H2 Italy 2050, a hydrogen value chain for growth and decarbonization: a study by The European House - Ambrosetti in collaboration with Snam

H2 Italy 2050, a hydrogen value chain for growth and decarbonization: a study by The European House - Ambrosetti in collaboration with Snam

  • The research, based on an innovative quantitative model, analyzes for the first time the Italian hydrogen industrial value chain, from production to transport, from storage to uses, and identifies its competitive advantages in the European and international scenario, from geographical position to strength of the manufacturing sector.

  • Thanks to a growth in end uses in the coming years, the Italian hydrogen technology industry and the connected upstream and downstream supply chains will be able to increase the cumulative production value in the period 2020-2050 to between 890 and 1,500 billion euros.

  • The increase in production will also enable to create between 320,000 and 540,000 new jobs by 2050 considering direct, indirect and induced effects on the value chain.

  • Thanks to the increase in the use of hydrogen in final consumption, Italy will be able to make a fundamental contribution to the fight against climate change. In fact, by 2050, a potential penetration of 23% of hydrogen in final consumption is estimated, which would allow for a 28% cut in C0 2 emissions compared to the base year 2018.

Cernobbio, 5 September 2020 - Italy can utilise hydrogen both to achieve decarbonisation targets and to create new forms of industrial competitiveness, leveraging its manufacturing potential and its skills in the natural gas sector. This is what emerges from the " H2 Italy 2050: a hydrogen value chain for growth and decarbonization"  study, created by The European House - Ambrosetti in collaboration with Snam to examine for the first time the potential of the Italian hydrogen value chain.

The contents of the reasearch were anticipated today, as part of the The European House - Ambrosetti Forum, in a press conference attended by Valerio De Molli, Managing Partner & CEO of The European House - Ambrosetti, Marco Alverà, Chief Executive Officer of Snam, and Esko Aho, Prime Minister of Finland and innovation expert, representing the research Advisory Board, which also includes Steve Angel, CEO of Linde, Suzanne Heywood, Chairman and Acting CEO of CNH Industrial, Francesco Profumo, President of Compagnia di San Paolo, and Paolo Borzatta, Board Member of The European House - Ambrosetti.

Marco Alverà, Snam CEO, declared: " Hydrogen can be renewable electricity's best ally to enable Italy to take the lead in the global fight against climate change, whilst also promoting new opportunities for development and employment. If, until a few years ago, its costs were unsustainable, today hydrogen has finally expanded the horizon of available technology options: in 2000, the price of hydrogen from renewables was forty times higher than oil, today we estimate that it will become competitive with some current fuels within five years and thus contribute to respond to over a quarter of Italy's energy demand by 2050.
As it emerges from the study, thanks to its geographical position, the strength of its manufacturing and energy sectors, and a widespread gas transport network, our country has the potential to become a continental hub for green hydrogen and an infrastructural bridge with North Africa, taking on an important role in the European Hydrogen Strategy. This would allow us to reach more easily the 2050 climate neutrality goals and to develop a new industrial chain capable of creating growth and jobs, with a cumulative production value that can reach up to 1,500 billion euros over the next 30 years. The hydrogen economy is within reach and it is an opportunity that we must seize".  

Valerio De Molli, Managing Partner & CEO of The European House – Ambrosetti, said: " There is no doubt that energy transition is a path that all European states must pursue with rigor and constancy in order to fight climate change and bequeath a world free from fossil fuels to the next generations. However, European countries must also set themselves the goal of becoming world leaders in research and production of innovative technologies that can enable and accelerate energy transition. Italy, thanks to its position as the second largest manufacturer in Europe and its long and unique experience with natural gas, has all the conditions to be able to aspire to become a technological reference point for the hydrogen industrial value chain. Starting from this intuition, the consultants of The European House - Ambrosetti have mapped the hydrogen industrial chain and identified the enabling technologies through an innovative model that has seen the analysis of over 3,700 technologies and the construction of a new and extensive database. The results of the analysis highlight the highly competitive positioning of Italy in the production of some key hydrogen technologies (for example, those for the production of renewable hydrogen, mechanical and thermal ones), capable of enabling important impacts in terms of industrial production and new employment".  

The research, in the context of growing interest for hydrogen in Europe after the presentation of the Hydrogen Strategy of the EU Commission on 8 July, examines the contribution of this energy vector to the energy transition process and estimates the economic, social and environmental impacts which can be activated in Italy from its development to 2050. Hydrogen, thanks to its intrinsic characteristics, can be considered an indispensable energy vector for the decarbonised future, in close synergy and complementarity with the electricity vector. In fact, it allows to decarbonise end uses since it generates zero emissions and can be produced with zero climate-altering emissions processes. In this way, hydrogen can accelerate, in a complementary way with other technologies, the decarbonisation processes, especially in the sectors that still contribute most to climate-altering emissions, from heavy industry (e.g. chemical and steel industry) to heavy and long distance  transport (e.g. heavy commercial vehicles and buses), from non-electrified rail transport to residential, for which various types of uses are examined, particularly in heating. Furthermore, hydrogen is able to offer advantages to the entire energy system, guaranteeing flexibility and resilience, settling out the peaks of electricity production from renewable sources and thus supporting the growing diffusion of non-programmable renewables also thanks to the distinctive capacity to act as a link between the gas and electricity sectors.

The transport, storage and use of hydrogen have many synergies with the natural gas sector; which is why the current gas infrastructures are to be understood as an accelerator that can allow faster penetration and a first-mover positioning for Italy and its supply chains. Hydrogen, in fact, has the advantage of being easily transported through the existing gas network, which in Italy is particularly extensive and widespread compared to other European countries. Furthermore, the development of technologies for the production of green hydrogen and the increasing availability of renewable electricity will allow to have in the next few years a strongly descending price curve for the production of hydrogen, which will reach cost levels that are competitive with respect to other alternatives.

Thanks to its clear advantages, hydrogen is capturing the attention of many countries around the world which have developed ad hoc national strategies and which provide for an evolution of its use in the final consumer sectors. According to the penetration scenarios for Italy, hydrogen has the potential to cover the 23% of the national energy demand by 2050. This increase in the share of hydrogen in final energy consumption would allow the country to reduce emissions by 97.5 million tons of CO 2eq, corresponding to a reduction of approximately 28% compared to current Italian climate-altering emissions.

The research highlights how Italy, thanks to its particular geographical positioning and the extensive gas network already in place, can aspire to become a European and Mediterranean hub, importing hydrogen produced in North Africa through solar energy to a cost 10-15% lower than domestic production, enhancing the greater availability of land for the installation of renewables and high irradiation as well as decreasing seasonal variability. In this way, the country can become the "infrastructural bridge" between Europe and the African continent, thus enabling greater hydrogen penetration in other European countries as well. In addition, the Italian gas network can provide the basis for receiving increasing percentages of hydrogen, through a series of targeted investments. Finally, the Italian energy system, characterized by an important role of renewables and distinctive skills on biomethane, is able to efficiently integrate hydrogen.

Italy will also be able to play a leading role in the technological reconversion and consolidation of the hydrogen supply chain in the coming years by virtue of a strong positioning in some clusters, such as the production of thermal technologies for hydrogen (leading producer in Europe, with a market share of 24%), mechanical technologies for hydrogen (second producer in Europe, with a market share of 19%) and technologies for the production of renewable hydrogen (second producer in Europe, with a share of market of 25%). In order to fully benefit from the development potential of the supply chain, Italy needs to invest in research and make a further technological leap. In the various development scenarios hypothesized, it has been estimated that in Italy a production value of the technologies relating to the hydrogen chain could be activated between 64 and 111 billion euros by 2050, thanks also to supply and subcontracting activities and to induced effect on consumption. The cumulative value of production of hydrogen-related supply chains, considering direct, indirect and induced effects, in the period 2020-2050 is between 890 and 1,500 billion euros. In terms of contribution to GDP, an added value (direct, indirect and induced) has been estimated between 22 and 37 billion euros by 2050. The contribution to the economy is also attributable to employment, thanks to the possible creation, including impacts direct, indirect and induced, of a number of new jobs between 320,000 and 540,000 by 2050.

To exploit the many opportunities offered by hydrogen and reap the maximum benefits, the study suggests that Italy should implement a plan based on six actions: develop a long-term vision and strategy; create an innovation ecosystem and accelerate the development of a dedicated industrial chain through the conversion of existing industry and the attraction of new investments; support the production of decarbonised hydrogen on a national scale; promote the widespread use of hydrogen in final consumption; encourage the development of specialist skills both for new professional figures and to accompany the transition of existing ones; raise public awareness and the business world on the benefits deriving from the use of this vector.

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05 September 2020 - 12:25 CEST