Including Taiwan and the United Kingdom, many nations currently rely on natural gas power generation to stabilize power supply and allocate renewable energy. However, there are some exceptions. For example, the Netherlands, once a big gas producer, has decided to end most of its natural gas production this year and switch to hydrogen.
The Netherlands once had the largest natural gas field in Europe but after decades of exploration, pumping, and development accompanied by earthquakes, the Netherlands has now decided to close the Groningen natural gas field. In addition, the Netherlands has also announced that it will halve its greenhouse gas emissions in the next ten years. Demand for natural gas is expected to fall precipitously in the future.
Therefore, Dutch gas infrastructure will inevitably be transformed in the future, and state-owned gas company NV Nederlandse Gasunie must find another use for its own 15,000-kilometer-long gas pipeline. The Netherlands will need hydrogen and has no choice but to stay away from natural gas, says CEO Han Fennema.
Fossil fuels supply 80% of the Netherlands' energy needs but natural gas revenue is actually not as good as it used to be. According to Dutch statistics, natural gas revenue in 2020 was only 140 million euros, much lower than the 10.7 billion euros accrued 10 years ago.
At present, in addition to declining support for natural gas among companies and governments and rising carbon pricing in Europe, the aforementioned reasons make "hydrogen energy" more attractive. Bloomberg New Energy Finance (BNEF) reported that renewable energy hydrogen will be cheaper than natural gas in at least 16 countries by 2050.
Professor of Energy and Sustainability at the University of Groningen in the Netherlands, Catrinus Jepma, said that the Netherlands used to be a pioneer in natural gas transportation and now this is our chance to get back to where we were. The European Commission has previously stated that green hydrogen can meet a quarter of the world's energy needs in 2050, with annual sales reaching 630 billion euros. Europe hopes to achieve 40GW of green hydrogen production capacity by 2030, which is a good opportunity for the Netherlands to transform.
However, there is a long way to go. Green hydrogen is not expected to be cost-competitive before 2030. According to BNEF, the production cost of green hydrogen is generally four times that of hydrogen production from natural gas. Therefore, even if the natural gas pipeline is updated to fully supply hydrogen energy, it still needs to be idle for a period of time. Manager Business Development Hydrogen at Gasunie, Helmie Botter, hopes to break the "chicken or egg" problem, and develop the market through large-scale projects.
Gasunie hopes to allocate 1.5 billion euros in 2027 to retrofit 1,200 kilometers of pipelines to receive pure hydrogen. At that time, the Dutch government will also provide half of the funds required to reduce financial risk. Fennema stated, eventually Gasunie is expected to renovate nearly 80% of the pipeline.
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