Source: EURLEX
Language: en
Format: md

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| INCEPTION IMPACT ASSESSMENT | |
| Inception Impact Assessments aim to inform citizens and stakeholders about the Commission's plans in order to allow them to provide feedback on the intended initiative and to participate effectively in future consultation activities. Citizens and stakeholders are in particular invited to provide views on the Commission's understanding of the problem and possible solutions and to make available any relevant information that they may have, including on possible impacts of the different options. | |
| Title of the initiative | European Partnership Clean Hydrogen |
| Lead DG (responsible unit) | DG Research and Innovation (RTD.F1) |
| Likely Type of initiative | Proposal for a Council Regulation for a European Partnership for Clean Hydrogen under Horizon Europe |
| Indicative Planning | Q1 2020 |
| Additional Information | – |
| The Inception Impact Assessment is provided for information purposes only. It does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content. All elements of the initiative described by the Inception impact assessment, including its timing, are subject to change. | |
| A. Context, Problem definition and Subsidiarity Check | |
| Context | |
| The proposal for Horizon Europe, the future EU’s future research and innovation (R&I) programme for 2021-2027, outlines the approach (Article 8) and criteria (Annex III) for R&I partnerships under the umbrella term 'European Partnerships'. According to the political agreement between the Council and European Parliament, “European Partnerships shall be established for addressing European or global challenges only in cases where they will more effectively achieve objectives of Horizon Europe than the Union alone and when compared to other forms of support of the Framework programme”. The overall financial framework for the upcoming partnerships still has to be agreed by the co-legislators. Different forms of partnerships can be implemented depending on needs and criteria. One such form is institutionalised partnerships set up under Article 185 or Article 187 of the Treaty on the Functioning of the European Union (TFEU). The draft legislation outlines possible areas in which institutionalised partnerships could be set up, including hydrogen and sustainable energy storage technologies with lower environmental footprint and less energy-intensive production. In the course of the strategic planning, the Commission, in close cooperation with the Member States, has identified ‘Clean Hydrogen’ as a candidate for such a partnership.  At the end of 2018, the Commission adopted a Communication on A clean planet for all (COM(2018) 773 final), which outlined its strategy for the transition to clean energy. The Communication acknowledges the potential of hydrogen as a clean energy vector (‘[…] the role of hydrogen is likely to become more prominent in a fully decarbonised energy system […]’) and identifies hydrogen and fuel cells as one of the ‘transformational carbon-neutral solutions that EU research should focus on’. This would also emphasise the key strategic value chain around hydrogen, covering many major sectors and providing solutions for tangible progress on several EU policy objectives.  The proposed partnership would build on the existing ‘Fuel Cells and Hydrogen 2’ Joint Undertaking (FCH 2 JU), but would have a significantly revised scope, involve more partners and take account of the strengthened societal, economic and technological impact criteria of Horizon Europe. It would also take into account the recommendations of the interim evaluation of FCH 2 (2014-2016), in particular by strengthening the synergies with other EU and Member State programmes to catalyse deployment at scale. | |
| Problem the initiative aims to tackle | |
| Fuel cell and hydrogen technologies have made notable progress in the last decade. In Europe, much of that progress builds on the work of past and current FCH Joint Undertaking, which have been instrumental in developing key technology bricks and bringing the first generation of products to the market, making Europe a global technology leader in applications such as electrolysis, fuel cell buses and hydrogen refuelling stations. [1](#footnote2)  Nevertheless, the sector is still in a pre-deployment stage and massive cost reductions across the entire supply chain are still necessary to enable the mass commercialisation to meet decarbonisation needs at energy system level. In order to achieve these cost reductions, the sector must tackle the following problems:  a)Market failure for first movers  The potentially huge environmental and energy security benefits of hydrogen applications accrue to society at large and are not readily susceptible to monetisation by individual technology providers. The technology has to compete with established incumbent solutions and related infrastructures, the external costs of which are typically not included in the overall price. Consequently, the financial risk for early movers is very high (if not prohibitive) and calls for strong and coordinated intervention by the public sector;  b)Fragmentation among players and lack of critical mass  By virtue of hydrogen’s versatility, the ‘sector’ is spread over various applications in energy, transport and industry, but also over actors and countries. This hampers the formation of critical mass.  The most promising means of addressing these problems is a synchronised combination of researchbased supplypush and market-oriented demand-pull measures, as outlined in the findings of the FCH 2 interim evaluation. It confirmed the suitability of the partnership approach for hydrogen R&I at European level, but also stresssed the need to align R&I activities more closely with a fitforpurpose deployment support framework in order to ensure a successful transition to marketreadiness.  As regards the research component, a coordinated pan-European approach is needed to:  §pull together private and public resources around the cost reduction target; but also  §reduce the environmental impact of the technology;  §foster the maturity of hydrogen-based solutions by improving their efficiency, performance, durability, etc.;  §test and validate these solutions in real-world settings and in an integrated manner so as to increase confidence among end-users; and  §develop and strengthen European supply chains such as that for hydrogen, as identified by the Strategic Forum for Important Projects of Common European Interest. | |
| Basis for EU intervention (legal basis and subsidiarity check) | |
| The legal basis for EU intervention is the Horizon Europe programme (based on Article 182 TFEU). In implementing the programme, the EU may make provisions for participation in research and development undertaken by several Member States or in programmes run jointly by several Member States (in accordance with Article 185 TFEU), or may set up joint undertakings (in accordance with Article 187 TFEU).  The nature and magnitude of the issues are such that action at EU level is needed, rather than the Member States acting alone; in particular:  §the fuel cell stakeholder landscape is still extremely fragmented (see problem drivers above). This restricts the exchange and pooling of knowledge and experience, and calls for continued efforts in terms of coordination, structuration and strategysetting that cannot be achieved by Member States acting in isolation;  §industry and Member States acting alone are not in a position to come up with the massive investments required to make ‘near-zero carbon’ hydrogen competitive. EUlevel intervention is needed not only to address key technology bottlenecks, but also to give the industry and research actors the confidence to keep investing in hydrogen technologies; and  §the interest in ‘near-zero carbon’ hydrogen is driven by its potential to optimise the European energy system through the transfer of clean energy between sectors (power sector, transport, heating, industry, etc.), i.e. ‘sectoral integration’. This can fully materialise only if there are no national/local borders in the application of the technology, so there is a need for EU-level dialogue and close collaboration between Member States to agree regulations, codes and standards. Solutions that need to be standardised across Europe include hydrogen refuelling infrastructure and hydrogen admixture in natural gas networks. | |
| B. Objectives and Mapping of Policy options | |
| Objectives  The overall objective of the initiative is to create a strong, innovative and competitive European clean hydrogen sector, fully capable of underpinning Europe’s energy transition by accelerating the market entry of technologies based on ‘near-zero carbon’ hydrogen and delivering a wide range of socio-economic benefits.  The new partnership should be able to channel cross-sectoral collaboration and thus capitalise and build on the current momentum of FCH 2, which involves a growing number of entities whose core business is not related to hydrogen. It should involve more energy companies (e.g. transmission and distribution system operators, operators of power plants, utilities), the waterborne and rail transport industry, and more representatives of the industrial sectors that could benefit from the use of ‘near-zero carbon’ hydrogen (chemical, steel, refineries, etc.) in order to reflect the revised strategic orientation more fully and incentivise further uptake of hydrogen technologies in the broader energy system. Given the need to address the acceptance of hydrogen technologies, it will also be important to have representatives of civil society and NGOs.  The relevance of the priority and continuation of support under the Framework programme, including the form of support, will be subject to evaluations and assessments in line with the criteria set out in the Regulation of Horizon Europe.  Mapping of policy options  Baseline option: no partnership, calls for proposals under Horizon Europe work programmes (option 0) can address the clean hydrogen priority, with projectbased Horizon Europe funding supporting multi-national, multi-disciplinary and cross-sectoral R&I.  On the other hand, a European Partnership (options 1 and 2) could mobilise and bring together a much broader spectrum of stakeholders, both private (large and medium-sized companies, SMEs, national hydrogen associations) and public (academia, research organisations, local authorities, etc.) to set and implement common long-term R&I agendas.  A co-programmed European Partnership (option 1) is a looser form of partnership based on memoranda of understanding or contractual arrangements. Compared with regular calls, this option would entail a longer-term perspective, attract higherlevel industry participation and result in more leverage from the partners.  Under an institutionalised European Partnership based on Article 187 TFEU (option 2), the EU would set up a joint undertaking implementing a jointly developed research programme. This would allow for participation by any public or private entity supporting R&I in the scope of the clean hydrogen partnership. It would involve better coordination and alignment, and be more effective in leveraging resources from industry.  Other partnership options (Article 185 TFEU and co-funded) are not considered suitable, as the initiative targets mostly industry. | |
| C. Preliminary Assessment of Expected Impacts | |
| A comprehensive impact assessment will cover the partnership’s potential contribution to scientific, technological and societal impact (Article 3 of the draft Horizon Europe programme) and impacts in relation to the relevant EU priorities and objectives. | |
| Likely scientific and economic impacts | |
| Scientific impact  The partnership is likely to contribute to the advance of science by stimulating innovation along the entire hydrogen value chain from low technology readiness levels (TRLs), e.g. with the development of nextgeneration technologies (key components, high pressure tanks, stacks, etc.), to higher TRLs closer to the market.  Economic impact  Experience from FCH 2 indicates that the partnership is likely to leverage funding for R&I activities more effectively than the other options. The hydrogen sector could also play an important role in job creation in the low-carbon economy.  Impact on SMEs  SMEs play a very important role in the hydrogen and fuel cell community, in line with the nascent nature of the sector. FCH 2 has already devoted a great deal of effort to nurturing the growth of these entities, with over 31% of funding to date benefiting SMEs (well above the Horizon 2020 target of 20%). A future institutional partnership on hydrogen can be expected to be of strategic importance for their survival and continued success, and will support the cross-fertilisation from SMEs to large companies that can bring innovative ideas to mass markets. | |
| Likely social impacts | |
| The partnership is likely to contribute to society at large through innovative proven solutions for improved public health, such as lower pollutant, particulate matter and noise emissions (as compared with direct fossil fuel combustion), in particular in sensitive (e.g. densely populated) areas. | |
| Likely environmental impacts | |
| Fighting climate change  ‘Near-zero carbon’ hydrogen can play a crucial role in reducing greenhouse gas (GHG) emissions, in particular in sectors that are difficult to decarbonise with existing solutions, e.g. heavy-duty and longdistance transport, heating and power for buildings and industry. It is estimated that the deployment of hydrogen could reduce annual CO2 emissions by approx. 560 Mt by 2050. [2](#footnote3)  In addition, hydrogen is expected to contribute indirectly to decarbonisation by enabling high shares of renewables in the EU power mix.  As hydrogen of fossil origin is a chemical feedstock widely used in industry, replacing it by its lowcarbon counterpart would itself cut GHG emissions significantly.  Preserving the quality of natural resources / preventing pollution (water, soil, air, etc.)  When combined with fuel cells in end-use applications, hydrogen eliminates local emissions such as sulphur oxides, nitrogen oxides and particulate matter, all of which contribute to smog formation and have negative impacts on natural resources and human health. This would also have positive impacts as regards water pollution in lakes, rivers and ports. | |
| Likely impacts on fundamental rights | |
| n/a | |
| Likely impacts on simplification and/or administrative burden | |
| A simpler, more strategic and coordinated approach to the setting-up and implementation of European Partnerships under Horizon Europe will significantly reduce the administrative burden for applicants and beneficiaries. Horizon Europe legal basis requires thorough assessment as to the necessity for establishing institutionalised partnerships, and whether other, more flexible partnership forms could achieve the identified objectives. In addition, it lays down requirements (e.g. related to central management of financial contributions, access to data, and links with the monitoring and evaluation framework of Horizon Europe etc.) that support further simplification, harmonisation and more effective implementation. | |
| D. Evidence Base, Data collection and Better Regulation Instruments | |
| Impact assessment | |
| An impact assessment is being prepared to inform the Commission's decision on whether to propose the establishment of an institutionalised European Partnership and to support the preparation of this initiative. If this decision is positive, the impact assessment is likely to be made available in the first quarter of 2020. | |
| Evidence base and data collection | |
| A full impact assessment is required for all partnerships, which might be institutionalised based on Articles 185 and 187 TFEU. In this context, an external study will provide coordinated input for the preparation of impact assessments, which could lead to and would accompany the proposals for institutionalised partnerships (based on Articles 185 and 187 TFEU). The study will be based on desk research, Commission and stakeholder consultation, quantitative and qualitative data collection and analysis and inputs from panels of experts. It will develop a single common methodology to ensure coordinated inputs to individual impact assessment studies of each envisaged partnership. | |
| Consultation of citizens and stakeholders | |
| In line with the Better Regulation guidelines, the Commission seeks to consult stakeholders as widely as possible. The consultation strategy aims to involve a broad range of stakeholders, including national authorities, the research community across the EU, industry, EU institutions and bodies, and others.  A structured consultation of Member States in the Shadow Strategic Configuration of the Programme Committee Horizon Europe in May-June 2019 provided early input into the preparatory work.  A single open public consultation from mid-2019 (in English, French and German) will cover all 12 potential institutionalised partnerships based on Articles 185 and 187 TFEU. It will collect input from a broad range of stakeholders, on both the overall approach and the individual candidates for institutionalised partnerships based on Article 185 or Article 187 TFEU. It can be accessed via the Commission's Have Your Say web portal. As the results are expected to inform debate during the ‘R&I days’ (Brussels, 24-26 September), it might be necessary to shorten slightly the 12 week consultation period.  Once all consultation activities are closed, the Commission will publish a synopsis report (summarising the results) on the consultation page. | |

:   [(1)](#footnoteref2)

     
       Study on supply chain for hydrogen and fuel cells technologies, E4Tech for FCH 2 JU, February 2017 (not public), p. 67.
:   [(2)](#footnoteref3)
     
       Hydrogen Roadmap Europe — a sustainable pathway for the European energy transition, FCH 2 JU (2019).

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