The hidden challenge of green hydrogen: Securing critical materials

Introduction

The EU has set bold targets to produce 40 GW of renewable hydrogen electrolyzers by 2030, a cornerstone of its strategy to achieve carbon neutrality by 2050. However, this ambition is constrained by the availability of critical materials required for electrolyzer technologies. The geopolitical risks, environmental concerns, and supply chain vulnerabilities associated with these materials could hinder the scalability of green hydrogen. Especially since China is dominating this market and has emerged as a potentially unfriendly geopolitical player. It is therefore essential to look closer to home and in the EU’s own backyard. The Mediterranean and MENA regions present a unique opportunity to stabilize supply chains while fostering regional economic growth and innovation.

The critical material bottleneck

Hydrogen electrolyzers, essential for producing green hydrogen, depend on specific materials that are scarce and geopolitically sensitive:

1. Proton exchange membrane (PEM) electrolyzers: Require iridium and platinum, with global production concentrated in a few countries like South Africa and processing in China. The limited supply of iridium is a major bottleneck, given its critical role in PEM technology

2. Alkaline water electrolyzers (AWE): Use nickel and cobalt, materials with significant supply risks. For instance, cobalt production is heavily reliant on the Democratic Republic of Congo, where mining practices raise ethical and environmental concerns. In addition, processing is again mostly concentrated in China

3. Solid oxide electrolyzer cells (SOEC): Depend on yttrium and zirconium, with yttrium supply largely controlled by China, posing geopolitical risks for the EU

These materials are not only essential for electrolyzers but also for other renewable energy technologies, such as wind turbines and solar panels, increasing competition and price pressures across the clean energy sector.

First step; look closer to home at the Mediterranean and MENA regions

The Mediterranean and MENA regions are rich in natural resources and offer a strategic opportunity to diversify and stabilize the supply of critical materials. By fostering partnerships and investments, the EU can address material shortages while contributing to regional stability and economic growth.

1. Resource availability: Countries like Morocco, Algeria, and Egypt have significant reserves of phosphate, rare earth elements, and other critical minerals. Leveraging these resources can reduce dependency on a few suppliers and mitigate geopolitical risks

2. Strategic partnerships: Initiatives such as the EU-Morocco partnership on renewable energy and critical raw materials highlight the potential for sustainable and mutually beneficial collaboration. Similar agreements with Algeria, Tunisia, and Egypt could further enhance resource availability while supporting local development

3. Economic diversification and job creation: By investing in mining infrastructure and renewable energy projects, the EU can help MENA countries diversify their economies away from oil and gas dependency, creating jobs and fostering social stability

Second step reduces dependency through innovation

Technological innovation is critical to alleviating the pressure on critical materials:

1. Material substitution: Developing electrolyzers that require fewer or no scarce materials, such as iridium-free PEM designs, could significantly reduce supply risks

2. Recycling and circular economy: Investing in recycling technologies to recover critical materials from used components can enhance supply security. Programs like the EU’s Horizon 2020 HyTechCycling project exemplify this approach

3. Sustainable mining practices: Encouraging environmentally and socially responsible mining practices in resource-rich regions can ensure a steady and ethical supply of critical materials

Final step securing strategic reserves and policy support

To mitigate short-term disruptions and price volatility, the EU must establish strategic reserves of critical materials, similar to the US National Defense Stockpile. In parallel, robust policies promoting ethical sourcing, recycling, and research and development will be essential to ensure a sustainable supply chain. This of course requires a different mindset which we see emerging anyway in response to increasing geopolitical pressure from the new Trump presidency, an assertive China and aggressive Russia in Ukraine.

Conclusion

The EU’s renewable hydrogen ambitions hinge on securing a stable and diverse supply of critical materials for electrolyzers and renewable energy technologies, currently dominated by China and few other countries that constitute a potential risk. Looking closer to home, the Mediterranean and MENA regions offer significant potential to address this challenge through strategic partnerships, investments, and innovation. Taking the newly liberated Syria as an example, the EU can contribute to sustainable development of the country while at the same time developing a resource for critical materials much closer to home. By proactively addressing material constraints, the EU can not only achieve its hydrogen targets but also set a global standard for a resilient and sustainable energy transition.

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