Green hydrogen imported into Europe will be cheaper than all types of domestically-produced hydrogen by the time imports to the continent begin in 2024, a US environmental non-profit organisation said today, adding that imported renewable H2 could also help the EU break free of its dependence on fossil fuels — and Russian gas in particular.

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Analysis from the Rocky Mountain Institute (RMI), which campaigns for an accelerated energy transition, projected that imported green hydrogen would cost around $3.75/kg in 2024, reducing to $2/kg by 2030.

Domestically produced renewable H2 would also reduce to around this level by 2030, RMI said, but it would not be competitive with imported hydrogen early on, costing around $4/kg in 2024.

Both types of green hydrogen production would undercut blue and even existing grey hydrogen production on cost up to 2030, it added, on the back of sky-high natural-gas prices that will take years to adjust to the new supply realities created by Russia’s war in Ukraine.

Based on current 2026 futures for fossil gas and European carbon, RMI expects blue hydrogen production to cost around $4.60/kg in 2024, reducing by nearly half to $2.50/kg by 2030.

This, said the non-profit, illustrates that blue hydrogen — produced from natural gas with carbon capture and storage — is “no safe harbour”.

Most expensive of all, due to carbon pricing, would be new European grey hydrogen production, which would reduce from $6.50/kg today to around $5/kg in 2024.

The analysis paints a stark picture of the cost pressures faced by producers of grey and blue H2. As recently as 2021, before the steep ascent of natural gas prices was factored into its models, the IEA estimated that the levelised cost of grey and blue hydrogen production would be a maximum of $1.7/kg and $2/kg respectively.

And BloombergNEF’s modelling on global hydrogen production costs in April 2021 estimated that green hydrogen wouldn’t outstrip blue hydrogen on price until 2030.

However, in March this year, BNEF performed a new analysis that concluded that green hydrogen was now cheaper to produce than blue and grey H2 in Europe, the Middle East, and China due to high fossil-gas prices.

'Last stand'

Significantly, the RMI claimed that imported green hydrogen could help “break” European dependence on fossil fuels — and by extension Russian natural gas — by deploying it in energy-intensive industries and replacing the grey H2 used in the fertiliser sector.

The report notes that adopting green hydrogen in these sectors could act as a jumping off point for further hydrogen use in heavy industry and shipping, helping towards a 76% reduction in natural gas demand by 2030.

Industrial demand accounts for just 25% of total European gas consumption, but RMI said in the report that replacing this from Europe’s energy mix would effectively form the “last” stand to end dependence on Russian gas once all other sectors have been either electrified or had demand reduced.

“Green hydrogen alone is not able to break the dependency,” a spokesperson for RMI tells Recharge. “But neither are all the other collective measures that are being considered, including very aggressive energy efficiency, electrification and source diversification of imported natural gas.

“The remaining demand for natural gas from sectors that cannot switch fast enough from a molecular fuel still cannot be supplied by domestic production and expanded LNG imports.

“In order to “break” the final stand of Russian natural gas imports in Europe, green hydrogen is the only logical solution.”

The report comes ahead of the European Commission’s planned unveiling of its new REPowerEU strategy next week, which aims to slash imports of Russian oil & gas.

Either way, the realisation of imported green hydrogen will require robust regulation and deep co-operation with potential hydrogen suppliers outside the bloc, RMI said, adding that it saw Morocco, Saudi Arabia, the US, Chile, Brazil and Australia as the lowest-cost potential suppliers to the EU in the short to medium term.