The European Union’s array of mandates and quotas for clean fuels imports and consumption are, in many ways, holding up the floor of the boom in projects around the world, with many developers seeking to take advantage of the expected demand from European industry.
The mandates, however, might be too ambitious to be fulfilled and could in some cases be revised or eliminated, according to multiple speakers this week at the Lisbon Energy Summit & Exhibition.
“You still have a lot of companies that by now should be doing something to fullfill the mandates by 2030, and they’re not,” said Sergio Machado, head of hydrogen and renewable fuels at Galp, a Portuguese multinational energy company. “I think you have some companies that are not completely convinced that the mandates are fulfillable, and if not, something may have to change” such as a revised mandate or another timeline, he said.
Machado noted that anticipated penalties under RED III from Member States could end up being a “bailout” for industry. The deadline for EU Member States to implement RED III into national laws is September, 2025, where penalties for non-compliance will be set.
“Being a pioneer in [green hydrogen], I want a level playing field,” he added.
Galp took a final investment decision in December on two projects at its Sines refinery – a 100 MW electrolysis plant, and an advanced biofuels unit – for a total of EUR 650m of investment.
Nuno Rodriguez, head of energy and decarbonization projects for The Navigator Company, said the EU should start considering mechanisms to put in place for early mover projects that take FID only to later have the mandates revised or eliminated in some way.
Philip Christiani, of Copenhagen Infrastructure Partners, lauded the European Hydrogen Bank for its principles but noted that it has just EUR 3bn in funding and is “grossly underfunded.” He compared it to over $30bn in funding that is being allocated at the federal level to hydrogen in the United States under the IRA.
Furthermore, he said, citing an unnamed study, the ReFuel EU targets for consuming a total of 20 million tons of green hydrogen on the continent by 2030 was out of reach. He noted that the projects that recently won financing from the European Hydrogen Bank amounted to just 150,000 tons of production.
“There’s a missing proportion between the ambitions on one side, and the possibilities on the other side,” he said.
A more realistic goal, he added, again citing research, was in the 2.5 million tons area by 2030. “[That’s] now not on the ridiculous scale, but it’s on a scale where you can see eye to eye with it.”
Executives from Madocqua Renewables, which has a 500 MW green ammonia project in southern Portugal, and ETFuels, an e-methanol developer, both noted they were relying on EU mandates to spur demand when their projects are expected to come online in 2028 or 2029.
“We believe that at the moment, without comprehensive legislative action, it’s difficult to get this industry off the ground,” said Oliver Seelis, of CIP, which is an investor into the Madocqua project in Portugal.
“We’ve seen this happen very successfully with renewables, where in the beginning feed-in tariffs and contracts for difference helped to start this industry,” he added. “If you look at hard-to-decarbonize sectors such as steel and shipping, that is not the case yet.”
