Hydrogen in the Integrated Energy System of the Future - A Case Study for the European Energy Transition

Among the available options to reduce greenhouse gas emissions, one is to substitute fossil fuels
for hydrogen from low-carbon sources. In some industrial sectors such as chemical industries, steel
manufacturing and shipping, options to decarbonize processes are limited and therefore hydrogen
represents an attractive option to substitute the current fossil fuels. In the present work, we use an
integrated model of power, natural gas and carbon markets to analyze the substitution of fossil fuel
and particularly natural gas for hydrogen. We consider three scenarios, representing three different
political approaches in Europe to study how the import of blue and green hydrogen as well as
domestic hydrogen production can replace natural gas. In the case of no import restrictions, we find
that the import of blue hydrogen can take a key role in the future energy mix. However, if the import
of blue hydrogen is banned or penalized, a mixture of domestic hydrogen production and import
of green hydrogen can replace the current fuel mix. In addition to depicting optimal pathways for
the hydrogen substitution, this study describes key interconnections in the energy sector as well as
with the carbon market and contributes to the discussion on the height of a potential penalty on the
import of blue hydrogen.