There is a significant lack of green hydrogen policy, leaving a Green Hydrogen Gap and driving us off our decarbonisation course. In this roadmap, we navigate the route to stronger green hydrogen policy and demonstrate how it can be used to decarbonise the shipping and aviation sectors.

Current policy landscape:

Shipping:

• FuelEU Maritime initiative, 2023:[1] Calls for 80% reduction in the greenhouse gas intensity of shipping fuels by 2050, lagging behind both the Paris Agreement targets, and the 2023 International Maritime Organization (IMO) strategy[2] which aims for a 30% reduction in emissions by 2030, 80% by 2040 and zero in 2050.

• FuelEU Maritime initiative includes a 2% synthetic fuels usage target by 2034, including hydrogen-derived fuels, but this new regulation will only be introduced if synthetic fuels amount to less than 1% in the fuel mix in 2031 - much too low.

• The initiative continues to incentivise the use of fossil LNG despite high methane leakage rendering it not a green solution.

• IMO Greenhouse Gas reduction strategy for global shipping, 2023:[3] Target for achieving net zero emissions by 2050, achieved by aiming for 10% uptake of zero or near-zero emission fuels and/or energy sources by 2030.

Aviation:

• ReFuel EU Aviation, 2023:[4] Sets target for fuel suppliers to incorporate 6% Sustainable Aviation Fuel (SAF) in 2030, but only 1.2% synthetic fuels (including green hydrogen-derived). This target will rise to 70% SAF and 35% synthetic fuels by 2050.

• The legislation is projected to reduce aircraft CO2 emissions by around two-thirds by 2050, providing climate and air quality benefits.

• ReFuel EU Aviation’s focus on biofuels in aviation risks creating incentives for deforestation that green hydrogen-derived fuel production does not involve.

Green Hydrogen:

• EU Hydrogen Strategy, 2020:[5] Recommended policy actions in research and collaboration, international cooperation, building a market and infrastructure for hydrogen, investment assistance, and production and demand support, all implemented by 2022.

• Green hydrogen’s integral role has been neglected in both the FuelEU Maritime and ReFuel EU Aviation initiatives.

The policies we need:

Holistic policymaking approach 

• Transport policy must not be viewed in isolation from energy policy and green hydrogen decision-making – this is an issue that requires coherence across EU policies. 

Being honest about our solutions 

• Hydrogen strategies must recognise the importance of green hydrogen in decarbonising shipping and aviation, along with other hard-to-electrify sectors that have no other routes to decarbonisation. 

• Hydrogen strategies must make clear that green hydrogen should be prioritised in these sectors without viable alternatives and regulate to ensure it is not taken forward as a major decarbonisation strategy for those sectors that do have alternatives, such as household heating and road transport. 

Bringing supply and demand in line with shipping and aviation’s decarbonisation needs:

• EU Commission Directorate-Generals (DGs) and Member States must create a policy environment that promotes green hydrogen innovation and scales up production as necessary to put shipping and aviation on sustainable decarbonisation trajectories. 

• EU mandates on minimum use targets for synthetic shipping fuels only start in 2034. These must be introduced sooner, and always prioritise incentives for the lowest-emission alternative fuels. 

• Revise ReFuel EU aviation targets to support green hydrogen fuels. The fuels with the greatest emission reduction potential must continue to be incentivised over others.

• Incentivising the lowest emission fuels must also extend to any mechanisms put in place to drive the supply of alternative fuels for the sector – for example, support for fuel production or ship retrofits. 

Economic benefits:

• In the EU, the green hydrogen economy could create as many as 5.4 million jobs by 2050.[6]

• Ambitious sustainable fuel mandates will spur production, with the resultant job creation leading to surges in housing, education, transport, and utilities demand in surrounding areas, drawing investment, creating induced jobs and multiplying economic benefits.  

Our Vision

• An entrenched and holistic approach to EU policymaking that reduces inefficiencies and harmonises energy, transport, green and industrial policies.

• Regulations stimulate green hydrogen-derived fuels demand.

• The new green hydrogen-derived fuels market this demand spike leads to increased production, and growth of small companies in the sector.

• The scale of the EU single market and its potential to streamline green hydrogen-derived fuel incentives across EU Member States would provide economic gains across the Union, with trickle-down socio-economic benefits positively impacting all sectors.

• A large but regulated green hydrogen market emerges that is limited to hard-to-electrify sectors including the aviation and shipping sectors, avoiding the inefficient misuse of green hydrogen in electrifiable sectors.

• The gradual transition from fossil fuels to green hydrogen-derived e-fuels in the shipping and aviation sectors sets the Union on course for its long-term decarbonisation targets.

References:

[1] https://www.consilium.europa.eu/en/press/press-releases/2023/07/25/fueleu-maritime-initiative-council-adopts-new-law-to-decarbonise-the-maritime-sector/

[2] https://www.imo.org/en/MediaCentre/PressBriefings/pages/Revised-GHG-reduction-strategy-for-global-shipping-adopted-.aspx

[3] https://www.imo.org/en/MediaCentre/PressBriefings/pages/Revised-GHG-reduction-strategy-for-global-shipping-adopted-.aspx

[4] https://www.consilium.europa.eu/en/press/press-releases/2023/10/09/refueleu-aviation-initiative-council-adopts-new-law-to-decarbonise-the-aviation-sector/

[5] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0301#:~:text=The%20priority%20for%20the%20EU,with%20an%20integrated%20energy%20system.

[6] https://cicenergigune.com/en/blog/green-hydrogen-employment-growth

Want to learn more? Read our Green Hydrogen Gap report here.*

* This factsheet draws on information and statistics included in the Green Hydrogen Gap report and supporting research conducted by Arup.