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To wean off Russian fossil fuels with green hydrogen, Europe needs to ramp up renewables

As the current geopolitical crisis pushes energy security concerns to the forefront, S&P Global Platts forecasts that Europe will need at least 150 GW of renewable power to meet its green hydrogen goal, which is expected to assist not only in phasing out Russian fossil fuels but also in speeding up the energy transition

To wean off Russian fossil fuels with green hydrogen, Europe needs to ramp up renewables

Brussels, June 30 - Neftegaz.RU. Due to the Ukraine crisis, the EU is actively working on securing its independence from Russian fossil fuels well before 2030, starting with gas.
In pursuit of this, the EU moved to phase out all Russian oil imports “in orderly fashion.”

As growing energy supply concerns have led to increased volatility in oil & gas prices, the EU presented its REPowerEU Plan as a way forward to come to grips with a double urgency, seeking to reduce the EU’s dependency on Russian fossil fuels and fast forward the green transition.
In addition, the EU intends to ban almost 90 % of Russian oil imports by the end of the year.

According to a recent S&P Global Commodity Insights analysis, the EU member states will need to install at least 150 GW of renewable energy capacity to power the electrolysis of water to meet at least half of its green hydrogen target of 20 million metric tons (mt) a year under REPowerEU, which the EC set as a goal for 2030 to end the EU’s dependence on Russian fossil fuels and to accelerate the transition to cleaner forms of energy.

As half of this goal or 10 million mt would be met through imports while the other half would be generated from renewable sources installed across the member states, the research analysis highlights that an estimated 300 GW of additional renewable capacity would be needed to meet the 20 million mt target, thus, roughly half or 150 GW would be needed to meet the internal EC production goal.

Based on the EC’s calculation, an additional 500 TWh of renewable electricity per year – about half the level of current EU renewable electricity generation including hydropower – will be needed to produce the 10 million mt of hydrogen within the EU by 2030.

Most of this additional renewable generation capacity will be wind and solar, says S&P Global’s research.
Thanks to the REPowerEU, the total renewable energy generation capacity would be increased to 1.236 TW by 2030, in comparison to the 1.067 GW by 2030 that the EU originally sought under its package of proposed policies targeting net-zero, Fit for 55.

Therefore, this 45 % increase in renewable generation is expected to meet the increased goal for green hydrogen, which the EU has identified as an important part of the solution for hard-to-decarbonise sectors, such as aviation, maritime and certain industrial sectors.

To remind, the Council of the EU adopted, earlier this month, its negotiating positions on 2 legislative proposals that tackle the energy aspects of the EU’s climate transition under the Fit for 55 package: the renewable energies directive and the energy efficiency directive.

Several countries and industry players are trying to up their energy transition game through collaborations on offshore wind and green hydrogen.
To this end, G7 launched the G7 Hydrogen Action Pact (G7-HAP), a joint initiative on low-carbon and renewable hydrogen, and its derivatives such as ammonia.

Moreover, the EC estimated implementing REPowerEU would require a «strong increase in the consumption of renewable hydrogen», which would translate into a need for increasing the installed capacity of electrolyzers - from 44 GW in Fit-for-55 to 65 GW in REPowerEU – as explained within a staff paper.

Additionally, the paper also outlines that installed wind and solar capacity would need to increase to supply electrolyzers with renewable electricity as under REPowerEU, there would be 41 GW of wind and 62 GW of solar in additional capacity.

The S&P Global’s research points out that the EU is currently working on 2 draft delegated acts, which are expected to clarify the bloc’s rules for renewable hydrogen-sourced fuel in terms of the additional amount of renewable capacity needed beyond what is required for electricity needs to meet the green hydrogen goal.

Julien Rolland, head of Trafigura’s power and renewables division, welcomed the EU’s attempts to clarify this, adding that there is a «deficit» of green electricity in Europe since the replacement of coal & gas is being prioritised.
While explaining that electrolyzers cannot be installed everywhere in the EU, Rolland pointed out:
  • You need to put them where you think you’re going to build more offshore wind farms or more solar farms
Back in March, S&P Global Commodity insights revealed in an analysis that electrolysis production capacity is growing strongly as annual production capacity is projected to grow from 4 GW in 2022 to over 12 GW in 2023 and as much as 35 GW by 2025.

Since meeting its hydrogen goal will require the EU to frontload its renewable energy deployment, S&P Global looked at wind production, elaborating that offshore wind additions are ramping up through 2030, but onshore wind additions have struggled to exceed 10 GW per year because of local opposition to permitting.
Catherine Robinson, S&P Global Executive Director, stated:
  • For Europe that is a clear yes that deployment of renewables will need to accelerate significantly
Meanwhile, as energy security concerns continue to take the world by storm, pressure from environmental activists is mounting to end fossil fuel extraction and transition to renewable sources of energy.
Earlier this month, 4 environmental groups disclosed they intended to start legal action to end support for 30 EU-backed gas projects with a total cost of nearly $14 billion.

At the time, the environmental organisations argued that the EU’s decision to support gas infrastructure puts the EU’s climate & energy goals under threat, pointing out that experts have clearly said no new gas or other fossil fuel developments should be built if we are to limit warming to 1.5C.

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