Regional cooperation key to tap into the North Sea’s hydrogen potential

Low-emissions hydrogen1 can play a significant role in decarbonising the global energy system – and in Europe, policy makers are making it a key part of their strategies to meet energy and climate targets. In addition to their environmental benefits, efforts to produce low-emissions hydrogen can help reduce reliance on fossil fuel imports in the medium-term, supporting energy security.

The majority of countries in the region have set targets for the production of hydrogen via electrolysis. Since the Russian Federation’s invasion of Ukraine, several Northwest European countries have doubled them, and others are considering increases, as highlighted by the Northwest European Hydrogen Monitor 2024, which the International Energy Agency (IEA) published last month. Altogether, countries in Northwest Europe – a region that here includes Austria, Belgium, Denmark, France, Germany, Luxemburg, the Netherlands, Norway, Switzerland and the United Kingdom – now have ambition to develop as much as 30 to 40 gigawatts (GW) of electrolyser capacity by 2030.

Based on the IEA’s Hydrogen Production Projects Database, Northwest Europe’s production of low-emission hydrogen and derivatives could top 7 million tonnes (Mt) per year by 2030 if all planned projects become commercially operational (taking into account expectations on efficiency and utilisation). This would cover approximately 2% of the region’s total primary energy demand. However, less than 4% of low-emissions hydrogen production by 2030 comes from projects that have been committed, which means they are in operation, have reached a final investment decision (FID) or are under construction. This is in line with the share seen globally, though it needs to increase rapidly to meet the worldwide objectives that have been set, according to analysis in the IEA’s Global Hydrogen Review 2023.

The North Sea has vast and untapped renewable energy and carbon storage potential, which could make it a powerhouse for low-emissions hydrogen production. Based on the IEA’s Hydrogen Production Projects Database, projects linked to the North Sea2 could enable the production of close to 3 Mt per year of low-emissions hydrogen by 2030, accounting for almost 40% of Northwest Europe’s potential output.

Approximately 25 GW of electrolyser capacity could be powered by offshore wind projects in the North Sea by 2030 if all announced projects for this period are realised. This could translate to approximately 1.2 Mt per year of low-emissions hydrogen production, taking into account assumptions on efficiency and utilisation factors. However, less than 2% of these projects in terms of low-emissions hydrogen have been committed, while 98% are undergoing feasibility studies or in early stages of planning. In addition to producing low-emissions hydrogen, electrolysers can also help integrate offshore renewables into broader power systems and limit generation curtailments.  

The North Sea could also become a hub for fossil-based hydrogen projects that capture the resulting emissions. Based on the IEA’s Hydrogen Production Projects Database, projects linked to the North Sea could enable the production of 1.7 Mt per year of low-emissions hydrogen by 2030 from fossil fuel-based hydrogen projects equipped with carbon capture, utilisation and storage (CCUS). The United Kingdom alone accounts for 70% of this potential supply. However, over 90% of these projects are either undergoing feasibility studies or are in the concept phase. 

A major factor hindering low-emissions hydrogen projects from reaching more mature phases of development is uncertainties surrounding demand. Secure expectations for demand are essential for the conclusion of long-term offtake agreements, which can in turn help reduce investment risks and improve the economic feasibility of low-emissions hydrogen projects.  

The majority of the largest ports in the Northwest European region face the North Sea, making it a hub for international trade. Twelve of these ports – many in the Netherlands and Germany – already have plans to develop infrastructure around low-emissions hydrogen or hydrogen-based fuels and all intend to expand their capacity to import ammonia, an industrial feedstock and hydrogen carrier that could play a central role in the nascent hydrogen trade market in the medium term.

In the Netherlands, fertiliser and chemicals producer OCI N.V. recently reached a final investment decision to expand its ammonia import terminal in the port of Rotterdam, tripling existing throughput capacity from 0.4 Mt to 1.2 Mt per year, or 0.2 Mt of hydrogen equivalent. In addition, OCI finalised engineering studies to construct a new ammonia terminal in the same port, aiming to ultimately reach throughput of over 3 Mt per year (or 0.5 Mt of hydrogen‑equivalent) as demand for ammonia could grow in the medium term. This terminal alone, if fully realised by 2030, could represent 13% of all ammonia import volumes to Northwest Europe based on announced projects.

A final investment decision has also been reached for the Hanseatic Energy Hub, a liquefied natural gas (LNG) terminal in the port of Stade in Germany. The project, set to begin operations in 2027, will initially import LNG and biomethane, but has also been certified as “ammonia-ready.” Similarly, energy storage provider VTTI and Höegh LNG, a provider of floating LNG terminals, have agreed to develop a floating storage and regasification unit in the Vlissingen port area in the Netherlands that could be adapted to import hydrogen.

Based on announced projects, the Netherlands and Germany are poised to account for the majority (99%) of the 5 Mt of hydrogen-equivalent that Northwest Europe could receive by 2030. These volumes could increase to 10 Mt of hydrogen-equivalent by 2040. However, the majority of projects tied to the trade of low-emissions hydrogen remain in early phases of development, with the lack of binding offtake agreements for imports continuing to pose a major challenge. 

Efforts are also underway to develop offshore hydrogen transmission infrastructure in the North Sea, which could facilitate cross-border trade within Northwest Europe. Projects in the works include the AquaDuctus offshore pipeline; advanced by Germany, it could connect national offshore hydrogen infrastructure tied to Denmark, Norway, the Netherlands, Belgium and the United Kingdom. Germany and Norway have also taken important steps to boost collaboration in recent years,  issuing a joint pledge to co-operate on hydrogen imports, including via offshore pipelines, in March 2022. The German Energy Agency (Dena) and Norway’s Gassco then published a feasibility study on a hydrogen value chain from Norway to Germany, and a joint task force was set up in September 2023 to follow up on the results. The Netherlands’ Gasunie also launched a tender for a feasibility study for an offshore hydrogen pipeline in the North Sea in June 2023 that included the design of an offshore platform for compression and electrolysis, as well as pipeline routing.

Countries in Northwest Europe have launched numerous initiatives to work together on hydrogen that could expand low-emissions production and trade in the region the coming decades. The Ostend Declaration on the North Seas as Europe’s Green Power Plant, published in April 2023, lays down the foundations for regional cooperation on offshore renewables between Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands, Norway and the United Kingdom. It sets the ambition for 120 GW of installed offshore wind power capacity by 2030, which then grows to 300 GW by 2050 – and includes ambitions to cooperate on offshore renewable hydrogen production, carbon storage and hydrogen transmission infrastructure.

Building on the Ostend Declaration, the Ministerial of the North Seas Energy Cooperation in November 2023 adopted the North Seas Energy Cooperation Action Agenda in The Hague. The Agenda highlights the importance of developing infrastructure for electrolysers and hydrogen, both offshore and onshore – noting their importance to long-term grid planning.

Yet to unleash the full low-emissions hydrogen potential of the North Sea, policy makers could focus on the following key areas:

1. Demand creation: Stimulate demand for low-emissions hydrogen in the industrial areas and ports located near the North Sea, which are already major consumers of hydrogen (though it is mostly produced from unabated natural gas). This could be facilitated through the adoption of policies such as quotas, mandates, public procurement and end-use subsidies, as well as through a wider implementation of carbon pricing.  
2. Regional development plan: Assess potential synergies in the North Sea between national low-emissions hydrogen projects and industrial hubs.
3. System integration: Explore the potential role of electrolysers in the integration of future offshore wind power supply in the broader Northwest European energy system.
4. Coordinated approach to port infrastructure development: Evaluate the potential for Northwest European ports to complement each other and optimise future investments in import infrastructure for hydrogen and derivatives.
5. Joint approach to developing international hydrogen value chains: Explore market-based mechanisms which could enable demand aggregation and potentially the joint procurement of low-emissions hydrogen and derivatives from outside of Europe. A joint approach could facilitate the development of international low-emissions hydrogen value chains, building on the collective market power of Northwest European countries.