Part 2

Hy-Politics – political considerations shaping the evolution of clean hydrogen policy

Summary of the use case in Italy

In December 2019, the Italian Government officially released the Integrated National Plan for Energy and Climate (Piano Nazionale Integrato per l’Energia e il Clima 2030) to implement the EU Regulation no. 1999/2018, which sets binding targets regarding energy efficiency, renewable sources and reduction of CO2 emissions to be achieved by 2030. Its objective includes the promotion of the use of green hydrogen, and it is currently being updated and strengthened in order to reflect the new ambitious goals defined at European level.

In November 2020, the Minister for Economic Development published the Preliminary Guidelines on the National Hydrogen Strategy (Strategia Nazionale Idrogeno - Linee Guida Preliminari – “Hydrogen Guidelines”), whose 2030 term objective is the development of a national hydrogen ecosystem and for hydrogen to gradually become competitive in selected sectors, covering about 2% of the 2030 Italian energy demand. In the long term, up to 2050, the Hydrogen Guidelines’ goal is for hydrogen to support the effort of decarbonisation together with other low carbon emissions technologies, especially in hard-to-abate sectors (e.g., steel production, chemicals). Thus, hydrogen would be able to cover up to 20% of the 2050 Italian energy demand.

The Italian Recovery Plan follows in the steps of the Hydrogen Guidelines with its second Mission, “Green Revolution and Ecological Transition”, focusing on, inter alia, renewable energy, hydrogen, and sustainable transportation with an overall budget of €23.78bn, €3.19bn of which is allocated for promoting the production and distribution of hydrogen in order to contribute to the achievement of the decarbonisation target. This goal is expected to be achieved through five lines of reforms and investments, provided also by the Hydrogen Guidelines, for which investments of up to €10bn between 2020 and 2030 will be needed:

1. creating the so-called “hydrogen valleys” in disused industrial areas already connected to the electricity grid. “Hydrogen valleys” will be in strategic positions to build a more granular hydrogen production and distribution network to neighbouring SMEs via trucks or via dedicated existing pipelines mixed with methane;
2. fostering decarbonisation of hard-to-abate sectors that are energy-intensive and lack scalable electrification options such as the chemicals, petroleum refining, steel, concrete, glass and paper sectors. Hydrogen is mainly produced on site in its “grey” form, hence from natural gas, which is not a zero-emission process: a significant development of green hydrogen would increase the abatement of emissions to about 90%;
3. increasing hydrogen trucks use up to 5 - 7% of the market by 2030 by creating approximately 40 hydrogen-based refuelling stations;
4. envisaging the conversion to hydrogen of about 9 refuelling stations on 6 non-electrified railway lines. Over the next 10 years, fuel cell hydrogen trains could become competitive at cost level compared to diesel trains, becoming one of the most promising areas to develop a national hydrogen market. This project includes the production of green hydrogen near refuelling stations, through the development of the entire relevant system for the production, storage and use; and
5. envisaging R&D on: (i) the production of green hydrogen; (ii) the development of technologies for storage and transport of hydrogen and for transformation into other derivatives and green fuels; (iii) the development of fuel cells; and (iv) improving the resilience of current infrastructure in the event of greater hydrogen diffusion.

In March 2023, the Ministry of the Environment and Energy Security announced the start of the selection process of industrial projects for the replacement of fossil fuels with low-carbon hydrogen, granting up to around €1bn.

Moreover, the Hydrogen Guidelines state that injecting and mixing hydrogen at low-levels in the gas grid can represent an effective method to contribute to the decarbonisation objectives and to stimulate the hydrogen market while investing in the development of the supply chain and distribution. As regards green hydrogen, overgeneration from renewable sources can be exploited to produce hydrogen to be mixed at a lower cost. In addition, the selection of the sites for hydrogen injections can also have a social impact, for instance using disused industrial areas would stimulate the local economy creating new opportunities for businesses.

In addition, certain regulatory changes have been recently adopted  aimed at accelerating the environmental impact assessment procedures for the development of green hydrogen production plants. 

Examples of demonstration/feasibility projects in Italy

Industry

Tenaris, Tenova and Techint Engineering & Construction: In January 2021, Tenaris launched the “Dalmine Zero Emissions” initiative aimed at integrating green hydrogen in steelmaking from the electric arc furnace steel and in the downstream processing. This would represent the first use of green hydrogen on an industrial scale in the Italian steel industry.

Tenaris, Edison and Snam: this project is part of the “Dalmine Zero Emissions” launched on 11 January 2021. It is aimed at decarbonizing Tenaris's seamless pipe mill in Dalmine by generating hydrogen and oxygen through a 20 MW electrolyser and by adapting the steelmaking process to use green hydrogen instead of natural gas. The construction of a storage facility may be envisaged.

SNAM: Use of the grid to transport hydrogen. In 2018, SNAM S.p.A (“SNAM”), launched a project called “SNAMTEC” – Tomorrow’s Energy Company, aimed at increasing energy and operational efficiency, reducing pollutant gas emissions and promoting innovation in the energy sector. Among the initiatives included in the SNAMTEC project, was a trial to introduce a quota of 5% of hydrogen in the energy mix relating to two industrial plants in the Campania region for a period of a month. The trial proved that the introduction of even a small portion of hydrogen in the energy mix would allow a substantial reduction in carbon dioxide emissions (approximately 2.5 million tons per year).

Eni: In March 2019, ENI S.p.A. (“ENI”) signed an agreement with the National Consortium for the Collection, Recycling and Recovery of Plastic Packaging, to develop a research project aimed at producing hydrogen and high-quality biofuels from non-recyclable plastic packaging waste. ENI is undertaking a strategic plan that will allow it to reduce absolute carbon emissions by 80%, by 2050.

Eni and Adnoc: In March 2023, Eni and Adnoc signed a Memorandum of understanding outlining a framework of cooperation for future joint energy transition projects, sustainability and decarbonisation. With this agreement, Eni and Adnoc will explore potential opportunities, among other things, in the renewable energy, blue hydrogen and green energy sector. 

 

Maire Tecnimont and ENI: Since 2019, ENI and NextChem, the Maire Tecnimont Group’s subsidiary for green chemistry, have entered into several partnership agreements to conduct engineering studies with the aim of developing and building gas production plants from non-recyclable plastic packaging waste. The partnership agreements provide for the development of new waste-to-hydrogen production plants in Venice and in Taranto, and a waste-to-methanol production plant in Livorno.

A2A and Friuli Venezia Giulia Region: The regional government of Friuli Venezia Giulia has signed an agreement with A2A Energiefuture for the decommissioning of the coal-fired power plant coal-fired power station in Monfalcone and its conversion to gas. A2a has signed a memorandum of understanding with Snam for technological cooperation for the development of green hydrogen projects in the context of decarbonisation in Italy and the European hydrogen strategy. In this perspective, the new plant will be equipped to use hydrogen green hydrogen.

Acciaierie d’Italia with Falck-BlueFloat: Acciaierie d’Italia and Falck-BlueFoat signed a letter of intent and set up a technical table for strategic collaboration related to the development of renewable energy projects. Specifically, Falck-BlueFoat will be able to supply steel and other materials for the construction of the floating marine platforms for the marine wind power plants developed by the equal partnership between Falck Renewables and BlueFloat Energy and in turn, these plants will offer Acciaierie d'Italia the supply of renewable energy and green hydrogen.

 

Transport

Enel Green Power and FNM: the two companies partnered up to identify the most efficient way to supply green hydrogen to increase rail mobility in Lombardy in February 2021. This will lead to the first Italian hydrogen valley. The key points of the project called “H2lseO” include purchasing new hydrogen-fuelled trains and building hydrogen production plants powered by renewable energy.

SNAM and Alstom: in June 2020, SNAM and Alstom reached an agreement to develop hydrogen trains in Italy and the related technological infrastructure in order to expand railway mobility projects based on hydrogen. Alstom will manufacture and maintain newly built or converted hydrogen trains, while SNAM will develop the infrastructures for production, transport and refuelling.

CNH Industrial: transport of hydrogen in partnership with Nikola, an American company. The final goal is to produce battery electric vehicles and fuel cell electric vehicles for the European market.

Landi Renzo: mobility solutions based on hydrogen fuel.

ENI: ENI has entered into partnerships with Toyota aimed at developing hydrogen fuelling stations and encouraging hydrogen powered vehicles in Italy.

Ferrovie dello Stato: On 20 October 2020, Ferrovie dello Stato Italiane S.p.A. (the Italian State-owned railway operator) and SNAM signed a Memorandum of Understanding to evaluate the technical and economic feasibility of the development and diffusion of hydrogen rail transport in Italy.

Transportation

Italgas: in May 2021, the company has announced the allocation of €15bn for the realisation of the first European hydrogen hub in Sardinia Region. The project provides for the installation of an electrolyser powered by renewable energy; the green hydrogen will be used to test the whole hydrogen chain: from on-site storage to delivery of liquid hydrogen by truck to industrial customers, through to distribution to hydrogen-fuelled road vehicles used for local public transport via a service station and feeding it into the gas grid, mixed with methane, to supply households.

Saipem: the group’s commitment will be focused in particular, on the production of green hydrogen (e.g. by improving the efficiency of electrolysis), the storage and transport of hydrogen, its use and its injection into gas networks.

Enel Green Power: in January 2019, Enel Green Power (Enel Group’s renewables subsidiary) and the Municipality of Lipari entered into an agreement for the building of a new solar PV and green hydrogen energy storage plant on the Island of Stromboli.

Società Gasdotti Italia: in March 2019, the National Agency for New Technologies, Energy and Sustainable Economic Development (ENEA) and the Società Gasdotti Italia, an Italian gas transportation company, signed a framework agreement to develop a “Power to Gas” pilot project using green hydrogen. 

Green vs. blue

To kick-start the development of the hydrogen market, the Italian Government plans to install approximately 5 GW of electrolysis capacity by 2030. National production of green hydrogen could be integrated with imports or with other forms of low carbon hydrogen, such as blue hydrogen.

There is no common view amongst leading Italian industrials as to whether green or blue hydrogen should be the focus of the hydrogen strategy:

• blue hydrogen: ENI and SNAM wish to pursue their sustainability goals without generating losses from the large investments made in recent years in gas pipelines and gas fields located in the Mediterranean;
• green hydrogen: Enel firmly supports the idea of a new way of producing hydrogen with low impact on the environment. The position is in line with the company’s green strategy. In addition, Enel disagrees with granting incentives to companies that rely on the use of blue hydrogen as it is not a “clean” form of energy.

At Governmental level, the Italian Recovery Plan seems to tip the balance in favour of green hydrogen considering the provision of measures aimed at introducing (i) a simplified authorisation procedure for the construction of green hydrogen production plants and (ii) exemption from the payment of the power system charges (oneri generali) for the energy produced by renewable energy plants and used for the production of green hydrogen.