Analysis of the hydrogen usage in Estonia

Hydrogen is one of the most promising renewable energy sources to replace fossil fuels in the energy and transport sectors. The introduction of hydrogen in everyday life is related to the existing technological possibilities for hydrogen production, storage and transportation. Several countries are already researching the possibility of the widespread use of hydrogen to replace fossil fuels. The European Union and more advanced countries have taken a number of policy steps to encourage faster development of hydrogen technologies and their penetration into industry, transport, energy and other areas of activity.

At the time of the analysis, hydrogen was not produced on a commercial scale in Estonia, but there are some research and business projects at different development stages. In order to plan for the faster deployment of hydrogen technologies, it is important to identify the opportunities offered by large-scale hydrogen deployment and to analyze the potential and applications of hydrogen deployment.

In light of this, CIVITTA, together with other partners in the region, initiated a project to analyse hydrogen resource usage in order to identify the potential and capacity of green and blue hydrogen production, distribution and consumption in Estonia and to map opportunities, bottlenecks, market barriers and threats for the future, including identifying and evaluating potential business projects. The analysis focused on the period 2020-2030, as large-scale global hydrogen deployment will gain momentum over the next decade.

The project concluded with the final report with the analysis of the usage of hydrogen resources, summarizing the main conclusions and policy recommendations. 

 The main part of the work is divided into six parts, where 

  • the technological possibilities of hydrogen production, storage and transportation are described

  • the current situation of Estonia in energy production and final consumption has been mapped and the capacity and readiness of the industrial sector, buildings and transport sector to use hydrogen have been analyzed

  • the socio-economic impact of the use of hydrogen analyzed

  • a cost-benefit analysis of ten pilot projects for the use of hydrogen based on economic aspects and risk factors presented

  • possible technological, social and safety risks in the implementation of pilot projects are mapped

  • an overview of the legal, administrative and economic barriers that hinder the introduction of hydrogen technologies in Estonia and the main measures that assist in the elimination or mitigation of these barriers is presented.



Today, the most reliable hydrogen storage methods are based on hydrogen gas.  In the context of Estonia, due to the short distances, it is most suitable to store gaseous or liquid hydrogen in special gas cylinders.

Regarding the transportation of hydrogen, for shorter distances (a few hundred kilometres) and for the transportation of smaller quantities, the most suitable way is to transport pure hydrogen by heavy goods vehicles, either by gas or in liquid form. As volumes and distances increase, other modes of transport become attractive, for example, large quantities can be transported in pipelines (up to 1,500 km) very quickly. If the distance is longer than 1,500 km, it becomes more reasonable to transport hydrogen using hydrogen carriers (ammonia, LOHC) using the existing natural gas, oil or similar infrastructure.



Hydrogen can currently be used in two ways, firstly in various industrial processes (such as ammonia production and the metal industry) and secondly as a fuel in fuel cells to produce electricity and heat. The application of fuel cells in the field of transport has great potential, as hydrogen vehicles have a longer range and a longer service life than electric vehicles.

The climate neutrality goals of the European Union and Estonia, in general, are factors that accelerate and support the use of hydrogen. In addition to the ambitious 2050 climate neutrality target, the European Union adopted on 8th June 2020 a European Hydrogen Strategy, which will account for 13-14% of the Union's total energy portfolio by 2050 and employ around one million highly skilled workers by 2030, reaching 5.4 million by 2050. There are many progressive countries around the world that have good practices in the use of hydrogen. In the field of transport, Japan is one of the leading countries in the development of hydrogen and fuel cell technologies, forecasting the introduction of 200,000 fuel cell vehicles by 2025. The second important area is considered to be the industrial sector (European Union, Germany, the Netherlands) and the third is energy production (France, UK).



 Estonia has the potential to reduce emissions the most in the transport sector, which is still heavily dependent on fossil fuels. In addition to the transport sector, hydrogen could replace the current use of natural gas in the heating sector, where energy consumption is mostly covered by biomass or central heating and less than 10% of private household heating energy consumption is based on fossil fuels (where natural gas accounts for the majority). 


In the course of the analysis, a sectoral model was developed to help quantify the potential for hydrogen uptake in Estonia, the related investments and the impact on reducing CO2 emissions and creating jobs. The model takes into account the other environmentally friendly alternatives while making the decarbonization scenarios and explains where hydrogen is the only way forward to decarbonize the specific sector. Two scenarios are modelled, the high scenario, where the maximum potential of hydrogen consumption is modelled through the main sectors in the Estonian economy, which would make Estonia one of the frontrunners globally and the low scenario, where Estonia is expected to follow the penetration rates probably more in line with European Union average levels and which is almost half of the high scenario. Different targets based on expert interviews, desk research and expert analysis have been set across different sectors. Figure 0.1 shows the high and low scenarios for hydrogen consumption potential in Estonia. 


Analysis showed that the transport sector (road, rail and marine), ammonia & methanol industry, heating and power sector should be the main targets for possible hydrogen penetration. In industry, ammonia and methanol are the main targets, where large quantities of hydrogen as feedstock are always required. In the transport sector, road, rail, and marine transport are considered.


The above figure shows hydrogen penetration potential across the main sectors. For 2050, the ammonia, urea and methanol industry has an overall potential of 43,922 – 87,845 tons of hydrogen, while the transport sector has the potential to consume up to 108,587 –214,174 tons of hydrogen. The heating and power sectors have the potential to consume 6,588 – 13,175 tons of hydrogen and 1,250 – 2,500 tons of hydrogen respectively, meaning that penetration at this level of hydrogen consumption would mean significant changes in respective sectors. The study concludes that all those changes would need a total investment of EUR 22,412 – 44,7 billion in different parts of the hydrogen value chain, the majority of the investments coming from the private sector i.e., companies and private consumers (in the transport and heat sector). 



In the course of the work, ten pilot projects were analyzed based on the potential of these use cases, economic profitability (ROI and IRR1 ), required investment, environmental impact and expected need for support. In the comparison of pilot projects, those with the higher potential were those where the hydrogen use technology is sufficiently mature and efficient compared to the alternatives currently in use, and at the same time, the initial hydrogen use is sufficient to apply at least 5 MW of electrolyser.


The area with the greatest potential for the use of hydrogen is the transport sector, where on the one hand it is possible to create high demand and on the other hand the technology is also effective for different vehicles. The use of hydrogen in the transport sector has a major environmental advantage over a diesel engine, as well as a functional advantage due to fast refueling and a longer range over an electric motor, especially over longer distances. Thus, the most promising projects in the transport sector are shipping and rail transport, where hydrogen technology is more mature, hydrogen consumption is high and energy demand per hour is high.

Due to these factors, according to the cost-benefit analysis, the project with the most potential is the project about the use of hydrogen ferries (Table 0.1; PP 5) (both mainland and inter-island passenger and international cargo between Estonia and Finland), since a couple of ships to hydrogen transfer ensures sufficient hydrogen for use by volume, hydrogen production takes place in a port near renewable electricity parks and the use of hydrogen technology in these vehicles is now relatively efficient.




The introduction of hydrogen is mainly associated with the risks related to social acceptance, technology and safety.  The main problems with social acceptability are people's low awareness of hydrogen use and the fear and ignorance of previous accidents. The main technological risks of hydrogen vehicles are related to the fuel tank and fuel element, but also to infrastructure and equipment maintenance. Lastly, with nitrogen production, there is a risk of oxygen entering the ammonia synthesis circuit, causing catalyst poisoning.




The analysis mapped 28 barriers and 46 measures across the entire hydrogen value chain, including 32 legal, administrative and 14 economic measures. Before implementing specific measures, an important precondition is the existence of a national hydrogen strategy, which would choose between the options analyzed in this study, set out specific policy objectives and guidelines, in which sector and to what extent hydrogen technologies are to be introduced and how much CO2 is to be reduced. Without a national hydrogen plan, investors are uncertain and reluctant to invest in hydrogen solutions. A coordinated division of competencies and activities between authorities should be ensured in order to implement the measures. Moreover, another important basic premise for the production and placing on the market of green hydrogen in Estonia is not only the setting but also the implementation of ambitious renewable energy targets, as the volume of renewable electricity demand in Estonia may increase approximately two times compared to the forecast so far if hydrogen technology is fully introduced.


The results of the study provide a summary list of all support measures, their effects on barrier mitigation and assessments of technological readiness, as well as the estimated cost of each measure and the CO2 reduction potential and potential impact on jobs under the two different scenarios. This list of support measures can be used as a supporting tool, but the final need for implementation depends on the potential to be realized.


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