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Industrial Strategy
Under its EU Green Deal, the Commission proposed a brand-new EU industrial policy, capable to deliver stronger development and integration of low-carbon solutions within its economy, through initiatives and financial instruments to create synergies both at EU and national levels, as well as via the private sector. Consequently, the European Industrial Strategy (published in March 2020) put emphasis on the Commission's twin green and digital transitions and on enhancing Europe's sovereignty. In the context of the COVID crisis that hit Europe and the world, the Commission published a revised version of its Industrial Strategy in May 2021, with a focus on 'strategic autonomy' and recovery.
The main message of the 2021 Industrial Strategy was of reasserting the values and principles outlined in the 2020 strategy, drawing lessons from the crisis, and aiming to enhance the ‘EU's open strategic autonomy’. The Strategy focused on the following key areas: 1) Strengthening Single Market resilience, 2) dealing with the EU's strategic dependencies, and 3) accelerating the twin transitions. The last two actions were particularly relevant for the hydrogen sector.
However, the EU industrial strategies needed to be updated to face more recent challenges related to the pandemic, Russia’s invasion of Ukraine and the rapid changes in the global geopolitical order. To respond to these challenges, the European Commission published its Green Deal Industrial Plan in February 2023, proposing a large restructuring and innovating its industrial basis.
Dealing with the EU's strategic dependencies
In this report, the Commission identified a range of products in sensitive sectors for which the EU is highly dependent, with particular emphasis on energy intensive industries and green transition pathways (such as raw materials).
Its first SWD on strategic dependencies presented six in-depth reviews on raw materials, batteries, active pharmaceutical ingredients, hydrogen, semiconductors and cloud and edge technologies, providing further insights on the origin of strategic dependencies and their impact.
In the second stage of reviews, the Commission gave an update on the progress made on the six in-depth reviews and presented four new areas in which the EU is considered highly dependent. These are raw and processed materials (rare earths, magnesium and other chemicals), photovoltaic panels and technologies, cybersecurity technologies and capabilities and IT software (cloud and edge software).
For hydrogen, the analysis refers to renewable and low-carbon (fossil-based hydrogen production with Carbon Capture and Storage (CCS)), and their key role to decarbonise sectors like long-haul transport, chemicals and steel, where it can ‘replace’ fossil fuels, provide cost efficient long-term energy storage, and transport it via pipelines. Identified dependencies are supply of renewable energy (power) and of raw materials (esp. platinum group metals (PGM) and liquid electrolytes) with the lack of hydrogen infrastructure also being mentioned as risk:
- 13 of the 30 needed raw materials for hydrogen technologies are deemed critical as their production is highly dependent on South Africa, followed by Russia and Zimbabwe;
- Supply risks are low and relatively low for processed materials and components, but deemed very high for assemblies (dependence on Asia and USA);
- EU also lacks the production capacity of high-quality carbon fibre components required for manufacture of compressed hydrogen tanks for transport applications;
- The supply risk for polymers needed to meet EU demand is also stressed.
To overcome such obstacles, industrial alliances been launched by the European Commission, aiming to bring together a wide range of partners in a given industry or value chain, including public and private actors and civil society.
Standardisation
The Strategy asserts the importance of international standard-setting and the EU’s leading role therein. The Commission has presented its new Standardisation Strategy in February 2022. It was accompanied by a proposal for an amendment to the Regulation on standardisation and an annual work programme for Standardisation for the EU. The goals are to strengthen the EU’s global competitiveness and to enable a resilient, green, and digital economy and it is composed of five key sets of actions:
- Anticipate, prioritise and address standardisation needs in strategic areas;
- Improve the governance and integrity of the European standardisation system;
- Enhance European leadership in global standards;
- Support innovation;
- Enable the next generation of standardisation experts.
In the subsequent years, hydrogen has become a central sector, where the EU’s prominent role regarding standardisation can be strengthened. In the 2023 annual work programme for European standardisation priorities were Hydrogen infrastructure, support and storage and Critical Raw Materials. In the 2024 annual work programme, Hydrogen technologies and Critical Raw Materials retained their critical position.
Cooperating on the topic, the European Clean Hydrogen Alliance published in March 2023 a Roadmap on hydrogen standardisation. The roadmap provides a comprehensive overview of standardisation gaps, challenges and needs identified in the hydrogen value chain, from production, distribution, transport, and storage to end-use applications.
European Clean Hydrogen Alliance
With the European Industrial Strategy as well as the European Hydrogen Strategy of 2020, the Commission acknowledged the potential of hydrogen in contributing to the energy transition and announced the creation the European Clean Hydrogen Alliance (ECH2A) in July 2020. Its aim is to bring governmental, institutional and industrial partners together with investors, to identify and build up a pipeline of viable investment projects along the hydrogen value chain, contributing to the green transition and creating a clean hydrogen market which contributes to growth and jobs and reduction of GHG emissions. The alliance is open to all public and private actors with activities in renewable and low-carbon hydrogen, which meet the membership criteria. Alliance members meet twice a year in the Hydrogen Forum to discuss large-scale deployment of clean hydrogen technologies. Additionally, six thematic workgroups (roundtables), plus the Electrolyser Partnership, meet throughout the year focusing on the specific and common challenges of the different parts of the value-chain. The roundtables are:
- Roundtable on hydrogen production, e.g. electrolysers, solar/wind/hydro, plant engineering, equipment, materials, carbon capture and storage (CCS) and pyrolysis;
- Roundtable on clean hydrogen transmission and distribution, e.g. pipelines, liquid organic hydrogen carriers (LOHC), liquid hydrogen (LH2) and ports;
- Roundtable on clean hydrogen in industrial applications, e.g. steel, chemical, refineries, eKerosene/eFuels, fertilisers, industrial heat and cement;
- Roundtable on clean hydrogen for mobility, e.g. trucks/buses, light duty vehicles, trains, ships, fuel cells, drive trains, tanks and hydrogen refuelling stations (HRS);
- Roundtable on clean hydrogen in the energy sector, e.g. re-electrification, mega storage and electricity grid/balancing;
- Roundtable on clean hydrogen for residential applications, e.g. district heating, combined heat and power (CHP) and solid oxide fuel cells.
- Additionally, the Electrolyser Partnership: focusing on regulatory and financial bottlenecks for the ramp up of the European electrolyser manufacturing capacities.
Contributing to the Green Deal Industrial Plan, the European Clean Hydrogen Alliance also created dedicated working groups to tackle standardisation and permitting priorities and gaps in the hydrogen sector.
A Green Deal Industrial Plan for the Net-Zero Age
In February 2023, the Commission presented the Green Deal Industrial Plan to enhance the competitiveness of Europe's net-zero industries and support the fast transition to climate neutrality. The plan builds on the previous initiatives to complement the ongoing efforts under the European Green Deal and REPowerEU. It aims to provide a more supportive environment for the scaling up of the EU's manufacturing capacity for net-zero technologies and products required to meet Europe's ambitious climate targets.
The document outlines the key opportunities and challenges for the European energy transition and sets four pillars of action:
- a predictable and simplified regulatory environment;
- faster access to sufficient funding;
- skills; and
- open trade for resilient supply chains.
In the first pillar, several key actions were proposed to enhance European industrial competitiveness and strategic autonomy, such as the Net Zero Industry Act, the Critical Raw Materials Act, and the Electricity Market Design Reform. Standardisation and energy labelling are also part of this pillar. In the second pillar, important actions include the increase of flexibility in state aid policy, step-up of European funding, simplification of access to funding and launch of the European Hydrogen Bank and European Sovereignty Fund. The development of a full Capital Markets Union is also planned. On skills, the Union will address the skills associated challenges under the European Skills Agenda and European Education Area. Lastly, on trade and resilient supply chains, the focus is on global cooperation under the WTO, free trade agreements and the development of frameworks such as Critical Raw Materials Club and the International Procurement Instrument, in addition to the development of the international leg of the Hydrogen Bank.
As the current European legislative cycle draws to a close, the European Council is deemed to shape the overarching political trajectory for the upcoming EU mandate. The Council conclusions from the Special Council in April 2024 underscore the central importance of industrial competitiveness within the EU's global engagement strategy for the foreseeable future. That is why the ministers have paved the way for an upcoming New Competitiveness Deal, that will bring industrial policy at the top place for the next European Commission mandate.
What’s in it for hydrogen?
The Commission clearly considers hydrogen as a key breakthrough technology where the EU is a frontrunner. Overall, the Industrial Strategy and the Green Deal Industrial Plan gives hydrogen a prominent role, however, regarding energy and climate commitments, more clarity was provided with the adoption of the different legislative acts under the Fit for 55 and the Hydrogen and Decarbonised Gas Market packages. These packages are the main implementation tools of the industrial strategy. In addition, the Net-Zero Industry Act and the Critical Raw Materials Act are key pieces of legislations to implement the rationale of the Green Deal Industrial Plan.
Hydrogen is one of the six strategic sectors the Commission provides a detailed supply risk analysis for. These analyses further elaborate on external dependencies especially for raw materials (PGM) and fuel cell and electrolysers assemblies. In this respect, alliances such as ECH2A and ERMA, as well as IPCEIs, have a key role to play in helping to secure supply and foster domestic production and communicate on risks and bottlenecks for technology ramp up.
Through the Green Deal Industrial Plan and subsequent legislative adoption, the European Union is on path to set the groundwork to strengthen the European manufacturing capacity of net-zero technologies and overcome barriers in achieving a resilient European industry. With the implementation of these legislative files, such as the Net-Zero Industry Act and the Critical Raw Materials Act, European competitiveness in the net-zero technology industrial can significantly improve, contributing to a more resilient Europe.
Links to the original document and additional information:
European Green Deal
2021 Industrial Strategy - Communication
SWD – Annual Single Market Report 2023
SWD – Strategic dependencies and capacities
SWD – Towards competitive and clean European steel
Q&A on 2021 Industrial Strategy
SWD – Annual Single Market Report 2022
An EU Strategy on Standardisation
European Clean Hydrogen Alliance
Alliance for Zero Emission Aviation
Renewable and Low-Carbon Fuels Value Chain Industrial Alliance
