THE OXFORDINSTITUTEFOR ENERGYSTUDIESJanuary 2021The Heralds of Hydrogen:The economic sectors that are drivingthe hydrogen economy in EuropeIntroductionThe 2019 Intemnational Energy Agency(IEA)report on the future of hydrogen highlighted the renewedinterest in hydrogen as a potential pathway to a zero-carbon future.1 Since then,many new projectshave started and many investment programmes reaching into the billions of euros have beenannounced,such as the earmarked fund of E9 billion for hydrogen as part of the COVID-19 recoveryeffort by the German govemment2 Yet,uncertainty remains about the precise role of hydrogen inEuropean visions of the energy transition.This raises questions about the support base of the hydrogeneconomy in Europe.What prompts companies as diverse as for instance Airbus,BP,Enagas,Fincantieri,Linde,Siemens,Skoda,SNCF,and Thyssenkrupp to become members of hydrogenassociations?Which economic sectors stand out among supporters of the hydrogen transition?Whatis the role of small and medium-sized enterprises (SMEs)?These are all relevant questions.The momentum for hydrogen comes at a time when policymakers atthe subnational,national and supranational level are faced with the task of reviving their economies inresponse to the COVD-19 crisis.The European Commission revealed its official hydrogen strategy inJuly 2020.3 Hydrogen is supposed to become one of the key pillars of the European Green Deal,announced just before the COVID-19 crisis started.Many national policymakers are working onhydrogen too,with recent strategies published in France and Germany,for example.At the same time,waves of enthusiasm for hydrogen have subsided in the past,and the European Commissionerresponsible for the Green Deal,Frans Timmermans,also warns that hydrogen is no silver bullet.4This paper provides a snapshot of the economic sectors that support the hydrogen economy,and whythey do so.It analyses membership data of 39 hydrogen associations across Europe (see Annex I fora list of these associations and their geographic location),classifying 1,670 membership entriesaccording to their business activities,and then analyses the background to and reasoning for members'support for these associations.The dataset gives some insight into individual companies'influence andIEA,'The Future of Hydrogen',Special Report for G20 Japan (Paris:International Energy Agency.June 2019).2 Christoph Steitz,Tom Kaeckenhoff,and Edward Taylor,'Gemmany Earmarks $10 Billion for Hydrogen Expansion',Reuters,4June 2020,https://www.reuters.com/article/us-health-coronavirus-gemmany-stimulus-idUSKBN23B10L.3 European Commission,A Hydrogen Strategy for a Clmate-Neutral Europe-Communication from the Commission to theEuropean Parliament,the Council,the European Economic and Social Committee and the Committee of the Regions(Brussels:European Commission,2020).Dave Keating.Timmemans Sees "pivotal Role for Hydrogen"in Meeting EU Climate Goals',euractiv.com,25 November2019,https://www.euractiv.com/section/energy-environment/news/timmemmans-sees-pivotal-role-for-hydrogen-in-meeting-eu-climate-goals/.Energy Insight 82Floris Jacobus Adrianus de Klerk Wolters,Graduate Institute of International and Development Studiessheds light on the breadth of the emerging hydrogen coalition,the varying interests that motivate it,andThe paper categorizes membership directory data on all non-public entities registered in hydrogenassociations across Europe.5 These associations aim to promote hydrogen projects and cooperationbetween interested parties,and can function as lobby groups in support of the hydrogen transition.6Business activity is registered according to the Statistical Classification of Economic Activities in theEuropean Community,commonly known as NACE.7 There are various validity problems with thismethod,8 but these may be expected when analysing sectors rather than conducting company-by-company analysis.The information on association membership is used to construct an overview of thevarious sectors that support hydrogen and their geographic background.The paper then looks at theseactors'motivation.This is done with literature research,such as by going through annual reports,financial reports,sustainability reports,press releases,news articles,and existing literature on thesector's or actor's connection to hydrogen.BackgroundHydrogen has several perceived benefits as a component of the energy transition.It can complementthe flow-based nature of electricity (as it is non-intermittent and a storage medium),diversify energyinput,and,crucially,decarbonize hard-to-abate activities in sectors such as heavy industry andtransport.This all while being relatively compatible with Europe's highly developed natural gasinfrastructure.Its permanent availability is a major advantage given the seasonal and daily variations inthe availability of some renewables,such as wind and solar energy,as well as seasonal variations inenergy demand.Moreover,it can replace hydrocarbons in (for instance)aviation,shipping,rail andheavy road transport,as well as those in the chemical,iron,steel,and cement industries.TheIntemational Renewable Energy Agency(IRENA)notes that hydrogen as a competitive feedstock canavoid carbon leakage from heavy industries moving elsewhere.10 However,its drawbacks should notbe downplayed.Examples are efficiency losses and high flammability,or discussions about thedesirability of the carbon capture and storage (CCS)technologies needed for blue hydrogenspecifically.Europe according to the UN Statistical Division's M49 definition,which for instance includes Russia.Hydrogen and fuel cellassociations can focus on the intemational,national,or subnational level.6 Activities may vary.Hydrogen Europe mentions industry representation,lobbying and advocacy as key activities,but alsoshares regulatory updates with its members and maintains a legal database(HyLaw).Its industry and research ams are two ofthe three members in the Fuel Cell and Hydrogen Joint Undertaking (FCH JU),with the European Commission as the thirdpartner.FCH JU has a total budget of E1.33 billion over the period 2014-2022 and spends approximately E100 million per yearon hydrogen projects.Other influential associations,such as EnergieAgentur North Rhine Westphalia,Afhypac in France,HYPOS in Eastern Gemmany,PTE in Spain,and DW in Gemmany all follow similar models,although mostly without HydrogenEurope's investment capacity.Many have pemmanent staff members who work on media and political advocacy.Most arepublic-private partnerships with close ties to different government levels and public institutions.Eurostat,NACE Rev.2:Statistical Classification of Economic Activities in the European Community (Luxembourg:Office forOfficial Publications of the European Communities,2008)There are several prominent flaws.First,companies choose their own classification and can classify similar activitiesdifferently.There have been some manual changes (notably of Nouryon and pipeline transporters like GRTgaz and Gasunie)tocomrect this.Second,many companies have multiple different business activities.Third,large companies tend to be registeredas head office activities".Fourth,subsidiaries might be registered as conducting different activities.To deal with this,same-name subsidiaries are registered exactly like the headquarters location,and "activities of head offices"are changed to those ofa registered subsidiary at the discretion of the author.If not,companies like Deutsche Bahn,EDF,Hyundai,and Shell would allbe registered as doing the same business activity.There are different"types"of hydrogen.Virtually all of the 70 million tonnes(Mt)of hydrogen produced globally each year iscarbon-intensive 'grey"hydrogen,for which 830 Mt COz is emitted according to the IEA's World Energy Outlook 2019.Europeaccounts for roughly 10%of global hydrogen production,according to Navigant's 2019 Gas for Climate report.This is differentfor blue hydrogen(produced with carbon capture and storage [CCS]),which could become financially feasible in the short temmand can kickstart the development of hydrogen infrastructure,but is unlikely to be completely decarbonized.Only greenRenewable Energy Agency,September 2018).The contents of this paper are the author's sole responsibility.They do not necessarily represent the viewsof the Oxford Institute for Energy Studies or any of its Members