H2Med vs SoutH2, the two possible H2 corridors in Southern Europe

by Sergio Martín and Juan Palencia | Jan 5, 2024 | Technical articles

Due to the decarbonisation plans proposed by the European Union, in which renewable hydrogen takes a major role, it is necessary to implement a network of distribution pipelines or gaseous hydrogen pipelines, also called hydroducts, with which to transport renewable hydrogen throughout the European geography from the countries that are expected to play a major role in production to the countries that consume the material.

In addition, as a consequence of the Russian invasion in Ukraine, in which the EU decided to limit the import of Russian gas, and the deactivation of the Nord Stream pipeline, the countries located in the heart of the old continent, especially Germany, need an urgent solution to supply their current demand for natural gas, and in the near future, for renewable hydrogen. These solutions, and for southern Europe, mainly involve two projects:

  • The first, and until a few months ago the only European hydrogen corridor, the so-called H2Med, in which the Iberian Peninsula would become the main hydrogen hub of the old continent where renewable hydrogen would be exported to northern Europe.
  • The second, called SoutH2 Corridor, in which renewable hydrogen produced in North Africa would be transported through Italy, Austria and finally to Germany.

Figure 1. SoutH2 and H2Med Itinerary Comparison

H2MED Project

The project, included in the PCI (Projects of Common Interest), was presented in Alicante during the EuroMed summit on December 9, 2022. The governments of Portugal, Spain and France would promote the project to create a hydrogen corridor that would cross their national geography. A month later, in January 2023, the German government joined the project, due to the urgent need to cover its current and future gas demand by countries belonging to the European Union, thus adding the large German industrial sector to the project. The main driving companies will be Enagás (Spain), GRTgaz (France) and REN (Portugal) and will have the following international connections:

  • Portugal-Spain: it will be carried out between the Portuguese region of Calourico de Beira and the Spanish province of Zamora and will be called the CelZa Corridor. It will have an investment of 2.4 billion euros, with a capacity of 0.75 Mt of renewable hydrogen per year, a length of 248 km and 24.6 MW in compression stations.
  • Spain-France: it will be carried out by means of a maritime connection between the cities of Barcelona (Spain) and Marseille (France), under the name of the BarMar Corridor. It will have a capacity of 2 Mt of renewable hydrogen per year, a length of 455 km and 140 MW in compressor stations.

The financing of this corridor is also associated with the promotion of the hydrogen backbone network in Spain, which will allow the connection of the CelZa and BarMar corridors and is also intended to be the connection between the different hydrogen production points in the country, facilitating the implementation of a hydrogen Hub in the Iberian Peninsula.

Within the financing of the backbone network, approximately 4.6 billion euros, from the PCI (Projects of Common European Interest) budgets, the following projects will be implemented:

  • Via de la Plata axis: this is the connection with the Puertollano and Huelva hydrogen valley, which will be approximately 1,250 km long.
  • Cantabrian coast axis: it will connect the Ebro valley with the Levante axis (which will have a length of 450 km and an investment of 5757 million euros), this connection is expected to have a length of 1,500 km.
  • Underground hydrogen storage facilities in salt cavities in Cantabria and the Basque Country, with a capacity of 335 GWh and 240 GWh respectively.

Figure 2. H2Med Map

H2Med PCI Project

On November 28, the European Commission selected the H2med project to be added to the list of PCIs. These are not IPCEI, but Projects of Common Interest (PCI). These are projects with an infrastructure dimension (transport, storage, etc.) financed by Europe and not by the Member States. This step formalises the strategic role of this gigantic pipeline. This is only the first step, as the European Council and Parliament will have two months to approve the list at the beginning of 2024. In total, the Commission has selected 166 cross-border energy projects.

French halt to H2Med and technical and economic uncertainty

France has cooled down the euphoria in recent months about the H2Med project. The industrial association France Hydrogène also agrees with the caution of the French government, claiming “to have serious doubts about the possibility of obtaining sufficient quantities of clean hydrogen by 2030, at the level necessary to make an infrastructure of this scale profitable,” admits its president, Philippe Boucly.

Until a few months ago, the government of Emmanuel Macron made its participation conditional on the guarantee that pink hydrogen, produced with nuclear energy, would also circulate along this new energy corridor. This concern has been solved since the European Commission, according to its delegated acts, will make it easier for hydrogen produced from nuclear energy, pink hydrogen, to be considered as renewable hydrogen. Now, according to an internal document, the French government is questioning the viability of the corridor in the face of a market that, according to internal government sources, shows no sign of taking off.

In the latest working document of the environmental planning department, the Government warns that the “transport of H2 is more expensive and complex than other molecules” and given that the “economic profitability will be very uncertain” in the coming years “there will be no infrastructure by 2030 for a carbon-free H2 import strategy”. The document detects “economic problems”, very high production costs, and “financial problems”, with an insufficient public aid budget for the ambitious plans drawn up for green hydrogen, which will have to be updated from 2025 onwards. This “additional need” will be subject to the “profitability of the results,” the text warns.

Studies such as that of the consulting firm Enervis or that of the University of Cologne affirm that the costs of producing renewable H2 from Spain with wind electricity do not have a competitive advantage over Germany, Norway and the Netherlands. It would have a competitive advantage over production with photovoltaic electricity but taking into account the transport costs per hydro-product (0.39 €/kg H2) would also eliminate the competitive advantage of production with photovoltaic electricity from the Iberian Peninsula. To reduce this disadvantage with respect to pipeline transport, transport by ship in the form of ammonia gains a lot of ground. Other studies, such as that of the JRC European Commission, identify that pipeline transport of H2 within the Union would make a lot of sense with electricity price differences above 20 €/MWh, which would be reached without any problem in photovoltaics between, for example, Spain and the Netherlands.

SOUTH2 Corridor

This corridor across the Mediterranean, unlike its Iberian counterpart, is mainly driven by Germany’s need for a natural gas supply decoupled from Russia. Both German Chancellor Olaf Scholz and Italian President Meloni agree on the need that “Italy and Germany are willing to work together on energy”, as well as initiating a project in which “a new pipeline through the Alps, linking Tunisia with Bavaria, will be put in place, increasing the security of supply in both countries”. In addition, on November 28, 2023, the sixth list of Projects of Common Interest (PCIs) was published, where the SoutH2 corridor has entered, under the name of “Hydrogen Corridor Italy-Austria-Germany”, so it will enjoy the advantages attributed to this type of projects.

According to Euracity, the corridor is planned based on the Transmed pipeline network, already used to connect North Africa with Slovenia, with a capacity of 33.5 million metric tons of natural gas per year and a length of 2,475 km. The pipeline will need to be extended to connect it to Austria and Germany, and the existing facility will need to be converted for future use as a hydrogen transport facility, with an estimated 70 % of the existing network to be renewed. Preliminary plans call for the final length of the corridor to be 3,300 km, with a capacity of 4 million metric tons per year, which would be 40 % of the target set in the REPoweEU program. The participants in the different projects for the achievement of the overall SoutH2 Corridor target (Political institutional boost for the SoutH2 Corridor | SynerHy) are:

  • The German companies FNB Gas and Bayernet GmbH will be responsible for carrying out the HyPipe Bavaria project in the southern part of Germany.
  • The Italian part, called Italian H2 BackBone, will be operated by the Italian company Snam Rete Gas.
  • The Austrian country has two national gas companies, Trans-Austria Gasleitung and Gas Connect Austria, which will run the H2 Readiness of the TAG pipeline system and H2 Backbone WAG + Penta-West projects, respectively.

There is also the possibility of a connection with Switzerland, which is still under discussion at the moment, as it is not known how to make the connection, whether through a specific section connecting to the main hydrogen pipeline or having the pipeline itself pass through the territory of the Swiss country.

The project will contribute to the achievement of European decarbonisation objectives through:

  • Offering a concrete energy solution to the production of industries located between northern Italy, Austria and southern Germany, the latter two of which do not have a maritime connection.
  • Guaranteeing enough hydrogen to cover more than 20 % of the production target set (of 10 Mt of imported renewable hydrogen) by 2030.
  • Contribute to improving the energy autonomy of Italy, Germany, and Austria.
  • Partially satisfy the national demand for renewable hydrogen.

Figure 3. SoutH2 Map

Algeria and Italy’s interest in SoutH2

The connection with the African continent will be made through Tunisia, reaching Algeria, which aims to become an important supplier of hydrogen to the European continent. The Algerian government’s aim is to become the supplier of 10% of Europe’s green hydrogen.

This will be made possible by strengthening the solar electricity production industry in the south of the country, where the Algerian Sahara is located, in order to use the energy to feed electrolysers for hydrogen production, and additionally, the Algerian state company Sonatrach intends to invest in hydrogen production and in the infrastructure for its transport, for a total value of 25 billion euros. A major challenge for SoutH2 will be to guarantee the water supply in the middle of the desert.  Algeria also intends to jointly supply natural gas, hydrogen, ammonia and even electricity through the pipeline that will be connected to Europe, although performing all these functions in the same structure seems somewhat impossible and implausible, there are a large number of technical aspects to consider that have not been disclosed, such as the percentage of hydrogen in the blending with natural gas. For this reason, it would be more convenient to make independent gas pipelines for each type of supply proposed.

On the other hand, this project is key to Italian interests. In this regard, Giorgia Meloni met in Algiers with Algerian President Abdelmadjid Tebboune with the aim of strengthening cooperation between the two countries in energy matters. Specifically, the African leader acknowledged that they had signed an agreement for “the study and realization of an energy infrastructure (composed of many elements) that will transport gas, hydrogen, ammonia and even electricity at the same time. Three months later, the Austrian, German and Italian ministers agreed to develop the SoutH2 corridor.

New Fraunhofer Institute study on renewable hydrogen deployment between Europe-MENA

The study “Clean hydrogen deployment in the Europe-MENA (Middle East and North Africa) region from 2030 to 2050: a technical and socioeconomic assessment” assesses the technical feasibility and socioeconomic aspects of the European Union (EU) REPowerEU target to produce, import and transport 20 million tons (Mt) per year of clean hydrogen until 2030 for use in various sectors or to be imported and stored via various routes (pipelines, ships). The central questions addressed by this article are:

  • What hydrogen production and import volumes are technically feasible in the Europe-MENA region?
  • Can imports from the MENA countries be integrated into the existing European natural gas grid?
  • How much technical storage capacity is available for hydrogen in the Europe-MENA region?
  • What socio-economic issues should be considered in a strategic analysis of clean hydrogen deployment in the Europe-MENA region?

The MENA countries can play an important role due to their geographical proximity, low-cost hydrogen production potential and existing gas infrastructure. Six MENA countries are considered key players in achieving the REPowerEU import target: Morocco, Algeria, Tunisia, Libya, Egypt and Saudi Arabia. The study estimates that hydrogen demand in Europe will be about 376 TWh by 2030 and about 2,000 TWh by 2050. By 2050, Europe will be able to meet a significant part of its hydrogen demand through imports from the six selected MENA countries. Most of these imports will have to come via pipelines. At the same time, ammonia imports by ship will also play an important role for Europe from 2030 onwards, not as renewable hydrogen carriers, but to be used as ammonia, due to the short transport distances.

While MENA countries can play a very important role in importing clean hydrogen into Europe, the authors argue that, in addition to the technical-economic aspects, the socioeconomic aspects and political dimensions of hydrogen deployment, including strict sustainability criteria and national policies and primary energy demand must be considered before the potential for hydrogen exports from MENA countries to Europe.

For Germany, hydrogen consumption is forecast to be around 84 TWh in 2030 and 492 TWh in 2050. This makes Germany by far the largest consumer of hydrogen in Europe. Given that there is a gap between production and sectoral consumption of about 1.8 Mt (60 TWh) in 2030 and almost 8 Mt (266 TWh) in 2050, Germany will become a major hydrogen importer in Europe.

Figure 4. Distribution of the MENA-EU scheme

Conclusions

Germany is the main interested party in having two corridors that will reinforce its energy independence from Russia from 2030, both with hydrogen and natural gas. Unlike SoutH2, H2Med will not transport natural gas, despite Spain’s insistence in negotiations with France. France, whose influence in Africa is great, but in exponential decline, did not accept a condition which would have given Spain formidable economic and political weight, both in Europe and in North Africa.

The agreements between Italy, Germany, Austria and Algeria have meant a hard impact on the renewable hydrogen projects planned for the Peninsula, as it implies the addition of greater competitiveness in the supply of hydrogen to Northern Europe, especially to the German country. In addition, the SoutH2 Corridor will have the support of Algeria, a country with a high potential in hydrogen production in the coming years, which is currently one of the largest importers of gas to Europe, and which seems to have entered a phase of “enmity” with Spain, due to the policies of approchement of the Spanish government to the country on the other side of the Strait of Gibraltar, Morocco, which does not have a great international relationship with the Algerian government. This “enmity” with Algeria means a reduction in natural gas imports into the Iberian country, which is also not allowed to take advantage of the surplus supply to export it to the countries further north because of the French refusal to this approach on the part of Spain.

For these reasons, and if no solutions are found, the H2Med project seems to be less competitive than its counterpart further east and could lose a large part of the imports to northern Europe.

There are many doubts that there will be a large-scale investment by the private sector in an exclusive renewable hydrogen infrastructure such as H2Med, while the SoutH2 Corridor will use natural gas transport to the center of Europe, with the unclear commitment to convert the current facility for future use for hydrogen transport. If the ambition of Algeria and SoutH2 is to produce 10% of the hydrogen consumed in Europe, it seems that H2Med will not be at all the competition of the Eastern Mediterranean Corridor. Additional hydroproduct lines may be needed in the future to ensure full European industrial decarbonisation.

There are, with respect to H2Med and SoutH2, serious technical and economic doubts about the large-scale production of renewable hydrogen by electrolysis, as well as transport and storage. The difficulties associated with long-distance hydrogen transport from an economic, technical and energy efficiency perspective mean that the objective is to prioritise local production and consumption of renewable hydrogen. The EU will provide half of the investment. The rest of the money will come from the main gas companies in the countries involved:  Enagas on the Spanish side, REN for Portugal, and GRTgaz and Terega for France.

Many voices within the industry are inclined to point out that H2Med is at a competitive disadvantage with respect to the SoutH2 Corridor as it is proposed as an exclusive H2 infrastructure. We identify, among other issues, that the use of H2 in the form of blending proposed in the SoutH2, since the use of pure H2 in the installation will be excessively delayed, may lead to a depreciation of the value of H2, which will be limited to uses in cheaper applications such as heat generation.

SynerHy identifies a unique opportunity to develop a unique hydrogen pipeline transport infrastructure that would provide the backbone of a southern distribution network from the Iberian Peninsula to the rest of Europe. If the financing is viable and other geopolitical interests (France) allow it, it could be a great opportunity for Spain to become, at last, a great energy power and perhaps be able to reindustrialise its productive system and increase the weight of the industrial sector in the GDP.