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ID:
191333
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| Summary/Abstract |
This paper studies the economic and regulatory conditions for the implementation of large-scale projects of production and transport of green hydrogen from North Africa to Europe. The EU has shown a remarkable interest in importing hydrogen from North Africa, to reach climate commitments while compensating for the reduction of gas imports from the Russian Federation. The idea to import green hydrogen from North Africa stems from the potentially low costs of production thanks to the abundance of solar energy and land in desertic areas, and to existing export infrastructure. The paper analyses the cases of Egypt and Algeria and finds that Algeria has a potential cost advantage in transporting green hydrogen to Europe thanks to an overcapacity in its existing gas infrastructure, which could be repurposed. By contrast, Egypt is more competitive in the generation of renewable power, a key input of green hydrogen, thanks to a regulation that attracts investments. Overall, both countries are cost competitive in a similar way, although production of renewable energy is still insufficient to make export infrastructure to Europe viable. Based on their regulatory and political economy differences, the paper suggests ways for the EU to adopt a differentiated approach of cooperation with Egypt and Algeria, which suits their strategic and commercial interests and contributes to boosting their production and transport potential.
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| 2 |
ID:
166707
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This paper explores how the profitability of European transnational gas infrastructure is affected by (i) alternative ways to organize the gas supply chain; and (ii) different forms of energy diplomacy. In particular, through a case study, the paper analyses how these factors determined the realisation and success of the Greenstream pipeline and the stalemate of the Galsi pipeline, despite the potential for both projects to be profitable. The issue is important in view of the full transition to the EU Single Market, of which unbundling and privatisation are policy pillars. In fact, before the transition, vertical integration in the foreign upstream and energy diplomacy were key elements for infrastructure profitability. The paper argues that these elements are still important, as constraints to gas procurement and binding contractual relations with producers have not changed substantially. Nevertheless, securing those advantages within the EU Single Market framework requires significant innovations. In particular, the paper suggests forms of EU energy diplomacy, based on bilateral trade deals, which could achieve forms of vertical integration for energy firms as well as help EU and non-EU counterparts align their interests. This paper may prove particularly relevant for the recent debate on how to shape EU energy diplomacy.
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