In recent weeks the world has witnessed the limitations of international diplomacy. In a world where countries are dependent on the importation of energy to sustain economies, the exporter of energy often has the upper hand. This is evident in the Ukraine crisis in how the EU has been constrained in imposing sanctions on Russian oil and gas imports.
One can only speculate what the international response would have been if the EU was reliant on itself for its energy security, or it had a greater choice of where to purchase energy from.
The international community is aware of this tenuous situation and responded with various government and private announcements to decrease reliance on Russian oil and gas.
In a market where cheap, decentralised solar and wind generation can be coupled with storage solutions and hydrogen transport, international alliances may look different in the years to come. This is especially true as the COVID-19 recovery measures that heavily invested in renewable generation and hydrogen development can now benefit from the creation of a European offtake market.
Up to now, the EU relied on Russia to supply 25% of its oil and 40% of its gas requirements. In a bid to make Europe independent from Russian fossil fuels, the European Commission announced the RePowerEU plan on 8 March 2022 which will, amongst others, quadruple green hydrogen supplies by 2030.
To encourage this hydrogen acceleration the EU intends to support the development of hydrogen infrastructure. This includes reforming regulatory frameworks, building new hydrogen storage facilities and port infrastructure and prioritising the provision of aid to State hydrogen projects. An obvious limitation will be the availability of electrolysers to produce hydrogen, which puts projects that are already under development in a favourable position.
With the continued denouncement of purchasing energy from regimes that do not align with the purchase country’s ethos, various jurisdictions are joining the call to develop their own sustainable renewable energy schemes or opening their markets to other suppliers.
The impact of this global power shift remains to be seen, but it will undoubtedly hold opportunities for hydrogen projects in development in Australia. The message to the market is clear: greater energy independence and energy security are possible, and Australian green hydrogen has a seat at the table.
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.