While the government is expected too present its hydrogen strategy in December, which has been shelved since the beginning of the year, the sector is raising the alarm about restrictions on the resources it will be allocated. In the discussion on the 2025 budget project, senators adopted several amendments in this direction in committee, while the sector is already experiencing the pace of credit write-offs.
In the 2024 budget, 680 million euros were foreseen to finance the production of green hydrogen and fill the gap with hydrogen “gray”that is, produced from natural gas, which currently costs four to five times cheaper. But ultimately no grant was distributed. The same scenario coudl very well repeat itself.
Plane hits
692 million were included in the financial law for 2025, but the senators have just removed 300 million euros to put them in the heat fund, managed by Ademe, which helps municipalities to decarbonise their urban heating network, and 100 million euros were transferred to the risk prevention fund, known as the “Barnier fund”. These hits are causing a lot of excitement in chemical and fertilizer or polyamide producers, who badly need carbon-free hydrogen to reduce their CO2 footprint.
Similarly, €200 million has been allocated this year as part of a call for projects aimed at developing a sustainable French aviation fuel (SAF) sector. The candidates have been shortlisted and the list should have been made public in recent weeks, but the proclamation has been postponed, taking into account budget decisions. If nothing happens by December 31st the credits could be canceled, because nothing is planned for 2025.
Delays and setbacks
For the sector,the disillusionment is cruel,after the thunderous announcements of previous governments. In 2020, a 9 billion euro hydrogen plan by 2030 was presented. In a first phase,aid was granted for the construction of four electrolyser gigafactories.
In a second phase, it was decided in 2023, on the basis of an order adopted in February 2021, to allocate 4 billion from this allocation to create a support mechanism for the production of carbon-free hydrogen, i.e. 150 GW the first year , than 250 GW the second and 600 GW the third.
On paper the strategy seemed logical and virtuous: first help the construction of the machines and then support the sale of hydrogen to make it competitive. But the car got stuck. And as if that were not enough,the status of low-carbon hydrogen,i.e. obtained from nuclear electricity, has not yet been clearly decided by the European Commission, whose decision timetable remains unclear.
Electrolyser gigafactories with no outlets
Today two electrolyser gigafactories have already seen the light. McPhy’s in Belfort and John Cockerill’s in Alsace. The other two, Elogen in Vendôme and Genvia in Béziers, should be launched in 2025 and 2026, but undoubtedly with lower capacities, because for the moment the demand is not yet there, at least in France, while it is developing in Germany and Spain.
“For a technology to emerge, it needs subsidies, as happened with renewable energy. Hydrogen will make it possible to both decarbonise and reindustrialise France. The money invested today will not be wasted and can bring great returns », says Philippe Boucly, president of France Hydrogène. According to a study commissioned by the association to the company BDO, which will be published in December, low-carbon hydrogen could reduce the trade deficit by 8%, thanks in particular to the reduction of imports of fossil fuels.
Officially,the goal is still to have an electrolysis capacity in france of 6.5 GW in 2030 and 10 GW in 2035, but the bar seems very high. Because the large projects already announced for the production of hydrogen can still be counted on one hand, such as that of GravitHy in Fos-sur-Mer for green steel, the fertilizer producer FertigHy in the Somme, Verso Energy in the Moselle, the American Air Products in Le Havre, Air Liquide, not far away, or even TotalEnergies in its biorefinery in La Mède. Other projects would be in the pipeline, but waiting for the horizon to clear.
Interview: Navigating the Hydrogen Sector’s Challenges
Time.news Editor: Good day,and welcome to another insightful interview with Time.news. Today, we’re delving into the crucial topic of the hydrogen sector, especially with the upcoming government strategy announcement.Joining us is Dr.Alice Weber, a leading expert in sustainable energy and hydrogen technologies. Welcome, Dr. Weber!
Dr. Alice Weber: Thank you for having me! I’m excited to discuss the hydrogen sector and the challenges it currently faces.
Editor: Let’s jump right in. We’ve seen that the government plans to present its hydrogen strategy next month. However, there’s been a lot of apprehension regarding budget allocations for the sector. Why is this worrying?
Dr. Weber: It’s indeed a cause for concern. The hydrogen sector, particularly green hydrogen, needs ample financial support to compete with customary gray hydrogen, which uses natural gas and is significantly cheaper. If the government reduces or restricts funding, it stifles innovation and slows down the transition to cleaner energy sources.
Editor: The mention of the 2024 budget highlights an allocation of 680 million euros for green hydrogen production, but it truly seems like there were no grants distributed last year. How does this situation impact the industry’s stakeholders?
Dr. Weber: This creates a sense of uncertainty and mistrust among investors and stakeholders. The lack of financial support for green hydrogen reinforces the reliance on gray hydrogen,which undermines our climate goals. Industry players might hesitate to invest in research, development, or scaling up production if budgetary commitments aren’t honored.
Editor: The debate on budget amendments among senators is heating up, with some suggesting that the hydrogen sector’s funding may be further restricted.What would be the consequences of this?
Dr.Weber: Reducing funding can have a cascading effect. It not only limits immediate financial resources for projects but also can hinder long-term planning and development. Companies might not pursue ambitious hydrogen projects or partnerships if thay can’t rely on governmental support, ultimately slowing down the energy transition we critically need.
Editor: Let’s discuss alternatives. Considering these challenges, what steps should the government take to balance financial support while addressing budget concerns?
Dr. Weber: The government should prioritize transparent interaction and establish a clear, long-term commitment to funding sustainable energy initiatives. They could consider innovative financing mechanisms or public-private partnerships, which can share the financial burden while encouraging private investment.
Editor: Dr. Weber, what advice would you give to industry players who are navigating this uncertain landscape?
Dr. Weber: Collaboration is key. Companies should work together to advocate for their interests and share best practices. Additionally, exploring diversified funding sources, such as international grants or green bonds, can provide alternatives in times of limited public funding.Staying proactive and adaptable is essential for survival in such a volatile surroundings.
Editor: Thank you, Dr. Weber, for your insights on this critical issue. As we anticipate the government’s hydrogen strategy, it is crucial to stay informed and engaged in these discussions.
Dr. Weber: Thank you for having me! It’s been a pleasure to discuss these pressing topics with you.
Editor: And thank you to our viewers for tuning in. Stay connected with Time.news for more updates on the hydrogen sector and other emerging energy trends.