[Series] The Import of Hydrogen by the Netherlands

From Oil Port to Hydrogen Hub: The Netherlands Wants to Capitalize on Its Trading Position

When Russia invaded Ukraine in February 2022, it became clear just how vulnerable an energy system can be when it relies on a limited number of suppliers. Gas suddenly became scarce, prices skyrocketed, and factories scaled back production or closed their doors. At the time, ABN Amro estimated that skyrocketing energy prices had cost Dutch businesses approximately 22 billion euros in extra expenses in 2022 alone. It was a costly lesson about the dangers of dependency.

That lesson is central to the hydrogen trade agenda that a coalition of 24 companies and organizations is presenting this week to Stientje van Veldhoven, Minister of Climate and Green Growth. The coalition—which includes the Port of Amsterdam, Port of Rotterdam, North Sea Port, NLHydrogen, VOTOB, and eleven terminal companies—is asking the government to take active steps regarding the import of hydrogen and hydrogen carriers. "Exporting countries are starting up projects. In Saudi Arabia, for example, but also in countries in South America and Africa. This goes beyond PowerPoint presentations. The volumes are coming. The question is whether the infrastructure in the Netherlands will be ready in time to receive those volumes," says Lijs Groenendaal, director of NLHydrogen.

Transit Country

The Netherlands is currently the largest energy hub in Northwestern Europe. Through pipelines and terminals in Rotterdam, Amsterdam, Groningen, and Zeeland, fossil energy flows to Germany, Belgium, France, and beyond. This position is not a given; it is the result of decades of investment in infrastructure and trade relations. The coalition wants to secure this position for the era of green energy as well.

The action plan deliberately speaks of trade instead of import. The Netherlands is not a passive recipient, but a transit country that adds value to the chain. "We won't make it with locally produced hydrogen alone," says Groenendaal. A system study by NLHydrogen shows that a significant amount of imports will be required. By 2050, the Netherlands will produce 350 petajoules of hydrogen locally, but given the overall energy demand, a staggering 850 petajoules of hydrogen will need to be imported.

Willem Henk Streekstra of VOTOB, the branch association for Dutch tank storage companies, emphasizes the trade perspective: "The Germans jokingly call Rotterdam a German port already," he says with a smile. "If hydrogen enters through Rotterdam later on, the Germans pay a dime extra. But if it enters through Hamburg, we pay a dime extra. The Netherlands is enough of a trading nation to figure this out, but we actually have to start building."

The starting position is good, he notes: “We have everything we need. We already have a great infrastructure. It is only logical to reuse existing networks as much as possible. This infrastructure immediately grants access to many potential users of these new green molecules.” Furthermore, Streekstra says the Netherlands has the knowledge and expertise to develop into a hub for the trade and logistics of green energy. “Trade is sometimes viewed as something negative nowadays. But as far as I'm concerned, we can be proud to play a pivotal role in the green energy supply of Northwestern Europe.”

Nine Projects, Three Regions

The fact that the infrastructure is not yet there is not due to a lack of ambition in the market. Nine major projects are ready to start, spread across Rotterdam, Amsterdam, and Zeeland. They focus on four different hydrogen carriers: ammonia, liquid hydrogen, methanol, and LOHCs (Liquid Organic Hydrogen Carriers). Across these regions, nine terminals are ready and could be operational around 2030. For instance, Air Products has plans for an ammonia terminal in Rotterdam that should be operational in 2028, and Vesta is working on a similar project in Zeeland, also to be delivered in 2028.

Ammonia is the carrier that most companies in the coalition are currently betting on, because it is already an internationally traded commodity. Ammonia is already shipped and stored on a large scale, and it can be used directly as a raw material for fertilizer production, as fuel, or "cracked" back into hydrogen for industrial use. "Ammonia is a familiar product and already has many applications," says Streekstra. "It's easy to transport and store. A trade chain for ammonia can therefore get off the ground quite quickly. It could easily be one of the first new green trade flows. But we certainly shouldn't blind ourselves to it. Every hydrogen carrier has its own characteristics and applications. As a terminal sector, we remain agnostic about this."

What is holding the projects back has little to do with technology, but rather with money and policy. The coalition notes that in recent years, the government has poured billions into subsidies for local hydrogen production, while support for import infrastructure has lagged far behind. "It's actually quite strange that we invest so much money in local production, when down the line we will mostly rely on imports. That needs to be corrected," Streekstra believes.

Three Concrete Requests

The action plan formulates three requests for the government. At the top of the wish list is demand creation. After all, if no demand for hydrogen arises, no supply will follow, and therefore no market will develop. The coalition asks for clear, long-term targets for the use of hydrogen and hydrogen carriers so that companies can sign long-term contracts. Without that certainty, no one will make an investment decision. "Parties are willing to build," says Groenendaal, "but not without knowing whether there is a customer."

The second request concerns financing. The coalition is asking for 400 million euros per year to scale up import infrastructure: shipping transport, storage terminals, and crackers to convert hydrogen carriers into usable hydrogen. With that budget, a supply chain could be set up to import 400 kilotons of hydrogen annually, which accounts for a third of the current Dutch consumption of 1,100 kilotons of grey hydrogen per year. Groenendaal puts that amount into perspective: "It sounds like a lot of money, but it's actually very little when placed in the right context. ABN Amro calculated at the time that the energy crisis following the invasion of Ukraine cost Dutch businesses an estimated 22 billion euros. Investing in building a hydrogen trade system costs a fraction of that. This investment reduces the damage of fossil energy shocks. It's a no-brainer."

The coalition has also thought about how that money can best be utilized. Four instruments have been developed: a subsidy on investment costs (capex), a subsidy per kilogram of imported hydrogen through setups like the SDE++ scheme, an expansion of the existing European H2Global tender instrument, and a capacity mechanism where storage capacity is compensated regardless of actual usage. Every path has pros and cons. The coalition leaves the final choice to the ministry.

The third and final request is about prerequisites: the timely construction of the national hydrogen network by Gasunie subsidiary Hynetwork, certification of hydrogen from exporting countries, a realistic safety policy for ammonia storage and transport, and support from residents living near the terminals. On all these points, the Netherlands is lagging behind countries like Germany and Japan, which approach safety issues surrounding ammonia with more rational detachment. "There is a lot of fear surrounding ammonia in the Netherlands," says Streekstra. "Other countries handle that with more professional distance. We want to become a hub. Then you also have to dare. We must, of course, properly analyze and manage the existing risks, but we shouldn't paralyze ourselves and block the entire development. As a sector, we take this matter seriously. We demonstrated this with the new safety framework for the large-scale above-ground storage of ammonia, the so-called PGS12 guideline."

Geopolitics

The urgency of the action plan is highlighted by the turbulent geopolitical developments of recent years. The Netherlands relies on energy imports for 78 percent of its needs. This dependency will not disappear in a hydrogen economy. However, imports can be diversified across dozens of exporting countries instead of a handful of large suppliers. "Diversification of hydrogen suppliers is highly feasible. Energy from wind and solar is abundant and, moreover, much more widely distributed than oil and gas," says Streekstra. "Dependencies can easily be avoided, provided you make the right choices right now."

The presentation of the action plan coincided with the World Hydrogen Summit in Rotterdam, where the sector gathered. "Last year, we already presented a Hydrogen Import Manifesto to the minister," says Groenendaal. "The response back then was: come up with concrete measures. We had studies conducted. The action plan is the result of that. We are ready to start. Now it's up to the cabinet."

Streekstra of Votob concludes: "The Netherlands is an energy hub, and that has served us very well. As we transition from fossil to green energy, we have to earn that position all over again. But the foundation is solid. We have the ports, the connections, the knowledge. Let's make use of them. It might move a bit slower than we thought a few years ago. But that is no reason to abandon it. Let's start a bit smaller, but we must start building soon."