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The import of green hydrogen is not a foregone conclusion

Many governments and also the European Commission are aiming for climate neutrality in 2050 or earlier. One component in many plans is importing green hydrogen and methane from North Africa or the Middle East, where reliable sunshine promises low electricity costs to run electrolysers. Synthetic fuels and heating oil or gas from electricity would have the charm of simply continuing to operate much existing technology and infrastructure in a climate-neutral manner. But it is still unclear how governments can initiate and economically shape international trade in green fuels. A study with the participation of Fraunhofer IEG has now compiled the essential aspects. It evaluates the potential of energy imports from neighboring Sunshine States in the journal Computers & Industrial Engineering.

Under the basic assumptions made, the study calculates detailed prices for green hydrogen and methane of over 100 euros per megawatt hour in 2030 and just under 100 euros per megawatt hour in 2050. Currently, the price of methane on the European commodity market is around 30 euros per megawatt hour. “The high costs show that importing e-fuels into Europe is not a cheap panacea to circumvent bottlenecks in the expansion of renewable energies or to achieve a transformation on the supply side,” warns Ben Pfluger of Fraunhofer IEG. The cost of e-fuels must be weighed against other options. Two things are crucial for the competitiveness of hydrogen imports from North Africa and the Middle East to Europe: comparable risk premiums for investment capital as in Europe and low transport costs. In addition, the slowed expansion of renewable energies in Europe, for example due to a lack of expansion areas for wind power and photovoltaics, may favor imports.

This detailed analysis of synthetic fuel production chains and consideration of transportation also highlights the complexity and sheer scale of these potential projects. Too often, green hydrogen and fuel imports are used as stopgaps in national energy transition strategies. Closer analysis shows that these projects are too large and too costly to be undertaken without strong political support and a high degree of certainty that the energy products will be purchased at agreed prices over the long term.

Policymakers seeking to import green hydrogen or fuels should begin developing policies in this direction now, as infrastructure projects of the scale discussed here have a significant lead time. The analysis shows that while e-fuel production is attractive in the region from North Africa to the Middle East, especially due to the high solar potential. However, developments in capital and transportation costs may reduce or even eliminate the region’s advantages.

Experts from Fraunhofer IEG, Fraunhofer ISI and the DVGW Research Unit at the Karlsruhe Institute of Technology collaborated on the study.

Click here for the original scientific publication of the study from the December issue of the journal Computers & Industrial Engineering: “Supply curves of electricity-based gaseous fuels in the MENA region”.