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| Mon, 22nd Mar 2021 11:00:00 |
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Is The World’s Most Controversial Pipeline About To Pivot To Hydrogen? |
Keeping the position of key energy supplier to the Old Continent comes at a price. And it looks like it’s a price Russia is ready to pay it. Moscow is silently investing in the production of hydrogen, potentially aiming to make it flow through its new NordStream 2 pipeline. While the future of the controversial project still fuels debates and uncertainties, Russia decided to adapt to its neighbor's needs for cleaner energy sources, and in particular for hydrogen, which the European Commission put at the forefront of its recovery agenda.
A dialog between Berlin and Moscow is currently underway to produce green hydrogen on a large scale. That information was revealed during a conference held at the German-Russian Chamber of Commerce on February 16th. But as surprising as it may appear, this narrative is not new. Firstly mentioned in 2018, the hydrogen option for Nord Stream 2 was then put on the table by Uniper who, in March 2020, envisioned the ability of the pipeline to transport up to 80% hydrogen.
"One of the key arguments against NordStream 2 is that adding natural gas contradicts the decarbonization objectives of Europe. Here, Russia's counter-argument is that NordStream 2 also has a hydrogen potential, and can fulfill those decarbonization objectives", according to Luca Franza, a researcher on EU-Russia gas relations.
The choice of hydrogen investment by Russia can be interpreted as a tactic to make the project more appealing and to change Western countries’ stance on Nord Stream 2 sanctions. But beyond the geopolitical aspect, it raises several questions on its actual feasibility.
Firstly, will this hydrogen be blue (produced from fossil fuel sources) or green (carbon neutral)? The question is difficult to answer since the EU is not adopting a “color-blind” approach to hydrogen anymore. According to Luca Franza, "Russia has a better comparative advantage along the blue hydrogen value chain: it is, therefore, better positioned to send blue hydrogen rather than green, for which costs are still very high”.
Stephan Weil, prime minister of Lower Saxony State, remains hopeful about Russia’s renewable energy potential for green hydrogen. “Russia can offer giant land potential as a basis to build up solar and wind power, and huge water resources for hydropower,” he commented, quoted by Reuters. However, looking at Russia's current energy mix, the country still relies for more than 60% on coal and natural gas and is far from being a role-model in renewable energy production.
Moving to a 100% green hydrogen economy implies using blue hydrogen as a transition fuel until at least 2045 when costs are expected to begin to converge. The cooperation framework set between Russia and Germany seems to ignore these considerations and is determined to pursue green hydrogen production.
The second major question then: how will this hydrogen be transported?
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