Natural Gas And Italy's Transition To A Hydrogen Economy

Essay By Marco Brun | CEO & Chief Commercial Officer | AleAnna

Italy is leveraging its existing natural gas infrastructure to accelerate its transition to a hydrogen economy, a critical component of its decarbonization strategy. As one of Europe’s largest natural gas consumers, Italy recognizes the potential of blending hydrogen into the energy mix to reduce greenhouse gas emissions and foster energy independence. Supported by European Union initiatives and substantial domestic investments, Italy is setting the stage for a sustainable hydrogen-based future.

The Role of Natural Gas in Hydrogen Production

Currently, over 95% of hydrogen produced globally comes from natural gas through steam methane reforming (SMR). Italy's robust natural gas infrastructure, including pipelines and storage facilities, makes it well-suited for large-scale hydrogen production and distribution. In 2023, Italy consumed approximately 68 billion cubic meters (bcm) of natural gas, with plans to gradually replace a portion of this with hydrogen to achieve its 2050 net-zero emissions goal.

Italy's hydrogen production potential is substantial. According to the Italian Hydrogen Strategy, the country aims to produce 5 million tons of hydrogen annually by 2050. A significant portion of this hydrogen will be "blue hydrogen," produced from natural gas combined with carbon capture and storage (CCS) technologies to minimize emissions. Pilot CCS projects, such as those in Emilia-Romagna, are expected to sequester 1 million tons of CO₂ annually by 2030.

Leveraging Natural Gas Infrastructure for Hydrogen

Italy’s extensive natural gas infrastructure, which includes over 33,000 kilometers of pipelines and 20 bcm of storage capacity, is being adapted for hydrogen transportation and storage. The national gas operator, Snam, is at the forefront of these efforts. In 2022, Snam successfully tested the blending of 10% hydrogen with natural gas in its pipeline network, demonstrating the feasibility of integrating hydrogen into the existing system.

By 2030, Italy plans to retrofit 70% of its natural gas pipelines to be hydrogen-ready, enabling the transport of up to 20% hydrogen by volume. These upgrades will require an investment of approximately €2 billion but are expected to significantly reduce the costs of building a new hydrogen-specific network.

Hydrogen Applications in Italy

The transition to a hydrogen economy is poised to transform Italy's industrial, transportation, and energy sectors. In the industrial domain, energy-intensive industries such as steel and chemicals are adopting hydrogen to replace coal and natural gas. A notable example is the Acciaierie d'Italia steel plant in Taranto, which has launched a pilot project incorporating hydrogen into its production processes. This initiative has the potential to reduce CO₂ emissions by up to 40%, marking a significant step toward industrial decarbonization.

In transportation, Italy is rapidly expanding its hydrogen infrastructure to support fuel cell vehicles. By 2030, the country aims to establish 300 hydrogen refueling stations, backed by €1 billion in investments. This infrastructure will initially focus on heavy-duty vehicles, with plans to extend its use to rail and maritime transport, paving the way for broader adoption of hydrogen-powered mobility solutions.

In the energy sector, hydrogen-ready gas turbines are being deployed in power plants to facilitate a smooth transition from natural gas. ENEL, Italy’s largest utility, is leading this effort with a €3 billion investment in hydrogen-powered plants designed to operate on 100% hydrogen by 2040. These developments highlight Italy’s commitment to embracing hydrogen as a cornerstone of its sustainable energy future.

Economic and Environmental Benefits

The transition to a hydrogen economy is expected to yield significant economic benefits. By 2050, Italy’s hydrogen industry could contribute €10 billion annually to GDP and create 500,000 new jobs. Additionally, domestic hydrogen production will reduce dependence on imported natural gas, enhancing energy security and insulating Italy from global price fluctuations.

From an environmental perspective, replacing natural gas with hydrogen could eliminate 50 million tons of CO₂ emissions annually by 2050. This shift aligns with Italy’s commitment to the European Union’s Fit for 55 targets, which aim to reduce emissions by 55% by 2030.

Challenges and Future Outlook

Despite its potential, transitioning to a hydrogen economy faces challenges. High production costs for green hydrogen, estimated at €5-6 per kilogram, remain a significant barrier. However, advancements in electrolysis technologies and scaling production are expected to lower costs to €2 per kilogram by 2030. Additionally, retrofitting existing infrastructure and ensuring regulatory alignment across sectors will require coordinated efforts.

Italy’s commitment to hydrogen is supported by €3 billion in funding from the EU Recovery and Resilience Facility, aimed at accelerating hydrogen infrastructure development and research. Collaborations with other European nations, such as Germany and France, will further bolster Italy’s hydrogen ambitions, positioning it as a leader in the European hydrogen economy.

Conclusion

Natural gas is playing a pivotal role in Italy’s transition to a hydrogen economy, providing the foundation for hydrogen production, distribution, and integration. By leveraging its extensive natural gas infrastructure and investing in innovative technologies, Italy is advancing toward a cleaner and more sustainable energy system. While challenges remain, the economic and environmental benefits of a hydrogen-based future make this transition a vital part of Italy’s energy strategy. Through strategic planning and international collaboration, Italy is poised to lead Europe’s hydrogen revolution.