Netherlands mulls launch of world’s first hydrogen bourse
Chasing its ambition to become northwest Europe’s hydrogen hub, the Netherlands wants to create a trading platform for the fuel
The Netherlands is considering the creation of a commodity exchange for hydrogen that could launch as soon as 2026, an exploratory government-commissioned study revealed at the start of October.
The country has grand ambitions to become northwest Europe’s hydrogen hub as its influence as a natural gas powerhouse is waning with the gradual shutdown of the continent’s largest onshore gas field at Groningen.
The use of green or blue hydrogen, produced using renewable energy and electrolysis or with carbon abatement respectively, is a viable alternative to fossil fuels and could help cut Dutch carbon emissions. The government has set itself a target of reducing greenhouse gas emissions by 95pc below 1990 levels by 2050.
Dutch gas network operator Gasunie, Shell and Groningen Seaports plan to build Europe’s largest green hydrogen factory, and the Dutch government is targeting 3-4GW of electrolysis capacity by 2030, building on just a handful of megawatts already installed.
“A hydrogen exchange can function as a catalyst” Eric Wiebes, Dutch energy minister
“A hydrogen exchange can function as a catalyst during the development phase of the market and can improve economic efficiency once the hydrogen market is mature,” says Dutch minister for economics and energy, Eric Wiebes, in a letter accompanying the report.
The structure of a hydrogen exchange would largely be based on examples from the electricity and gas sectors, where the Netherlands built successful bourse models. “The balancing of oversupply and undersupply through a marketplace would deliver benefits and also be favourable for the energy transition,” writes Bert den Ouden, author of the initial study and former chief executive of Dutch energy exchange APX Group. He is now leading a more in-depth study into the creation of a hydrogen exchange that is expected to be published within a year.
The supply of green hydrogen, typically produced using electricity from wind or solar PV farms, will be volatile due to its intrinsic link to renewable power production. This will also mean hydrogen trading will be strongly influenced by weather patterns, creating a market that will be marked by periods of steep oversupply and undersupply. “An exchange, or a spot market, will present an effective way to deal with this short-term volatility,” den Ouden says in his report.
The launch of an exchange is inherently linked to the development of hydrogen infrastructure. The Netherlands has just a handful of scattered underground hydrogen pipelines that supply industrial users, but Gasunie plans to create a 1,400-km long hydrogen “backbone”, largely by repurposing existing natural gas pipelines. It estimates that, with an investment of €1.5-2bn, such a network could be fully up and running by 2040, with connections to Germany and Belgium.
In light of the current lack of a physical hub where hydrogen trading can be focused, the Netherlands can start offering precursor services, such as trading of hydrogen guarantees of origin and developing a price index, den Ouden writes in his report.
1,400-km – Length of Gasunie’s planned hydrogen pipeline network
“I can indeed understand the appeal to be an early mover and reference for what is considered to be the future major clean fuel,” says Rodolphe Schennen, managing director at Commerg, a renewable energy brokerage. But he also warns that trading should start only once there is sufficient liquidity in the market.
The success of a hydrogen exchange will depend on whether it can attract enough trading parties. One of its potential clients could be Shell, which in October opened its first hydrogen fuelling station in the Netherlands to add to its existing fleet of stations in Germany, the US, the UK and Canada.
“Shell is an advocate of creating a hydrogen bourse. It is needed for a well-functioning liquid and traded market and will be an important incentive for the development of a hydrogen economy,” says a Netherlands-based Shell spokesman. He declined to comment on whether Shell would become a member of the group to help set up the exchange.