Hydrogen economy has become a central topic of discussion in Finland, and its potential has sparked widespread interest among the state, industry, and research sectors. Finland aims to produce 10 percent of the EU's green hydrogen by 2030. This vision includes the idea that hydrogen would be Finland's future export product. During the summer and autumn of 2024, we discussed with companies involved in the hydrogen economy about this national hydrogen vision and the construction of a green and clean hydrogen economy in Finland. From these discussions, we gathered an overview of the development and future prospects of Finland's clean hydrogen economy and combined our own views based on these discussions. What needs to happen for the hydrogen economy to flourish in Finland over the next 10 years?

Hydrogen as a raw material and its production system form a systemic and value chain-dependent whole, where the benefits and risks of the entire value chain must be weighed. The green hydrogen value chain includes essential elements such as:

• Renewable electricity production methods, such as wind and solar power. The clean hydrogen value chain also includes electricity produced by nuclear power.

• The electricity grid

• Clean water

• Biogenic carbon dioxide

• Hydrogen based products, such as methane, methanol, and ammonia

Finland has excellent conditions for hydrogen production. Companies believe in the long-term realization of the hydrogen vision, but many share the idea that hydrogen is a raw material and should be further processed specifically in Finland – biogenic carbon dioxide, which serves as a raw material for hydrogen-based products, is Finland's major competitive advantage. However, there are still many unanswered questions for the growth of the hydrogen economy – two key open topics are:

• How to make the hydrogen ecosystem market work in a largely uncertain operating environment and achieve final investment decisions for production facilities on a much larger scale than currently?

• How to make the logistics of the entire hydrogen value chain work for overall efficiency: what should be produced and where, what should be transported and how? How to build logistics cost-effectively from the regional level to the national level, and further for export?

First, let's look at logistics. A network suitable for hydrogen transfer is needed to transport raw hydrogen, which is a significant infrastructure investment. Hydrogen is a small-molecule, difficult-to-control gas that can embrittle metal pipes, escape, and even pose an explosion hazard. In addition to the pipeline, new storage capacity for hydrogen would be needed, which also requires new design and cooperation from hydrogen ecosystem operators. The current geopolitical situation also recognizes the security threat posed by transfer pipelines.

In the hydrogen economy, there is often talk of creating hydrogen valleys, but in the interviews, it was suggested that we could alternatively talk about carbon dioxide valleys and transfer carbon dioxide instead of hydrogen. Biogenic carbon dioxide is seen as a key driver of Finland's hydrogen economy, being a raw material for hydrogen based products – methanol and methane – alongside hydrogen.

 

Hydrogen can be produced by electrolysis almost anywhere, but the capture of biogenic carbon dioxide only makes sense for large biogenic emission sources such as pulp mills or bioenergy plants. The interviews revealed the view that the transfer of carbon dioxide is significantly more cost-effective and safer than the transfer of hydrogen.

There is already some existing transfer infrastructure and logistical solutions for hydrogen derivatives: methane, methanol, and ammonia. Methane could be transferred through the existing natural gas network in Southern and Southeastern Finland, and methanol and ammonia could be transported in liquid form by road or rail, for example, to the port for export or other uses. This way, the new hydrogen economy could be integrated into existing markets, and at the same time, possibly promote the clean hydrogen economy towards hydrogen energy and transportation use. Of course, the logistical solutions for hydrogen derivatives must be designed with growing production capacity, a wider geographical range, and export in mind.

Next, let's look at business. There are many opportunities, but why isn't the new, green or clean hydrogen economy taking off? The basic requirement for investments is, of course, profitable business. An attractive investment needs demand – so-called off-taker agreements, on which investment decisions can be based. The interviews clearly indicated that demand needs to be supported by legislation, but regulation must be predictable and stable, preferably over decades. Finland cannot afford generous public subsidies, so investments must be attractive in every way on market terms. We also do not have the capital for large investments, so we inevitably need international financing and international operators to support us. Obtaining investment financing requires work, but it is not seen as a problem because Finland has the necessary conditions for investment – raw material sources, educated workforce, and societal stability.

The availability of electricity must be stable. According to the interviews, interpreting nuclear power as green would help in this. The increasing electricity consumption is also seen as needing offshore wind power. In Finland's climate, the profitability of hydrogen production can be improved by utilizing waste heat in district heating production, which would also be a significant factor in carbon-neutral district heating production. In hydrogen production itself, sufficiently large and cost-effective electrolysers are central, but for investments to be profitable, investments and business potential are needed simultaneously throughout the value chain.

Hydrogen producers want predictability in electricity costs through electricity purchase agreements. For electricity producers, this can pose challenges with the price of wind power fluctuating and sometimes being negative, which in turn does not attract additional investments. Would it then be most natural for electricity producers themselves to take a significant role in Finland as hydrogen producers and thus increase the degree of processing and the price they receive for their product? These operators could also have the investment capability for relatively rapid large-scale production and thus realize Finland's vision – if not by 2030, then within a relatively short time frame. We can still envision electricity producers partnering with the biogenic CO2 capture operators in the forest industry and reaching the next part of the vision of large-scale hydrogen-based product processing. In this scenario, the role of smaller, regional operators, whose role is also seen as significant, should not be underestimated.
 

The interview results show that Finland has good conditions to become a leading hydrogen producer in Europe. However, this requires significant investments, technological development, and political support. The development of the hydrogen economy can strengthen Finland's security of supply and create new business opportunities. It is important that all parts of the value chain progress simultaneously and that cooperation between different operators is seamless. We can take advantage of biogenic carbon dioxide in the hydrogen economy value chain and thus open markets and develop our position in international hydrogen value chain markets. We can build cost-effective and easily scalable solutions for overall logistics and accelerate renewable energy investments by ensuring the business profitability of electricity through hydrogen and hydrogen-based products. Of course, the social acceptability of renewable energy is another matter, but we will not address that in this blog.

In summary, to make the hydrogen economy flourish, we need the following elements:

• Ensuring the demand and availability of green hydrogen

• Sector integration between the bioeconomy and the hydrogen economy

• Ecosystem cooperation in the clean hydrogen economy

• Predictable regulation at national and EU levels

• Investment financing and synchronization in the value chain

• Technological development

• Infrastructure development

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