Hydrogen Needs a Strategy in Latvia

Article published in the newspaper Dienas Bizness on July 23, 2024

In the future, hydrogen could become not only an important resource for achieving climate neutrality but also a significant sector in the national economy, though it requires an appropriate state policy. This is highlighted in the study Latvia’s Hydrogen Economy Strategy 2030. Its author, Dr.oec. Justs Dimants, emphasized that the hydrogen economy could become one of the driving forces of Latvia’s energy decarbonization and, in the medium term, promote sustainable energy.

“The Latvian government needs to define our role in the European hydrogen economy ecosystem — whether we will be a transit country, a green hydrogen producer, a green methanol producer and exporter, a hydrogen consumer, or choose another scenario,” explained J. Dimants. He noted that defining Latvia’s ambitions would also allow the development of a corresponding strategy, which would guide regulatory changes and relevant state support programs.

“Latvia has the potential and the prerequisites to fulfill all these functions to varying degrees and thus contribute to the national economy, but significant work is needed to realize this potential,” said J. Dimants. He reminded that Poland, Estonia, and Lithuania already have hydrogen strategies that are more detailed and concrete, meaning these countries are effectively three to five years ahead of Latvia.

“That is not and cannot be an excuse to do nothing,” said J. Dimants. Currently, the most available option is so-called gray hydrogen, produced from natural gas, but the desired target is green hydrogen, which would be produced from solar, wind, and also hydroelectric sources.

Multiple Possibilities

One of the potential hydrogen consumers mentioned is the energy sector. Hydrogen can be used as an energy carrier, especially in an integrated system with solar and wind power plants.

“Hydrogen obtained through electrolysis can be stored, thereby increasing the efficiency of renewable energy use and promoting energy independence and security. The heat generated during hydrogen production is an environmentally friendly by-product that can be effectively used in both centralized and local, decentralized heating systems,” explained J. Dimants. He also emphasized that Latvia has opportunities to engage in hydrogen technology research and development, which includes developing new technologies to improve hydrogen production and utilization processes, as well as seeking and testing innovative solutions to integrate hydrogen applications into existing and new infrastructure and industrial processes.

“The focus is on innovation and technological improvement, which in turn enhances engineering and scientific competence,” said J. Dimants. He points out that in Latvia, hydrogen can be produced and consumed locally, produced and exported to other EU member states, or the country can serve as a transit hub for this resource. “These are new jobs and opportunities for attracting investment,” explained J. Dimants.

Challenges Are Not Lacking

The researcher also acknowledged that alongside potential opportunities, there are challenges.

“The lack of a regulatory framework, including standards, creates obstacles to a standardized approach in technology development and implementation, as well as in attracting investment and promoting hydrogen development. Adding to this are gaps in planning documents and the absence of support instruments, which are essential prerequisites for developing a new energy sector,” J. Dimants explained when asked about the most significant challenge. He noted that other EU member countries already have regulations related to hydrogen, which Latvia should also adopt.

“Currently, there is no infrastructure, no consumption, and consequently no demand, which is a significant barrier to hydrogen production,” concludes J. Dimants. He acknowledged that although the transport sector is seen as having the greatest potential for hydrogen consumption, there is still a great deal of uncertainty — in terms of technology costs, refuelling expenses, and hydrogen production prices.

“The study concluded that many uncertainties and untested assumptions exist, and there is a lack of experience based on factual data in this field. One possibility is that the first pilot projects could be bus fleets, but several experts remain sceptical about using hydrogen in transport in its pure form, noting that hydrogen adoption in the transport sector will most likely occur only in the long term,” explained J. Dimants.

At the same time, the development of the hydrogen sector requires knowledgeable specialists, which means there is a need for appropriate education.

Currently, a key challenge is attracting and retaining a team of engineering specialists. It is also very important to implement demonstration projects for hydrogen technologies related to hydrogen production, transportation, storage, and consumption, as well as hydrogen contact points.

Several areas of focus

Since green hydrogen production has not yet developed in Latvia, achieving profitability and competitiveness in hydrogen production requires, according to J. Dimants, implementing measures to support the production of green and low-carbon hydrogen.

He believes that Latvia should focus exclusively on the development of green and low-carbon hydrogen. Support instruments could include subsidies, tax incentives, and investment stimuli. Another area of action would be the implementation of hydrogen technologies in energy and heat supply, as hydrogen could eventually serve as an alternative to natural gas in heating systems, including the processing of biowaste into biofuels from which hydrogen can be produced.

“An important aspect is the assessment of nationally critical infrastructure objects and defining their role in hydrogen use for electricity and heat production, as well as evaluating their economic feasibility,” emphasized J. Dimants.

At the same time, to stimulate hydrogen consumption (demand in Latvia) with the goal of reducing fuel emissions, it is necessary to create a support program that promotes the use of hydrogen vehicles, alongside establishing hydrogen refueling stations for cars.

“Hydrogen can play a significant role in industrial decarbonization, and achieving this goal requires not only demonstration projects but also tax incentives, subsidies, and grant programs for companies investing in hydrogen technologies,” stated J. Dimants.

He pointed out that for the hydrogen economy to take off in Latvia, it is essential to ensure that this resource can be efficiently and safely delivered from production sites to end users (including for export), as well as stored.

“For transporting large volumes of hydrogen over relatively long distances, the most rational solution is to use a pipeline system,” J. Dimants reminded.

DB already reported in the April 9 issue this year that a preliminary study is underway for transporting green hydrogen from the Nordic countries to Central Europe via a proposed hydrogen pipeline, with Latvia’s approximately 270-kilometer section potentially costing around 800 million euros.

J. Dimants noted, however, that to ensure hydrogen availability in locations where pipeline construction is not economically feasible or possible, mobile hydrogen transport solutions can be developed and used. “This includes transporting hydrogen with specially adapted tanker trucks, rail tank cars, or ships,” he said.

He also emphasized that, in addition to production and transport, developing hydrogen storage capabilities (above-ground reservoirs and underground storage) in Latvia will be an important issue. There was also a call for procurement authorities, when issuing tenders, not to define a specific technology but rather the results to be achieved.

Latvians implement pilot projects in Europe

“Currently, we are participating in the implementation of five different projects (approved at the EU level), during which the knowledge and experience gained could be incorporated into the development of Latvia’s roadmap for a hydrogen strategy,” said Ģ. Greiškalns, board member of the Latvian Hydrogen Association. He noted that nothing comes from nothing, so practical projects are essential—technical and economic feasibility studies, pilot projects, and scaling. “We are in a consortium with Hamburg Airport, which also includes Scandinavian airports, analyzing hydrogen use in airport infrastructure, ground handling, and aircraft refueling with hydrogen, which makes this even more significant in connection with the Dutch company Fokker Next Gen’s idea to start manufacturing hydrogen-engine aircraft in Liepāja,” explained Ģ. Greiškalns.

He pointed out that Riga Airport, like Tallinn and many other airports, is involved in the Baltic Sea region hydrogen project, which includes both technical and economic feasibility studies and evaluations of possible technologies (gaseous or liquefied) along with relevant research.“Current data show that for long-distance flights, the technology for using liquefied hydrogen is more suitable, while for shorter routes, gaseous hydrogen is preferred, and in parallel, work is being done on the use of synthetic fuels,” Ģ. Greiškalns replied when asked about hydrogen in aviation.

It should be noted that Airbus is developing three aircraft projects that will use hydrogen, with flights expected to begin in 2028–2030.

In its June 4 issue this year, DB reported on the German company Evia Aero GmbH’s plan to acquire the shares of the operator of Jūrmala Airport, located near Tukums, SIA Sky Port, and transform it into a green aviation hub in the Baltics. From there, flights would be operated with electric and hydrogen-powered aircraft to regional cities—Tallinn, Vilnius, Kaunas, and potentially in the future to Helsinki and Stockholm.

At the same time, there is currently one airline operating hydrogen-powered aircraft in New Zealand, and Estonia is also exploring the possibility of a commercial flight to Saaremaa Island.

All sectors must be covered

“In our roadmap, we had to outline many roles—not only production but also storage, transportation, and refueling, because there were no other developers in the respective fields,” describes Kaspars Avots, CEO of the investment and project management company Baltic Hydrogen Group. He hopes that interest in and around hydrogen will grow, simultaneously promoting its adoption across all possible areas of life. While Europe is witnessing heated discussions about which form of energy (e-fuel, electricity, etc.) should be prioritized, Avots believes such competition is unnecessary, as the key question is simply how green the respective resource is. In other words, there are things that cannot be economically implemented with batteries, and there are ideas that cannot be realized using hydrogen.

“In the hydrogen sector, Latvia is recognized across Europe, because the European Hydrogen Association has authorized us to conduct a hydrogen bus pilot project, which is currently being implemented in 13 member states and will also be carried out in Sweden and Finland,” notes Ģirts Greiškalns regarding successful work on a European scale. Interestingly, Baltic Hydrogen Group is currently installing two hydrogen stations in Sweden and one in Slovakia. The company’s goal is to build six production plants, storage facilities, a logistics chain, and 23 refueling stations covering the entire territory of Latvia by 2028.

We were at the forefront…

In the past, a hydrogen trolleybus project was launched in Riga, but it was halted due to political management issues. According to Ģ. Greiškalns, this does not indicate any technological problems. “The initial project included scaling—20 trolleybuses and 20 buses—which would also have made the hydrogen refuelling station economically viable while simultaneously decarbonizing it by switching to green hydrogen,” explained Ģ. Greiškalns. Unlike other countries, Latvia has, even though small, but functioning hydrogen infrastructure.

Interestingly, Latvia could have been the first country in Europe—and possibly in the world—where locomotives used hydrogen as fuel. However, this opportunity was not utilized. In 2017, the then Latvian Railways management proudly presented a prototype locomotive at the World Expo that ran on hydrogen fuel.

There were even documents regarding the conversion about converting shunting locomotives from diesel fuel to hydrogen-electric locomotives. “At that time, Latvia was ahead of companies like Alstom and Siemens,” noted Ģ. Greiškalns. He admits that unfortunately, after the new political leadership came to power, many personnel changes occurred, and the hydrogen locomotive project was shelved.

“This idea attracted interest from France, Germany, and other countries, and in 2018–2019, considering the energy prices at that time, it was concluded that in certain cases, hydrogen is economically more competitive in a total life-cycle analysis compared to three other types of energy resources,” said Ģ. Greiškalns. He points out that hydrogen as an energy resource is being tested in both passenger and freight rail transport, but it is most effective in so-called “last mile” (shunting) locomotives, which are difficult to electrify or equip with battery technologies. Currently, one Latvian company (DiGas) is already carrying out locomotive conversions. Ģ. Greiškalns emphasizes that technology is advancing and efficiency is increasing, so a hydrogen bus consumes 4.7–5.2 kg per 100 km, comparable to diesel fuel consumption, although the hydrogen bus itself is more expensive than a conventional fuel-powered bus.

Evaluation formula

“Every potential solution needs to be evaluated because hydrogen is not a silver bullet suitable for all scenarios. If electricity is generated, it is necessary to understand where and how quickly it will be used: if immediately, it goes into the power grid; if after a short delay (for example, on a sunny day when solar panels generate significantly more than is consumed), it should be stored in batteries; if after a longer period, then converting it into hydrogen must be considered,” explained Ģirts Greiškalns regarding the economic life-cycle evaluation of the resource and the choice of applicable solutions.

He also notes that transportation nuances must be considered.

“Transporting electrons via a cable reduces their value compared to transporting the same amount of energy via a pipeline in molecular form. This was studied in Estonia, where it was found economically more advantageous to create a pipeline connection with Finland, which can carry eight times more energy than using a cable,” Ģ. Greiškalns explained. He adds that on the consumer side, calculations differ slightly: if daily city travel is 20–30 km, the most logical solution is an electric vehicle, but for transporting cargo over long distances, a hydrogen vehicle is competitive when considering transported cargo per kilometer.

It must be taken into account that converting a resource from one energy type to another results in losses, although technology is developing. Currently, 52 kilowatt-hours of electricity are needed to produce 1 kg of hydrogen, and from 1 kg of hydrogen, only 24 kilowatt-hours can be obtained (experimentally, even more than 30), while technologies are being developed that could produce 1 kg of hydrogen from only 42 kilowatt-hours.

“Latvia has a success story with Nano Technologies – a startup that secured significant funding from both EU structural funds and private investors, having developed an innovation: nano coatings for plates to make electrolyzers more efficient. As a result, they work with leading electrolyzer (cell) manufacturers, and their solution is reportedly several times more efficient compared to competitors,” noted Ģ. Greiškalns.

Latvia can produce hydrogen and consume it domestically, produce and export it to other EU member states, or act as a transit country for this resource, according to Justs Dimants, Dr.oec., author of the study Latvia’s Hydrogen Economy Strategy 2030.

Currently, the most available form is so-called gray hydrogen, produced from natural gas, whereas the desired form is green hydrogen, produced from solar and wind (and also water) stations.

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