Ursula von der Leyen, a German politician who is seen as one of the most powerful women in the world, has been re-elected as president of the European Commission. Last week, she secured 401 votes from parliament’s 720 newly elected members – a majority slightly higher than in her first mandate in 2019.

Despite the ultimate support guaranteeing her second mandate (2024-2029), von der Leyen faces increased criticism in the European Parliament. Her policies as head of the EC have also been challenged – particularly those related to electric vehicles and renewable hydrogen, which are core to the EU’s Green Deal.

The re-election ensures the opportunity to continue work towards completion and turn the European Green Deal into the bloc’s social and industrial deal. The challenge, however, remains big.  

Electric vehicles

Industry bodies have welcomed and congratulated von der Leyen, though their reaction was accompanied by a ‘but.’ In a brief social media post, the European Automobile Manufacturers’ Association (ACEA) congratulated the EC president and emphasised their “shared vision” of a competitive Europe. Yet, it called for an “Industry Deal” to put the bloc’s industrial strategy “firmly back on the agenda.”

The trade body requests “regulatory coherence” to enable the sector to be globally competitive. Two other major calls are for the EC “to guarantee technology neutrality,” to enable affordable and accessible mobility.

EV INVESTMENT ANNOUNCEMENTS BY CARMAKERS 2021-2023

SOURCE: T&E

Von der Leyen indicates that to reach the “climate neutrality target for cars” in 2035 – a law that will remain unchanged – certain aspects of the policy may need to change. This includes allowing the use of e-fuels, or synthetic fuels produced using carbon capture, ultimately prolonging ICEs.

“We have to create predictability for investors and manufacturers and of course, customers. Getting there will require, indeed, a technology-neutral approach in which e-fuels have to play a role… they can play a role through a targeted amendment of the regulation as part of the foreseen review. So important is we stick to the goals and we are technology neutral,” she tells a press conference.

Campaign group Transport and Environment (T&E) welcomes the second mandate and confirmation to not backtrack on the Green Deal targets, but opposes the e-fuels “backsliding.”

“Opening the door to e-fuels for cars under the false flag of technology neutrality, is a major threat to investment certainty, especially with significant battery investments currently at risk,” warns Julia Poliscanova, senior director for vehicles & e-mobility supply chains at T&E. “It is critical to European industry and jobs to maintain the 2035 zero emissions targets for cars. Spending years designing a policy framework for niche e-fuels is a distraction from the monumental task to secure clean and competitive EV supply chains.”

Both T&A and ACEA have put forward key recommendations for the 2024-2029 mandate, which should help von der Leyen and her soon-to-be-formed team plan the next steps.

Green hydrogen

Days before the vote, the Brussels-based European Court of Auditors (ECA) released a special report on the EU’s industrial policy on renewable hydrogen. The auditors analysed the EU’s Hydrogen Strategy and the REPowerEU plan, focusing on green hydrogen. The study covers July 2020 to the end of 2023.

“The EU’s industrial policy on renewable hydrogen needs a reality check,” says Stef Blok, the ECA member in charge of the audit. “The EU should decide on the strategic way forward towards decarbonisation without impairing the competitive situation of key EU industries or creating new strategic dependencies.”

EU ELECTROLYSER PIPELINE AS OF OCTOBER 2023 (IN GW)

SOURCE: ECA

While recognising the legal framework has been “mostly adopted,” auditors say the EC set “overly ambitious” targets for the production and import of green hydrogen. These targets were driven by political will, not robust analysis, they claim.

The study shows massive discrepancies in figures related to estimated electrolyser and renewable hydrogen production capacities. The EC is targeting 10 million tonnes/year of green H2 production and 10m t/y of imports by 2030. By 2024, the target was to install at least 6 gigawatts of electrolysers to produce 1m t, according to the Hydrogen Strategy. This hasn’t materialised.

The ECA points out that some EC documents state at least 40 GW of electrolysers should be installed by 2030 to deliver 10m t/y domestic production. Some other mentions suggest 40 GW of electrolysis would result in 4.4m t/y of renewable hydrogen output, though this volume also varies around 5.6-6.6m t/y. Some communications state that the targeted output would require between 65 GW and 140 GW of electrolysis capacity, the report claims. In other words, the targets lack consistency and robustness.

The auditors also argue that the estimated €18.8 billion ($20.46 billion) EU funding for the 2021-2027 period is scattered between several programmes. This makes it difficult for companies to determine the type of funding best suited for a given project. Additionally, they say the bulk of EU funding is only used by member states with a high share of hard-to-decarbonise industries such as Germany, France, Spain and the Netherlands.

“There is still no guarantee that the EU’s hydrogen production potential can be fully harnessed, or that public funding will allow the EU to transport green hydrogen across the block from countries with good production potential to those with high industrial demand,” the report concludes.

The race is on

Responding to the report, an EC spokesperson tells Kallanish that the EC welcomes the recognition of the extensive regulatory work done so far to stimulate this industry by creating more certainty and predictability. “However, our work is far from finished. We now have to accelerate the deployment and uptake of renewable and low-carbon hydrogen in Europe and further develop this emerging market,” she says.

The EC notes it stands by the “ambition” – not a binding target – to produce 10m t/y of green hydrogen and import another 10m t/y, “but recognises the challenges in scaling up the hydrogen value chain.”

“The current confirmed project pipeline, within the EU and internationally, is insufficiently advanced,” the spokesperson adds. Demand, however, will continue to grow “so hydrogen remains a solid investment.” The EC estimates 27-35m t/y of demand in 2040, increasing to 66m t/y in 2050.

Von der Leyen acknowledges the challenges she faces ahead, from political support to geopolitics, technology maturity, competitiveness, investment and funding, to name a few. Be it on EVs, hydrogen, batteries or clean steel, “choices are the hinges of destiny,” she told the parliament after her victory.

“And in a world full of adversity, Europe’s destiny hinges on what we do next. Despite the momentous things we have done and overcome, Europe now faces a clear choice. A choice which will shape our work for five years and define our place in the world for the next 50,” she continues.  

The EC president says she will stick to the targets of the European Green Deal with pragmatism, technology neutrality and innovation. “We attract more investments in clean hydrogen than the US and China combined… In the last years, we have concluded with global partners 35 new agreements on clean tech, hydrogen and critical raw materials,” she claims. “This is the European Green Deal in action.”

New commissioners will “stay the course” on the new growth strategy and the goals already set for 2030 and 2050. The focus will now shift to implementation and investment, with a new Clean Industrial Deal to be put forward in the first 100 days of the mandate.

“We must be faster and simpler, because Europe is decarbonising and industrialising at the same time,” she concludes. “Our first priority will be prosperity and competitiveness… Those who are not competitive will be dependent. The race is on and I want Europe to switch gear. And this starts with making business easier and faster.”