.

Here the calendar of the European Commissioners (Si apre in una nuova finestra).

Quite a few events in the energy realm at the Commission, also for the “technicians”. Today and tomorrow the 4th meeting of TEN-E Regional Groups on electricity (Si apre in una nuova finestra); till Thursday the Just Transition Platform Meeting (Si apre in una nuova finestra); a webinar on Public acceptance of projects of common interest (PCI) (Si apre in una nuova finestra) on Wednesday; the 35th European Gas Regulatory Forum (Madrid Forum (Si apre in una nuova finestra)) on Thursday and Friday.

These events show the Commission’s strategy: moving ahead with electricity, drifting away from coal, while working on public acceptance and on the role of gas.

The Parliament has a fairly interesting agenda too: Brexit/EU-UK agreement, Turkey, Russia, China and EU programmes (including Horizon Europe).

For what concerns the Council, worth to keep in mind the Working Party on Energy on Wednesday (Si apre in una nuova finestra) about Energy Charter Treaty and East Med Gas Forum.

This week (Si apre in una nuova finestra), from Wednesday till Friday, the online conference between Germany and Russia on raw materials.

LAST WEEK IN BRUSSELS AND AROUND

Co-legislators clenched a provisional deal on the European Climate Law. As one of the key elements of the European Green Deal, the European Climate Law enshrines the EU's commitment to reaching climate neutrality by 2050 and the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. The Commission welcomed the agreement between Council and Parliament (Si apre in una nuova finestra).

“In June, my Commission will table proposals to make Europe ‘Fit for 55'. We will make emission trading work – not only for energy generation and industry – but also for transport and for buildings,” commented Ursula von der Leyen.

Carbon prices reached an all-time high on Friday (44.33), according to Ember data (Si apre in una nuova finestra).

The negotiators agreed that the Commission would propose an intermediate climate target for 2040 (Si apre in una nuova finestra).

The European Commission has adopted a package (Si apre in una nuova finestra) on Sustainable Finance and EU Taxonomy: EU Taxonomy Climate Delegated Act with technical screening criteria, a proposal for a Corporate Sustainability Reporting Directive to trigger sustainability information in the corporate world, and six amending Delegated Acts.

Agriculture, gas and nuclear excluded from these initial rules.

“The Commission’s final taxonomy on forestry and bioenergy does not acknowledge the environmental challenges we face. It has been strongly influenced by unbalanced lobbying by Finland and Sweden: it is at odds with environmental science, discredits the taxonomy and creates a disastrous precedent,” commented Sébastien Godinot, WWF EU economist (Si apre in una nuova finestra).

Focus on the Western Balkans.

Meanwhile, the president of the European Council Charles Michel underlined the need to impose a carbon border adjustment mechanism.

The Parliament of Serbia adopted a package of laws on energy, renewable energy sources, energy efficiency and mining, wrote the Energy Community in a note (Si apre in una nuova finestra).

The National Electricity Market Operator of North Macedonia, MEMO, and the Montenegrin Power Exchange, BELEN, launched last week public tenders for the selection of a service provider for the operation of the day-ahead market, reads a note (Si apre in una nuova finestra) by the Energy Community.

“If you really want to stop Russian aggression against Ukraine, you have to stop Nord Stream 2. As simple as that,” commented on Twitter Donald Tusk (Si apre in una nuova finestra), former president of the European Council, now president of the EPP.

“AI is a means, not an end. It has been around for decades but has reached new capacities fueled by computing power. This offers immense potential in areas as diverse as health, transport, energy, agriculture, tourism or cyber security. It also presents a number of risks,” Commissioner for Internal Market Thierry Breton commented, presenting the proposals (Si apre in una nuova finestra) for new EU rules and actions on Artificial Intelligence (AI).

The European Investment Bank (EIB) approved € 3.4 billion of new financing to accelerate shift towards renewable energy and sustainable transport, corporate innovation, improved housing, education and communications, reads a note published last week (Si apre in una nuova finestra).

GLOBAL HYDROGEN DEVELOPMENTS

PwC's Strategy&  published a report about hydrogen. “It is likely that the fledgling low carbon hydrogen market will ramp up and take off by 2030, becoming cost-competitive in this decade. Governments, cities and corporates will all have a part to play, through partnerships, in making a hydrogen economy a reality in Europe,” reads the note (Si apre in una nuova finestra).

The industrial gas sector is likely to be one of the first to move toward a hydrogen. Existing end markets, such as oil refining, chemicals, and later on possibly fertilizers, will likely be among the early adopters of H2, wrote S&P Global Ratings in a note (Si apre in una nuova finestra) last week, presenting a new report. The use of hydrogen for steel production might be marginal.

Investments are also making the headlines. Rotterdam-based, Geneva-headquartered Vitol acquired a 10% of Gen2 Energy (Si apre in una nuova finestra), a Norwegian producer of green hydrogen, for an undisclosed sum. The collaboration will first include two sites, one with a 80MW capacity, the second with a 300 MW. Both projects aim to use Norway’s surplus hydroelectric power to produce green hydrogen which will be transported and sold to customers principally in Europe, says Vitol.

Companies are also investing in innovation. Umicore and Anglo American teamed up (Si apre in una nuova finestra) to develop PGM-based catalysts for liquid organic hydrogen carrier (LOHC) applications. According to the companies, this application represents a simpler and cheaper alternative to onboard storage of compressed hydrogen. This partnership eyes room to solve logistics and infrastructure challenges, specifically focusing on fuel cell electric vehicles.

The Spanish city of Oviedo intends to invest in mobility solutions that will enable it to have a 100% sustainable fleet in the future. The first green hydrogen local bus is being launched these days, through a partnership with Carburos Metálicos (Si apre in una nuova finestra), a company of the Air Products group, the world's largest hydrogen distribution network.

Mobility will indeed be a key sector for hydrogen development. A marketing boost could come from motorsports. Developments in this direction came last Thursday when Toyota announced an hydrogen engine for Toyota's Corolla Sport.

One day before Alstom (Si apre in una nuova finestra) organised an event with several executives, including Snam’s Marco Alvera and ÖBB’s Mark Topal, suggesting growing interest also for hydrogen trains.

Toyota also teamed up with US o&g major Chevron (Si apre in una nuova finestra) to understand public policy measures, market demand for light-duty and heavy-duty fuel cell electric vehicles.

Experiments also in the United States, where the largest publicly traded full-service travel center network (TravelCenters of America) and a “start-up” active in zero-emission vehicles (Nikola Motors) decided to deploy two minor hydrogen infrastructures (Si apre in una nuova finestra). The important part of the story is the focus: heavy-duty trucks.

Meanwhile, as reported by Reuters, Shell is conducting a feasibility study with partners to trial the use of hydrogen fuel cells for ships in Singapore.

Chile’s government launched the first call for public support to renewable hydrogen projects over 10 MW to be commissioned by end-2025.

Australia’s Federal and South Australian Governments focused last week on carbon capture and storage (CCS), and hydrogen technologies to take advantage of the country’s strategic position - close to Japan and South Korea. Prime Minister Scott Morrison announced an investment in these energy transition projects totalling €349,82 million.