The EU will need to spend €145bn ($160bn) on grants and subsidies by 2030 to enable enough clean hydrogen to be produced to allow the bloc to keep to its commitment of limiting climate change to 2C, according to a report from trade body Hydrogen Europe.

A further €430bn of private investment would be needed to ensure “an innovative and competitive hydrogen manufacturing industry can start up, build up and scale up”.

Hydrogen is seen in Europe as a vital tool in the fight against climate change as it is a zero-carbon fuel that can be used for energy storage and to decarbonise transport, heating and heavy industry. But at the moment, the cheapest method to manufacture hydrogen is through unabated fossil fuels, either natural gas or coal, which emits nine to 12 tonnes of CO2 for every tonne of H2 produced.

This hydrogen can be produced in a zero-carbon manner by using renewable electricity to split water molecules into hydrogen and oxygen inside machines called electrolysers (known as green hydrogen), or the existing “grey hydrogen” production can have around 90% of its CO2 captured and stored (known as blue hydrogen). Both methods are more expensive and would therefore require government support to be cost-competitive with grey H2 — in a similar way that wind and solar power have been subsidised to allow renewable energy to compete with coal- and gas-fired power plants.

Hydrogen Europe believes that all hydrogen required in the EU by 2030 — 16.9 million tonnes — should be green or blue. It argues that the aforementioned funding would enable 173TWh or 4.4 million tonnes of green hydrogen to be produced in the EU, using 40GW of electrolysers, and a further 118TWh or 3 million tonnes to be imported into the bloc from North Africa and Ukraine via another 40GW of electrolysers.

The EU’s 40GW of electrolyser capacity, which would cost an estimated €14.8bn, would need to be powered by 81.7GW of new wind and solar power at an estimated cost of €107.9bn. “These [costs] could be lowered by maximising the use of already existing carbon free electricity available in Europe,” the report adds.

A further 8.2 million tonnes — the entire current production of “grey hydrogen” produced from unabated natural gas in Europe — would be classed as “low-carbon hydrogen” or “blue hydrogen” by 2030, with 90% of emissions captured and stored, the report adds, while another 1.3 million tonnes would be made from new coal gasification plants — in Poland, Bulgaria, Romania and Hungary — with 100% of emissions captured and stored.

Demand for the 16.9 million tonnes of clean hydrogen per year by 2030 would come from replacing the current ‘grey hydrogen’ usage (9.1 million tonnes); new industry demand including steelmaking (2.5 million tonnes; heating, including industrial heat (2 million tonnes); transport (1.8 million tonnes) and power balancing (1.5 million tonnes).ncing (1.5 million tonnes).