How Can the Mediterranean Lead the Green Transition?

With Europe seeking to take the lead in the global energy transition, green hydrogen is emerging as a key catalyst, with many arguing that the Mediterranean basin could become an energy hub for the entire continent.

In essence, European governments hope that an energy counterweight to the one already operating around the North Sea will emerge in the Mediterranean. The benefits are enormous. If plans for Europe's southern power-generation hub go well, this will give the continent access to cheap renewable energy and allow it to clean up carbon-emitting heavy industry.

Hydrogen is expected to be added to Europe's energy mix

The Mediterranean has always been an energy conduit.

As The Economist points out, from the days of Roman rule until the 19 century, it was human labor in the form of enslaved Africans. Today, it is mainly natural gas. Half a dozen pipelines connect Europe with Africa and the Middle East. The EU depends on the region for more than a third of its natural gas imports.

In the age of renewable energy, countries on the Mediterranean coast have some of the best conditions on Earth for harnessing natural forces.

Solar capacity shows enormous potential. Spain enjoys an average annual 4.575 kilowatt-hours (kWh) of sunlight per square meter, and Morocco 5.563 kWh, twice what Germany can expect.

In some parts of Morocco and Mauritania, both sun and wind are abundant, creating locations where hydrogen electrolyzers can operate almost nonstop. “There are only ten such locations in the whole world,” explains Benedikt Ortmann, who runs the solar business of BayWa, a German energy and construction company.

An old idea
Harnessing this reservoir of renewable energy is not a new idea. In the early 2000s, an association backed by dozens of companies, mostly German, came up with the idea of installing giant solar facilities in the Sahara. But support for Desertec, which was incorporated in 2009, quickly evaporated, mainly because of the cost of the technology.

The development of better and cheaper ways to capture the sun's rays is behind a revival of the idea. According to the International Renewable Energy Agency, the average cost of electricity from utility-scale solar installations fell from 0,45 $ per kWh in 2010 to 0,05 $ last year.

Transporting the energy north, where it is needed, is now also more feasible.

Desertec's plan involved undersea cables, which have limited capacity. But now cheaper and more efficient electrolyzers can convert electricity into hydrogen at the source. This can then be transported as a gas or derivative, such as liquid ammonia. Analysts expect that in a few years green hydrogen from North Africa will cost less than 1,50 dollars per kilo, potentially making it cheaper than “blue” hydrogen, which is derived from natural gas but requires capturing and storing the resulting carbon.

Demand for energy from the south is much more likely to materialize than it was in Desertec's days. Hydrogen and its derivatives will be needed as carbon-free feedstocks for Europe's steel and chemical industries. Of the 20 million tonnes that the EU has set as its consumption target by 2030, much will come from southern countries and North Africa.

The risks
However, according to The Economist, the region's position as Europe's southern powerhouse is not a given. Europe must create a market for a new energy source and do so in a liberalized arena with many competitors.

“It's a chicken-and-egg problem,” argues Kirsten Westphal of the German Association of Energy and Water Industries.

Increasing demand and supply at the same time is a delicate balancing act. Companies are reluctant to commit to long-term offtake agreements if they are unsure about hydrogen availability and pricing. This, in turn, discourages producers from making critical investment decisions. It does not help that political instability in North Africa increases risks and therefore the cost of capital.

However, the biggest problem is connecting both sides of the market, which starts with creating physical connections. Most of the hydrogen will first need to be transported by ship, probably in the form of ammonia (liquid hydrogen, which must be kept at -253°C, is difficult to move).

But shipping capacity is limited. James Kneebone of the Florence School of Regulation estimates that even if it were technically feasible, repurposing the entire existing global fleet of ships capable of carrying liquefied natural gas could deliver only about 6,5 million tonnes annually. This leaves a dependence on pipelines

Experts are divided over whether existing natural gas networks can be upgraded to carry hydrogen, and building new pipelines is expensive. Geopolitical turmoil could deter investment in pipelines as well as hydrogen production. All three corridors identified by the EU through which hydrogen could flow into the Mediterranean basin cross contentious territory. Hydrogen piped from Mauritania would ideally pass through Western Sahara, but Morocco's control of the region is disputed. One alternative under consideration is an offshore route via the Canary Islands.

Once built, pipelines are vulnerable to political interference. In November 2021 Algeria's strained relations with Morocco led to a break in diplomatic ties and a halt to natural gas flows through the Maghreb-Europe pipeline, which connects Morocco's gas fields to Spain via the territory of its neighboring country.

Domestic challenges

But things are no less complicated within the region itself. An agreement on an undersea pipeline linking Barcelona to Marseille, from where hydrogen could be transported from Spain through existing infrastructure across France to Germany, could run up against a dispute between Germany and France over whether nuclear power should be considered “green.” In addition, Air Liquide, a French company that is the world's largest producer of industrial gases, is lobbying against a project that would render its own hydrogen pipeline network obsolete.

Europe has no choice but to address these problems if it wants to achieve its ambitious carbon-reduction targets. Some steps have already been taken. These include the European Commission launching a series of initiatives, from a “hydrogen accelerator” to promote the use of the gas to a “European Hydrogen Bank” to kick-start trade.

Most importantly, the Commission has allowed subsidies to flow by relaxing state aid rules, enabling member states to support businesses in their efforts to decarbonize. Funding has also been earmarked for hydrogen pipelines, such as a 3.300-kilometer link from Algeria and Tunisia to Austria and Germany. And hydrogen projects in North Africa will benefit from investment by institutions such as the European Bank for Reconstruction and Development.

Source: OT.gr