Speeches by EU Commissioner Simson on EU-Japanese energy cooperation

Good morning, ladies and gentlemen,

Thank you for inviting me.

I’m delighted to be here today at this Japan Energy Summit and Exhibition.

Europe and Japan may be on opposite sides of the world.

But we have a lot in common. We are both democracies. We are both clean tech pioneers. We both want to address the climate emergency, speed up the energy transition and cut our dependence on fossil fuels. And we both want to keep growing our collaboration further.

Over the past few years, we have working towards exactly that. In 2021, we signed a Green Alliance to strengthen our cooperation in a new era of clean energy and energy security. In 2022, we signed a Memorandum of Cooperation on Hydrogen.

Last year, EU and Japanese leaders held a successful summit and committed to an ever-closer strategic partnership. Energy cooperation is at the heart of this. Japan is one of our key partners in designing the global energy security architecture, especially in relation to LNG.

We welcome our cooperation with Japan and METI on the Global Early Warning Mechanism. Moving forward, collaboration within the International Energy Agency framework, led by Japan, remains crucial for ensuring gas security of supply globally. We’re also working together to reduce methane emissions in fossil fuels, including in the LNG value chain.

Nuclear is another important sector for our collaboration. I was here last November for the inauguration ceremony of an EU-Japan backed breakthrough nuclear fusion device. And we value Japan as a partner in discussions on the role and safety of nuclear energy.

Today, I’m in Japan to take this energy partnership one step further and intensify our bilateral cooperation on hydrogen. Later on, I will co-chair, together with Minister Saito, the Joint EU-Japan High-level Business Hydrogen Forum. But before I get to that, I want to speak directly to the many companies and investors here today at this Japan Energy Summit.

We need to attract and mobilise more private investments to successfully spearhead this energy transition. And we count on you to do that. You can drive forward this transition, and at the same time capitalise on huge opportunities. And we are committed to providing the right incentives, and doing what it takes to help you seize them.

Let me explain.

First, it’s important to understand the EU’s energy situation and our efforts to transform our energy system over the past few years. This began in 2019 with the European Green Deal and our decision to be the first continent to commit to climate neutrality by 2050.

From the get-go, we knew that transforming our energy sector would be the backbone of these efforts as it’s a precondition for decarbonising across all other sectors. We started by decarbonising the electricity sector. Today 40% of electricity produced in the EU comes from renewable sources and an additional 20% from nuclear. That means low carbon electricity. Then we looked into decarbonising the gas sector. In the first year of my mandate, in 2020, we presented the first ever hydrogen strategy for Europe.

One year later, we put forward a proposal to decarbonise the gas market and establish the first ever EU market for clean hydrogen. Then in February 2022, Russia invaded our neighbour and partner Ukraine. This disrupted global energy markets and triggered the worst energy crisis in decades.

That’s when the EU took the bold decision, under a Plan called REPowerEU, to completely phase-out Russian fossil fuels by 2027 at the latest.

Two years on, results are clear: We made it through the crisis without blackouts or rationing. We slashed our Russian energy imports, squeezing the Kremlin’s war economy, while standing in solidarity with our Ukrainian friends. In just two years, we have moved from a very big dependence of 45% of Russian gas in our overall gas imports to a 15% share.

We did all that by serving our citizens and industry, saving energy, diversifying energy supplies with reliable international partners and accelerating the clean energy transition. The increase in renewables over the past two years is unprecedented, with over 130 GW of new renewable energy deployed.

In fact, last year, we produced more electricity from wind than from gas. And with electricity consumption in the EU set to grow exponentially over the next years, this means that the EU will become an important market for demand for renewable electricity in the future.

Ladies and Gentlemen,

We’ve also been working hard to prepare the ground for hydrogen to take off in the EU. As I mentioned, this started with a vision in the form of a European Hydrogen Strategy. Only four years later, we have a completely new framework for Europe’s hydrogen economy in place and a clear direction of travel for industry and business.

We have binding EU wide targets for the consumption of renewable hydrogen in industry and transport, which will drive demand. We have criteria for what can be considered renewable hydrogen in the EU. And this comes on top of certification schemes for renewable hydrogen.

We are also financing hydrogen infrastructure projects and working to bridge the financing gap of hydrogen generation projects under the EU Hydrogen Bank. We have just allocated 720 million euros to seven different hydrogen production sites. This will help producers and off takers make their business case and we will launch a new auction before the end of the year.

So what does all of this mean? There are a number of key takeaways for companies and investors: Hydrogen will be an internationally traded commodity. So close EU-Japan cooperation will be essential for promoting renewable and low-carbon hydrogen globally and a gradual convergence of high-standard rules.

Bear in mind too that Europe is home to two-thirds of the leading electrolyser manufacturers. We are now attracting more investment in clean hydrogen than the US and China combined. In the first auction of the EU Hydrogen Bank, there was a high level of participation and competition, with 132 bids from 17 different European countries. Around 80% of the bids were below a green premium of EUR 2/Kg. This is really encouraging. And we know that around 6 million tonnes of hydrogen off-take commitments are under discussion.

My conclusion of all this is that the market is ready. And this is ‘the’ moment to speed things up and make some additional efforts to allow it to take off.  This is why, as we speak, I am launching the process to create a new pilot mechanism for hydrogen market development. This will connect European off takers with hydrogen supplies both from Europe and outside Europe and will prepare the ground for future auctions under the European Hydrogen Bank. I am confident that, in the next couple of years, this new instrument will help turn off-take discussions into final agreements and a significant number of Final Investment Decisions for new hydrogen projects in Europe.

Dear friends,

This is an exciting time for EU-Japan energy relations. Japan is clearly positioning itself as a key player in the global shift towards cleaner and sustainable energy sources. So too is the EU. And together, there is so much we can achieve. Let’s continue building ever stronger energy relations and business ties for more prosperous economies, and a cleaner, greener planet.

Thank you for your attention.

Let me first thank the Japanese Minister, Ken Saito, for the warm welcome and for hosting this joint EU-Japan High-Level Business Hydrogen Forum in Tokyo. It is a pleasure to be here.

I want to particularly welcome and thank the CEOs, leaders and senior representatives from the EU and Japanese hydrogen industry for joining us today.

This Forum is an important moment. It delivers both on the agreement by Prime Minister Kishida and President von der Leyen at the EU-Japan Summit last year as well as our Memorandum of Cooperation on hydrogen signed in 2022.

With this in mind, we are here today with clear objectives:

• We want to foster stronger ties and exchange innovative ideas between European and Japanese business leaders;
• We also want to deliver on our mutual goal to rapidly develop and rollout hydrogen technologies and related sustainable energy solutions.

Hydrogen is a top energy priority for the EU. It’s a crucial element in our RePowerEU Plan, aimed at phasing out our dependence on Russian fossil fuels. It is also central to our transition to climate neutrality by 2050.

The EU has now almost completed the regulatory framework for a future hydrogen market and we have binding hydrogen targets in our legislation that will drive demand.

Around 6 million tonnes of potential hydrogen off-take commitments are currently under discussion. We hope that this will soon result in off-take agreements and final investment decisions for the significant pipeline of projects in the EU.

We are aware that turning this pipeline of projects into reality remains challenging. This is why the Commission is strongly committed to investing in the development of the hydrogen market, both domestically and globally. Our work on financing hydrogen infrastructure projects is proof of that. So too are our efforts to bridge the financing gap of hydrogen generation projects under the EU Hydrogen Bank.

Under the first auction of the EU Hydrogen Bank, we decided to award nearly EUR 720 million for seven highly innovative renewable hydrogen projects in Europe. The results of the auction show that the market is ready: there was a high level of participation and competition, with 132 bids from 17 different European countries. We will have a second domestic auction this year and we are confident that next year we could organise the first auction to finance hydrogen projects outside the EU.

Finally, as we speak, we are taking another important step to create a European hydrogen market. We are now launching the process to create a new pilot mechanism for hydrogen market development. It will connect European off-takers with hydrogen supplies both from Europe and outside Europe and prepare the ground for future auctions under the European Hydrogen Bank.

Ladies and Gentlemen,

Hydrogen will be an internationally traded commodity, and close EU-Japan cooperation will be essential for promoting renewable and low-carbon hydrogen globally and ensuring standards and regulation converge.

EU-Japan energy relations are very good, and they are growing closer. We are aligned in our global efforts to combat climate change. We both have a comprehensive approach to hydrogen. Japan is clearly positioning itself as a key player in the global shift towards cleaner and sustainable energy sources. And so too is the EU.

We want to cooperate with Japan to develop high standard regulations and ensure a level playing field. This is important work in establishing a global market.

And we need the private sector on board! I now look forward to hearing from business leaders. Tell us how you see things from your perspective. I want to hear your take on the hydrogen market.

Thank you.

Source – EU Commission