The industrial community acknowledges that Luxembourg wishes to restrict the deployment of hydrogen to renewable sources. In other words, only hydrogen produced from renewable energy shall be promoted to tackle the energy transition. The industrial community already expressed its reservation about this approach in its Discussion Paper, published in July 2020, arguing that this choice will probably slow down market adoption of hydrogen. Also, will it negatively impact the hydrogen ecosystem’s development rate due to the price premium and limited availability of renewable hydrogen. Instead, FEDIL suggests using hydrogen produced from other energy sources during a transition period until renewable hydrogen is priced competitively, and security of supply is given.

Currently, little is known about Luxembourg’s Hydrogen Strategy. The document has been under development for many months, information about its content is released only in fragments and to like-minded audiences. Hopefully, the strategy’s focus on renewable hydrogen does not mean that the ministry for energy would not agree with hydrogen infrastructure development projects unless they were for 100% renewable hydrogen. Considering that less than 2% of the hydrogen available on the market is renewable, there is little risk that a significant budget must be reserved for such endeavours. However, Luxembourg risks missing the boat when it comes to preparing the energy transition or getting involved in initiatives to connect to EU-wide networks of hydrogen supply infrastructures.

The approach not only endangers the Luxembourg economy to switch towards hydrogen smoothly, but it is also incoherent and difficult to grasp. The same ministry who insists on renewable hydrogen is broadly promoting individual electric mobility by deploying a national charging infrastructure, and the government is heavily subsidising electric and hybrid vehicles. Following the logic of the « green-only » hydrogen infrastructure, no vehicle charging infrastructure would be permitted unless all the electricity in the grid would originate from renewable sources such as photovoltaics, wind- or hydropower. However, the electricity mix in Luxembourg’s grid, sourced to almost 80% from Germany, has one of the highest carbon footprints in Europe. And purchasing guarantees of origins for the electricity in its charging stations will not make the related emissions go away. On the long term, it is nevertheless the right approach if we wish to decarbonise mobility. The same pragmatic approach should be valid for developing a hydrogen infrastructure.

For industrial users, the choice to restrict hydrogen deployment to renewable sources means that accompanying measures must be put in place to promote its market acceptance. Those measures must be designed to ensure that prices, the offer in terms of available volumes and the quality of renewable hydrogen are compatible with business reality. In other words, the government must be willing to reserve budgets to compensate industrial consumers for the price difference compared to cheaper, other forms of hydrogen. Furthermore, it must develop channels capable of delivering the volumes and qualities required.

Currently, Luxembourg’s industry uses hydrogen mainly as a reactant for specific chemical production processes. The volumes needed are limited, and the level of purity required is high. Only two industrial companies are consuming volumes of hydrogen worth mentioning. This hydrogen is produced via gas reformation (CH4 + H2O → CO + 3H2), referred to as grey hydrogen, and imported via road transport.

Ecologically speaking, it is worth considering a local infrastructure to produce the renewable hydrogen volumes needed to substitute today’s limited, fossil fuel-based quantities. The limited volumes combined with the high-level of purity support the option to install local electrolysers. They could further be used as flexibility potential to stabilise the grid if needed. The electrolysers could be run on renewable electricity – or merely using electricity from the grid. According to the government’s logic, the grid’s energy mix is considered suitable to decarbonise mobility. Following this pragmatic approach, it should also be considered suitable to produce local, carbon-free hydrogen for the industry. Knowing that the CO2 emitted for Luxembourg’s electricity production is accounted in Germany’s carbon footprint, it does not affect Luxembourg’s national CO2 targets. What does not seem to make much sense ecologically in the short term, seems reasonable if we are serious about decarbonising our economy on the longer-term. And in the meantime, Germany’s electricity mix is rapidly becoming more renewable.

Economically speaking, however, it might become challenging to run this production to compete with market-based hydrogen prices. Little is known about the economics of operating a local electrolyser, and the same goes about its impact on the electricity grid.

As a carbon-free energy source, hydrogen could be used to substitute natural gas in many heat-generating processes. What sounds straight forward, in theory, is, however, more difficult in practice. Except for conventional heating processes, we know little about available hydrogen-based technologies regarding sector- and process-specific heat production. Open questions include what hydrogen-based boilers, burners and furnaces are available on the market. What are the necessary investments and operational costs, overall energy efficiencies and what volumes we need in Luxembourg’s industry?

The above discussion about the deployment and sourcing of hydrogen shows that the subject still includes many unanswered questions. Hopefully, the national hydrogen strategy has the answers. The industrial federation suggests conducting a cross-sectoral study to investigate hydrogen’s substitution potential and available technologies, including their overall costs. Such a study must be done at least on a national level and across all energy-intensive industrial sectors to identify potential use cases for hydrogen. It would be worth considering extending the study to the greater region and other hard-to decarbonise sectors, such as long-haul road transport.

Gaston Trauffler
Responsable politique industrielle auprès de la FEDIL