EU plans green hydrogen push, with hints of blue - draft

June 18 (Reuters) - The European Commission wants to rapidly scale up production of “green” hydrogen, a key zero-carbon fuel if heavy industry is to meet European Union climate targets, according to a draft document seen by Reuters.

European industry and refineries already use roughly 8 million tonnes of hydrogen each year, but most of this is “grey” hydrogen, a version made from natural gas in a process that produces planet-warming emissions.

To clean up polluting sectors like steel and chemicals, the EU’s executive Commission wants to develop gigawatt-scale European factories for green hydrogen, which is produced from renewable energy, according to its draft hydrogen strategy.

The draft, due to be published on July 8, sets out an aim to bring down the cost of green hydrogen production to 2 euros per kilogram.

Policy options to support this goal include sector-specific hydrogen use targets, a scheme to pay hydrogen projects the difference between the price of an EU carbon permit and the actual cost of cutting CO2, and EU rules for what can be classed as “clean” hydrogen.

The Commission does not comment on unpublished drafts, which are subject to change until they are adopted.

While green hydrogen will be the priority, the draft says “blue” hydrogen - which is is produced from natural gas, but uses carbon-capture technology to limit the resulting emissions - will also play a role in the EU’s clean energy transition.

Some EU lawmakers and climate campaigners said supporting blue hydrogen could lock in demand for natural gas.

“Public funds should only be used to promote hydrogen production from renewable energies,” Germany’s green lawmaker Michael Bloss, said.

Greenpeace said blue hydrogen was an attempt to “greenwash” fossil gas, and an inefficient alternative to green hydrogen, given the large amounts of energy required to capture the resulting emissions.

Reporting by Kate Abnett; Editing by Kirsten Donovan