REFHYNE II Project: assessing the evolution of renewable hydrogen demand for EU27 + 3 fuel manufacturing up to 2050 under net-zero scenarios

Report no.2/26: REFHYNE II is a Horizon 2020 sponsored investment project to install a 100 MW PEM electrolyser to produce renewable hydrogen from 2027 at the Shell Rheinland refinery in Germany. At the request of Shell, Concawe joined the project consortium to help with hydrogen demand studies and dissemination of the project learnings.

The REFHYNE II project targets the production of approximately 15,000 tonnes of renewable hydrogen per year and the main justification of this project comes from the increasing need of such a valuable feedstock in the context of REPowerEU Strategy and the forecasted evolution of European fuel manufacturing legislation.

‘Renewable hydrogen’ is hydrogen produced through the electrolysis of water (in an electrolyser, powered by electricity), and with the electricity stemming from renewable sources. This process ensures a significant improvement in terms of emissions savings since its GHG emissions are almost zero.

This report provides an estimation of the need for renewable hydrogen production by assessing the hydrogen demand originated by different fuel sources (traditional fossil, co-processing, biofuels and e-fuels) and the contribution from traditional solutions (naphtha catalytic reformers and steam methane reformers), all done using the framework and the data provided by two alternative long-term scenarios developed by S&P Global Commodity Insights (later referred as SPGCI) for Concawe in 2025 in which the European fuel manufacturing industry achieves net-zero by 2050. It’s important to highlight that this report does not assess or quantify the investments needed to meet such demand nor their financial feasibility.

Regarding the different sources of demand, the hydrogen needed by fossil fuels decreases from 4,4 Mton in 2024 to 0,6-0,7 Mton in 2050 mainly due to a significant asset rationalization. In the same period, co-processing, that is strongly linked to the same assets, drops by 50% from 0,2 Mton in 2024 to 0,1 Mton despite an intermediate period in which it rises up to 0,4 Mton. The hydrogen needed to produce biofuels, defined as advanced products of biorefineries (so excluding ethanol and FAME), grows significantly from 0,2 Mton to 3,4-5,3 Mton. E-fuels-related hydrogen need, from almost no demand in 2024, reaches 1 Mton in 2040 but grows exponentially to 4,8-7,5 Mton by 2050. In the last two cases the scenarios (“Max Electron” vs “More Molecule”) highly influence the trajectory of development and consequently the end point. In total the hydrogen demand stays relatively stable until 2040 and then doubles in the last decade to reach 9,0-13,5 Mton in 2050.

Both traditional sources of hydrogen, naphtha reformers and steam methane reformers (SMR), follow the trend seen for the hydrogen of traditional fossil fuels. Naphtha reformers’ hydrogen production decreases from 1,5 Mton to 0,2 Mton. SMRs however drop significantly by 2030 (minus 65%) as they are the easiest to replace with alternative sources with lower CO2 emissions and reach almost zero production in 2050.