Leading with a green industry

By Ville Niinistö, Greens/EFA MEP (pictured)
Spring 2021

A lot has happened since the launch of the current industrial strategy. Europe went to a standstill from covid lockdowns, the EU agreed on its recovery measures, which have a green focus, and vaccinations have started so there is hope in the pandemic.

On the climate front the EU has practically agreed to climate neutrality by 2050, but the Climate Law is still in progress. Outside the EU major economies have set carbon or climate neutrality goals for 2050 (UK, Japan, South Korea) and China committed to carbon neutrality by 2060. This shows we are not on this path alone, but we are risking falling behind in case we do not scale up our efforts to provide for the products and solutions to meet the climate commitments. We can always resort to buying clean solutions from others if we fall behind in development, but wouldn't it be better to be the supplier, to sell to others the products, technologies and solutions they need. For this we need a strong focus on taking our innovations commercial, and creating a front runner market that demands the cleanest products that will act as a business card to our industries. The new industrial strategy needs to set the EUs industry on a clear and ambitious path to climate neutrality.

Hydrogen is an industrial opportunity and needed in some industrial sectors to be climate neutral. The commission's hydrogen strategy set targets for electrolysers and volumes of renewable hydrogen, while also supporting low carbon hydrogen. So blue hydrogen, which is hydrogen made from natural gas with carbon capture and storage (CCS), is still supported. The commission has said blue hydrogen is a needed stepping stone to renewable hydrogen made from renewable power, but from an industrial point of view, would it not be better to put the focus heavily on renewable hydrogen, as we still have an edge in the technology? And what about renewable power? We know there is no renewable hydrogen if we don't have renewable power, so the first no regret effort is to massively scale up our renewable power production. Only if our renewable power capacity grows in line with electrolyser capacity we are on the right track, and this needs to be on top of renewable power installed to get rid of fossils in the power system.

The parliament is making its stance in the hydrogen strategy. There we hope to see a realistic approach, with focus on making more renewables, and installing the electrolysers close to the no regret end uses that have no other option than hydrogen, that also need it in the long run and replacing existing hydrogen use by renewable hydrogen. Hydrogen is not the silver bullet, but a tool to take renewables where direct electrification is not possible. We need to keep true to the energy efficiency first principle, and not be wasteful with our electricity consumption – the time of a fully renewable power system with abundant electricity is not yet here.

We can also push our neighbours and energy suppliers to shift to renewable hydrogen, by supporting the use of only renewable hydrogen, and using the coming carbon border adjustment mechanism to our advantage. We need to put a price on fossil gas based hydrogen, whether with CCS or not, also taking into consideration the price for the methane emissions in the supply chain. This also makes our european production cleaner, and pushes exporting countries to clean their products as well, if they are to compete on our markets. We need also demand for renewable hydrogen, and for that we need to stimulate lead markets for clean products, and one market could be the automotive sector. I’ve heard green steel can be 20% more expensive than normal steel. This is not major, but still significant. But when you make a car out of that green steel, the car is only 0.6% more expensive to manufacture.

I would hope that a majority of growingly environmentally conscious consumers would be willing to pay 0.6% more of their car. So depending on how you look at it, the issue is very different – so this transformation is also a communications exercise. But incentives are not always enough, so we need to also consider binding obligations to purchase lower emission products. If we require green products on the markets, they are also more likely to be produced here, and our industries should have a first mover advantage, if they don't doze off.

But to wrap up. We are at a crossroad. We can focus on Europe's past successes, and put our efforts into small improvements and "bridge solutions" that we know are not fit in the long term, while we watch the other global markets become climate neutral. Alternatively we create new European successes and become real global leaders in climate action, and supplying others the means to reach their goals.