<b>Bijsluiter</b>. De hyperlink naar het originele document werkt niet meer. Daarom laat Woogle de tekst zien die in dat document stond. Deze tekst kan vreemde foutieve woorden of zinnen bevatten en de opmaak kan verdwenen of veranderd zijn. Dit komt door het zwartlakken van vertrouwelijke informatie of doordat de tekst niet digitaal beschikbaar was en dus ingescand en vervolgens via OCR weer ingelezen is. Voor het originele document, neem contact op met de Woo-contactpersoon van het bestuursorgaan.<br><br>====================================================================== Pagina 1 ======================================================================

<pre>13969444
                      NortH-
         Kickstarting the green hydrogen
          economy In Northwest Europe
                                         2204
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         Management               summary            (EN)
         The momentum for      hydrogen    is unprecedented: countries across the globe have developed hydrogen
         strategies. They  have  set targets, committed funding for innovation & scale-up and started the developmet
         of the necessary infrastructure. We need to accelerate further. By 2050, Europe aims to become the
         world’s first climate-neutral continent. Hydrogen plays a pivotal role in getting there. If we move now      we
         can  make it.
         The  Netherlands, has been    an  energy hub for Northwest     Europe for decades, the acceleration and scale-up
         of hydrogen provides an economic and strategic opportunity to maintain its position in the energy market,
         and in key industrial segments. Hydrogen will create jobs, contribute to the Netherlands’ future prosperity
         and 1s a key lever in realizing the Dutch Climate Accord ambitions for 2030 and towards 2050, especially
         in decarbonizing the hard-to-abate sectors. Opportunities that will only be unlocked if ambitious goals are
         set and the current momentum 1s seized to implement concrete actions. The Netherlands, and specifically
         the Northern part, has all the ingredients for success, ranging from it’s unique location, space availability,
         infrastructure and storage, ecosystem and off-take potential. However, there is no time to waste.
         Scaling up green hydrogen comes with its challenges as new value chains need to be developed: the
         technology needs to be de-risked, the supply chain needs to be scaled up, a market needs to be established
         and perhaps most urgently a significant scale-up of renewable power generation is needed. As these
         challenges are met, new questions will undoubtedly emerge. The NortH2 consortium partners have
         dedicated themselves to finding answers. Based on the research done in the last 1.5 years, as well as the
         commitment to further develop the project the coming years. the partners feel confident in the added
         value of the integrated and programmatic approach that is advocated in this paper. NortH2 can provide
         the platform for change, for growth towards a green hydrogen economy in 2050. Governmental
         commitment to these goals, targets and ambitions 1s needed.
         The NortH2 consortium has researched and          seen the opportunity to unlock the potential of green
         hydrogen before 2030 with an integrated value chain approach on the basis of offshore wind fully
         dedicated for hydrogen production. Integrated projects such as NortH2 are critical in achieving
         decarbonization via large-scale renewable hydrogen production in time to meet national and European
         climate ambitions. NortH2 provides enough volume to set up sizeable infrastructure (thereby breaking the
         chicken and egg problem), it will accelerate the anticipated crucial reduction in the green hydrogen cost
         curve, and increases the availability and competitiveness of low carbon hydrogen that will lead to an
         uptake in demand. And it will do so at the lowest cost to society. This 1s what a big program like NortH2
         can put in place.
         Below you    can  find the most fundamental        strategic decisions, four of which have been highlighted,
         that  we  believe are  needed in 2021.     They  will be further  explained in the paper (Chapter 4).
         UPSCALING & COST REDUCTION               |
              e   Government declares the intent to         develop the hydrogen economy in the Netherlands in
                  accordance with the NortH:         large-scale programmatic approach and strategic umbrella
                  interlinking technology      and   supply chain development along the green hydrogen value
                  chain to enable a cost-reduction and scale-up of green hydrogen.
              =
                  Today, there is a cost gap between grey (JINRISE) and green (JERKED) hydrogen of ca. EE
                  Eur/kg. The integrated and large-scale NortH, offering can bring down the cost gap between grey
                  and green hydrogen by almostggIOIls
         CONFIDENTIAL                                                                                                   3
                                                                                                                          2206
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<pre>13969444
         MARKET DEVELOPMENT            |
                A decision to    develop  the required policy framework (at national and EU level) is needed to
                incentivize demand for green       hydrogen in hard-to-abate sectors.
                Although CO; prices are expected to rise, this will not be sufficient nor timely to overcome rest of
                the gap. During scale-up,      JESUS of the cost gap needs to be bridged through market making
                mechanisms such as (Carbon) Contracts for Difference and/or sectorial market mandates (similar
                to REDII, but for industry).
         OFFSHORE WIND      |
                Additional dedicated offshore wind lots for green         hydrogen   on top of the existing offshore
                wind   roadmap     2030 should be   assigned in 2021.
                To reach 55% CO2 reduction       by 2030, acceleration of offshore wind development beyond the
                10.6 GW    already planned   is necessary and  a no regret measure.  As there 1s  a maximum to the
                amount   of intermittent renewable power that can be     integrated into the power system, conversion
                to hydrogen is pivotal to reach the necessary carbon     reductions. and specifically needed for hard-
                to-abate sectors.
                The Dutch green hydrogen ambition of 4 GW by 2030 should be paired with at least the                same
                amount of additional offshore wind for NortH2 and specifically earmarked for green H2
                production. The allocated wind lots should be planned nearby strategic onshore electrolyser
                (NortH2) locations to enable a power connection landing directly to the electrolysers.
                The combination of offshore wind production dedicated to the production of hydrogen and the
                scale of the NortH2 project enable lower societal costs compared to a segmented approach. In the
                award process, it 1s crucial to investigate in which way the scale and integrated approach for wind
                and hydrogen can be enabled.
         INFRASTRUCTURE       |
                A mandate for Gasunie and TenneT to           support  and accommodate the       development of       the
                required hydrogen transportation and power infrastructure and also             securing a level
                playing field.
                Since existing pipelines are used for realizing a national hydrogen infrastructure, the capacity of
                this hydrogen grid (~10 GW) will initially be larger than the transport capacity needed by 2030.
                The costs associated with the excess capacity should not be transferred to the first launching
                green hydrogen customers. Gasunie is prepared to finance the largest part of the investment and
                take the associated risk. However, a financial mechanism needs to be put in place to mitigate part
                of the commercial risks of using existing pipelines and building infrastructure sized fit-for-the-
                future.
                To  develop   the required national hydrogen transport infrastructure Gasunie needs clarity in 2021
                that the national backbone will be built   connecting with all industrial clusters and storage. This
                needs to be accompanied by a mandate for Gasunie to develop (in several stages) the backbone.
                To support green hydrogen, it is important to create a level playing field between green molecules
                and green electrons through socializing the cost of the power infrastructure, having the ability to
                reduce the cost of green hydrogen production with another KUNISIMhy                 drogen. This would also
                encourage   the  grid balancing  function that the integrated ‘offshore wind  and   electrolyser’ may
                provide: (1) the direct connection between the offshore wind farm and the electrolyser (i1) the
                partial and bi-directional connection between the electrolyser and the national power grid.
         CONFIDENTIAL                                                                                                       4
                                                                                                                              2207
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<pre>13969444
         The envisioned scale of the NortH2    project is unprecedented. The consortium aims to realize 4GW in
         2030, expanding to 10GW by 2040. A significant contribution to the European goal of 40GW in 2030.
         This asks for partners to think beyond existing boundaries. It requires action today. Systematic research
         and engineering of all aspects of the value chain are crucial for the next 1.5 years. Final investment
         decision is, when all the requirements are met, foreseen in 2024.
         This policy paper provides an overview of the project development and related requirements known
         today. Some topics are further matured and detailed than others due to project needs or ongoing policy
         developments. To achieve the goals, the project NortH2 would benefit from public commitment towards
         green hydrogen to entice the entire ecosystem to transition away from fossil as soon as possible. The
         project needs sectorial marketing making mechanisms, offshore wind close to where we can build
         electrolyzers and where we can start the hydrogen backbone, and TSO’s need to be tasked to
         accommodate the development of the green hydrogen infrastructure.
         We  recognize the need for innovative alliances with public and private partners in order to accelerate the
         journey and successful implementation of green hydrogen. In order to realize the hydrogen ambitions and
         realize this major step into the energy transition; we need to work together. Together we can tackle the
         challenges we face to develop the energy system of the future.
         CONFIDENTIAL
                                                                                                                     2208
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         CONFIDENTIAL 6
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<pre>13969444
         Samenvatting (NL)
         Vertaling volgt
         CONFIDENTIAL      7
                             2210
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<pre>13969444
         Contents
         MANAGEMENT SUMMARY                      (EN)                                                                                                                                 2
         SAMENVATTING           (NL)......                                                                                                                                          4
         1  INTRODUCTION..                                                                                                                                                          -.8
         2  THE CASE FOR SCALING TIP INOW.                          ccrsnrmrinmmsssmmomusssommessnanssn sssaan sms ss soso saint sns sass                    soon                     9
         3  PROJECT OVERVIEW.                                                                                                                                                        10
           3.1 AMBITION     AND DESIGN PRINCIPLES.          .ccomavsmssvonsammesssnssnivines
                                                                                               weenie somssesssmimrssss mmasss sama nmne sms mses 10
           3.2 INITIAL  FEASIBILITY STUDY RESULTS              (20200])..ccconvccmmssovimmssnsosinssnsonsnsonoimeossoomisssmmmmmstommmms          anmmssssmmes 11
                    3.2.1 4 GW  Design   characteristics NortH2 Phase 1                                                                                                              11
                    3.2.2 Market Potential  Analysis                                                                                                                                 12
                    3.2.3 Cost reduction and scaling up                                                                                                                          L12
                    3.2.4 Levelized cost of green hydrogen                                                                                                                           13
                    3.2.5 Summary results of feasibility study    to date   (December 2020)                                                     a                                    14
           3.3 SCOPE FEASIBILITY STUDY TOWARDS END                     Q2    2021...    coer                    eee      eerie    eerie    eerie    eee eeeee         eae            14
         4  POLICY DEVELOPMENT IN RELATION TO PROJECT DEVELOPMENT......                                                                                                      ..16
           4.1 NORTH2 STAGE-GATE APPROACH........                ui eieteneeeeeeeeeriaeeeeeeensaee
                                                                                                      sees sann anes ssn sean ns Ty.                                                21
           41.2 LEGISLATION AND REGULATION               smo                       gous oes sa  som vss  anes  isa summa           ss  assum          oan      ien                  23
                    4.2.1 Physically conneciad   alecirolyser; OIBIone WAN....ceriiicmmmminiiismmmmsunivissmmrmmmimiiissmssemiioiiitissmo                                  tite      23
                    4.2.2 Grid connected   electroly sers: Green hydrogen through Guarantees of Origin...                                                                            26
                    4.2.3 Hydrogen   transport and storage                                                                                                                           27
           4.3 COST   REDUCTION AND SCALING UP GREEN HYDROGEN,                             crue          misecrivsmss   snes  mms tess ssmmsnmos ross  smasens                      28
           4.4 SUSTAINABILITY OF FINAL CONSUMPTION: CREATING A GREEN HYDROGEN MARKET........ccccvvuu.... 29
           4.5 SUPPORTING AND FLANKING POLICY; SUPPORTIVE EU POLICIES.                                   ......cuuieie
                                                                                                                         ieee eeeeeeee eee eeeee een ee 30
         5  WORKING TOGETHER.....                                                                                                                                       I
         LIST OF ABBREVIATIONS...                        erect seeeeeneseennssan sssnnssssnsssannss sanssnssn sasssansnssasnssen                            snssssssnnnssasnnsanans 33
         CONFIDENTIAL                                                                                                                                                                 9
                                                                                                                                                                                        2212
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         CONFIDENTIAL 10
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<pre>13969444
         1     Introduction
         The  Ministry   of Economic Affairs and Climate    (MEAC)   has  requested the NortH2 consortium to provide
         an overview of the project development activities and timeline and to highlight the anticipated policy
         needs arising over the course of the project development. This memo provides the requested information.
         The  project is in the feasibility phase, which is expected to be concluded mid 2021. That means there are
         knowns, known unknowns and unknown unknowns. For example, the optimal set of policies to develop
         the hydrogen market 1s unknown, but the available policies are known and the consortium will work on
         quantifying the expected impact of different sets of policy instruments on hydrogen supply and demand in
         the next few months. From the feasibility work to date, it 1s clear that the scale, integration and a
         programmatic approach are important levers to reduce costs and further work is commissioned to
         understand the ultimate green hydrogen cost levels that can be reached in this project.
         We   are at the beginning  of our journey and don’t have all the  answers yet. Therefore, we  invite you, the
         government and our future customers to develop this project together: to share the insights we develop
         along the way, align our approach and activities and jointly accelerate the development of the green
         hydrogen    economy to meet the climate    goals.
         The  memo    is structured as follows. The rationale underpinning the need to kickstart the green hydrogen
         economy through a large-scale dedicated offshore wind to hydrogen approach is described in Chapter 2.
         In Chapter 3. a project overview is given describing the ambition and design principles, the results of the
         feasibility study to date, including cost reduction and scaling up (3.2.3) and the scope of the work
         towards end of Q2 2021. In Chapter 4, the various project phases and the anticipated timing are described
         (4.1) as well as legislation and regulation (4.2). final consumption (4.4) and supporting and flanking
         policy (4.5).
         CONFIDENTIAL                                                                                                  11
                                                                                                                          2214
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         CONFIDENTIAL 12
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<pre>13969444
         2       The       case        for     scaling         up
                                                                     —
                                                                         now
         The EU’s aim of climate              neutrality by    2050 forces drastic        changes    in the way energy is produced. stored,
         transported, used and made accessible. Large parts of the economy e.g. built environment, passenger
                                                                                                     —
         vehicles, businesses can be electrified using (renewable) electricity. For other important parts of the
                                       —
         economy
                       —
                          e.g.  steel, manufacturing, chemicals, heavy-duty transport, shipping and aviation                            —
                                                                                                                                           direct
         electrification is not feasible           or economic. Low-carbon            hydrogen’     is a solution for these hard-to-abate
         sectors,    as  well  as a   potential     solution to store    electricity     and balance the     electricity grid.    Demand
         estimates     for hydrogen vary but range             from 45 to 70 million tonnes per            annum      (MTPA)*      in the EU     by
         2050 and from 3 to 5 MTPA in the Netherlands.’
         Today,     renewable      hydrogen plays a miniscule role in the energy system. Developing the hydrogen
         economy will require building new value chains. The challenge is massive and encompasses the
         production, storage and transportation as well as investment and conversion at the customer end. Existing
         hard-to-abate industries will need to transform their production processes and business models; new
         industries will emerge.
         The Netherlands 1s well            positioned to take the lead in green hydrogen production, due to large areas of
         prospective       low-cost wind North of the            Netherlands, the existing gas infrastructure that can be
         transformed at low-cost into a large-scale hydrogen transportation network, connecting all major NW
         European demand centres, storage potential and a large (chemical) industry clusters with hydrogen
         demand.
         There    are   only thirty years left to build the sustainable molecules part of the future energy system. The
         large-scale development of hydrogen production needs to start now to achieve the NL and EU climate
         targets for 2030 and 2050, but also to reduce costs through scale and innovation early in the development
         cycle, to underwrite the investment in the H2 backbone and to seize the associated economic
         opportunities.
         Developing a green hydrogen market requires a dedicated offshore wind-to-hydrogen approach, focused
         on synchronized development all parts of the value chain directed and facilitated by dedicated
         government policies. All of this requires close cooperation between customers, developers, suppliers and
         governments.
         The coordinated fast-track             development of the hydrogen economy to GW scale through a dedicated wind
         for   hydrogen approach, on top of the existing roadmap, and in line with the Dutch Climate Accord, is
         what NortH?2 is about.
         !
           ‘Hydrogen’ taxanomy    in this paper follows the EU taxanomoy as laid out in the EU Hydrogen  Strategy ‘A hydrogen strategy for a climate-
         neutral Europe’ (2020):
             ®
                  ‘Renewable hydrogen’, ‘clean hydrogen’ or ‘green hydrogen’ is hydrogen produced through the electrolysis of water (1n an electrolyser,
                  powered by electricity), and with the electneity stemming from renewable sources. The full life-cycle greenhouse gas emissions of the
                  production of renewable hydrogen are close to zero.
             ®
                   ‘Low-carbon  hydrogen’ encompasses fossil-based hydrogen with carbon capture and electricity-based hydrogen, with significantly
                  reduced full life-cycle greenhouse gas emissions compared to existing hydrogen production.
         2
           McKinsey & Company (2020). ‘Net-Zero Europe. Decarbonization pathways and socioeconomic implications’, p. 137.
         Approximately 10 GW of offshore wind (NL sector). fully dedicated to H2 production is required to produce 1 MTPA of green hydrogen
         (NortH2 calculations)
         *
           Gasunie & TenneT (2018). ‘Infrastructure Outlook 2050". p.5
         https://www.gasunie.nl/en/expertise/system-integration/infrastructure-outlook-2050
         CONFIDENTIAL                                                                                                                                   13
                                                                                                                                                           2216
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<pre>13969444
         3      Project        overview
         3.1      Ambition and           design principles
         From    inception,  the NortH2 consortium has set the               following objectives     to frame and     guide the
         development of the project:
              =
                    By 2030, the project can contribute to achieving the Dutch Climate Accord targets, drive down
                    production cost of green H2 through scale and integration and trigger a NW European H2
                    backbone.
                    =  Driving    4 GW      by   2030     (0.4 MTPA of green H2 production largely with onshore electrolysis
                    and 3.2  —
                                4.0 MTPA CO2              abatement, a 100+MW pilot offshore electrolysis will be executed).
              =
                    By 2040, the consortium             will have moved electrolysis offshore at scale to harness wind potential
                    of more remote sections of the North Sea and make the necessary contribution towards
                    establishing a commodity market for green H2)
                    —2 Driving 10+GW by 2040 (1.0+ MTPA of green H2 production and 8 10 MTPA CO2                 -
                    abatement)
              =
                    By 2050, H2 1s an indispensable green molecule in a climate neutral and reliable energy system,
                    having established itself as a commodity in a fully functioning green H2 market.
                                                             Phasing              -—
                                                                                     —
                                                                                              =
                                                                                                                   Sly
                                                                             »                    2 Sl green   H2 market in 2050
          5                                                  NortH2
                                                                    ”
          E                                                     vr                    PHASE 2
          3
           a                                                                                               \
                                                                                      +600 kton H2
          £                                                                                               /
          =                                                                     Offshore Electrolysis
           c
           ©
                                                                                                        /
           o                                                                                           —
          I                                                  PHASE 1
                                                               4 GW Wind
                                                                                                          |
                                                                                                              Initial focus
                                                              400 kton H2                                     for FID
                                                       Onshore  electrolysis
                         Green H2 Pilot projects   Jif
                                                                                                                                ,
                                              2027                                                  2040                       2050
                                                         =~.
                                                             ~            2830
         Figure  1 —
                     NortH2  Development      Staircase
         The  project   critical  path   is  governed by the first 4 GW of green hydrogen production by 2030. As such,
         this paper focuses mainly on this first             phase as it will offer the platform for further and more autonomous
         growth of green H2 beyond 2030.
         From the outset of the       project,    the    following guiding design principles        were    applied  for Phase 1  (4 GW by
         2030):
              =
                    Provide   a credible     pathway to introduce green H2 as an important pillar of the                future energy
                    system at lowest cost to society achieving carbon neutrality in 2050.
              =
                    As such, provide a no-regret opportunity to kickstart the green H2 economy.
         CONFIDENTIAL                                                                                                                    14
                                                                                                                                            2217
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<pre>13969444
              =
                  Provide scale and value    integration to significantly drive down cost to  supply green H2.
              =
                  Primarily target hard-to-abate industrial sectors for which green H2 is the most cost competitive
                  solution to decarbonize and underpin launching demand at scale.
              =
                  Produce green hydrogen through water-electrolysis using renewable power.
              =
                  As such, a dedicated offshore windfarm will be developed directly coupled to the onshore
                  electrolyser thereby also relieving the public HV power grid.
              =
                  Offshore wind farm to be in the prospective areas north of the Northern Netherlands on the top of
                  the current NL Offshore Wind Energy Roadmap (10.6 GW by 2030). fully dedicated to hydrogen
                  production.
              =
                  Power produced by the offshore wind farm to be transported through high voltage cables to
                  onshore electrolysers located in the Eemshaven area with dedicated power infrastructure.
              =
                  Transportation of produced green H2 to key industrial clusters in NW Europe through refurbished
                  gas pipelines that can increasingly be made available prior to 2030.
              =
                  Storage of green H2 in salt caverns in North of the Netherlands to match supply and demand,
                  providing a 100% green flexibility solution.
              =
                  Pilot offshore electrolysis (~100 MW).
         3.2    Initial  feasibility study      results    (2020)
         Together   with consultants TNO and DNV-GL, the consortium studied the NortH2            development program
         to understand the value chain    setup and associated levelized   cost of hydrogen  (LCOH) and accordingly
         the theoretic market  potential to underpin the development. During the first    stage of this study, the Phase
         1 preliminary   value cham   (4 GW by 2030) was conceptualized to establish an initial view on the LCOH
         and corresponding capital requirements. Key insight that emerged 1s that the scale of the 4 GW program
         and optimization potential was not fully leveraged both technically or commercially.
         Consequently, the consortium commissioned TNO and DNV-GL again to further study the programmatic
         approach in terms of leveraging scale and technical integration, as well as the LCOH reduction potential
         provided by commercial optimization. The results strengthen the confidence of the consortium in the
         potential of the approach with regard to the objectives.
         3.2.1    4 GW     Design characteristics NortH2 Phase 1
         Progressive insights obtained during this study also changed design characteristics and scope of the
         program. Notably, where initially the consortium targeted a wind area South of Gemini, this later moved
         to an area North of Gemini (TNW), affecting power cable length and technology choices.
         In addition, to  accommodate the start-up of the wind farm and electrolyser, to provide grid stability and to
         accommodate     grid and power market balancing, a further electricity connection was added to partially
         connect the  electrolyser to  the public HV   grid (beyond  a dedicated connection between the wind farm and
         the electrolyser).
         This led to the  following design   characteristics of NortH2 Phase 1   (4 GW  by 2030):
         Offshore Wind Farm
              =
                  Location North of Gemini      (TN'W)  at an average distance of ~130 km from shore
              =
                  4 GW realized in 1 GW steps towards       2030, starting with the 1 GW in 2027
         Power infrastructure
              =
                  Dedicated offshore power infrastructure from the offshore wind farm to the onshore        electrolyser
                  in the Eemshaven area
         CONFIDENTIAL                                                                                                    15
                                                                                                                            2218
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<pre>13969444
              =
                   Partial connection from the onshore        electrolyser to the public HV-grid, to optimize the operation
                   of the electrolyser and at the    same time help to balance the grid without causing investments in
                   interregional grid expansion.
         Electrolyser
              =
                   Electrolyser located in Eemshaven area in 50 to 100 MW modules
              =
                   4 GW realized in 2030 (producing 0.4 MTPA), starting with the 1¥             GW in 2027
              =
                   Compression and processing to meet inlet conditions H2 backbone
         Transport
              =
                   Backbone that connects all      major industrial clusters in Netherlands and interconnectors        to
                   Germany and     Belgium by 2027 mostly based on refurbished L-gas pipelines.
         Storage
              =
                   4 Salt caverns   with  a total storage  capacity    of 900 GWh to match    supply   and demand    profiles by
                   2030.
         End-use
              =
                   Primarily   industrial  application (see Market Potential Analysis).
         3.2.2     Market Potential        Analysis
         For industrial   applications the competitiveness of green hydrogen vis-a-vis other decarbonization
         solutions is assessed, based on full value chain cost and technical ability to switch. This analysis showed
         the potential of green hydrogen for high grade heating and feedstock without carbon requirement.
         For  high-grade heating,     the major advantage      of switching to  hydrogen 1s that existing processes can be
         retrofitted, whereas switching      to the all-electric   option requires replacement of equipment and electricity
         grid expansion.
         Feedstock    applications   without carbon    can  be retrofitted to green  hydrogen,   such  as part of the hydrogen
         supply   to refineries for  hydrocracking    or hydro    treatment.
         The time-to-market for the above two sectors is less than five years with an estimated potential demand of
         1 MTPA in the Netherlands, equating to a green hydrogen development based on 10 GW offshore wind.
         This excludes    potential  in e.g. Germany and Belgium for which the          assessments   are being developed.
         3.2.3     Cost reduction and          scaling up
         A  key  part of the NortH2 value      proposition   is to  significantly reduce LCOH    based   on leveraging  scale
         and optimization    across   the value chain   both technically and commercially.
         The TNO/DNV GL          study showed that LCOH can be reduced b                  in total, of which
         contributed   by  the  programmatic approach,       i.e. scale  and technical integration  and [jffJoy  commercial
         optimization.
                   Programmatic approach
         The  programmatic approach is a long-term and strategic umbrella interlinking technology and supply
         chain development along the green H2 value chain and that aims at achieving large-scale impacts based
         on strategic partnerships. Since the cost of hydrogen supply 1s a combination of capital, operational cost
         and energy efficiency. all levers to reduce cost or increase energy efficiency have been mapped and
         evaluated for potential to reduce LCOH, for example:
         CONFIDENTIAL                                                                                                           16
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<pre>13969444
              =
                  Offshore Wind Farm: Significant reductions in OPEX through pooling maintenance, reduction in
                  CAPEX through the aggregated 4 GW manufacturing and construction program, potentially
                  augmented by new installation methods.
              =
                  FElectrolysers: Progressive cost reductions due to modularization, standardization, (semi-)
                  automation and optimization of the required ‘Balance of Plant’ equipment.
              =
                  Design optimization: Instead of pressurizing the electrolysers at 30 barg, designing these at 3-5
                  barg which will decrease electrolyser CAPEX, with only a limited increase in compressor
                  CAPEX.
              =
                  Operational algorithm: Load prediction and optimization        of the electrolyser stacks to increase
                  energy efficiency and reduce stack maintenance.
                  Commercial      optimization
         In the initial design configuration, the electrolyser was directly coupled with the 4 GW offshore wind
         farm with no connection to the grid. This means that the electrolyser load profile would follow the wind
         profile and often times, when the wind load is low, the electrolyser would not be fully loaded or even
         stand 1dle. In this set up, the capacity factor (utilization) of the electrolyser would equate to 57% or ~5000
         full load hours per year.
         During the study a partial grid connection of 1 GW was modelled to understand the contribution towards
         reducing the overall LCOH through increasing the electrolyser utilisation. To maintain the green and
         renewable character of hydrogen produced by NortH2, the model was limited to only buy solar power
         produced in the Netherlands at times spare electrolyser capacity was available, bounded by the size of the
         partial grid connection. In case that would be economic, the model would also sell green electricity on the
         power market. Low power prices would typically indicate abundance of electricity and high prices at
         shortage. In that regard also the ability to balance the power system using electrolysers becomes apparent.
         As such this set up can also alleviate grid congestion by having the ability to electively increase or
         decrease the electrolyser load. As a consequence the connection will help to balance the grid without
         causing investments in interregional grid expansion. With an increasing share of renewable energy
         sources supplying the power market as the energy transition unfolds, the ability to balance the power grid
         and market through installed electrolyser capacity will also have an increasing value uplift in the green
         hydrogen business case.
         3.2.4    Levelized cost of green        hydrogen
         Figure 2 shows the breakdown of LCOH for NortH2. The cumulated capital investment for NortH2 Phase
         1 (4 GW by 2030) amounts to approximately            [J{UNISI(over the period 2024 2030) with costs related
                                                                                               —
         to power (‘power infra’) excluded: it 1s assumed that these costs will be socialized and where appropriate
         passed-on to the consortium via a transmission tariff. The development of hydrogen infrastructure
         (transport & storage) is also out of scope, as it 1s expected that these are open-access and cost will be
         shared with other   users.
         Without the    programmatic approach,    commercial    optimization and any level playing field or other policy
         provisions   the LCOH for the 4 GW value chain      by 2030 would amount to approximately                   of
         green H2. The programmatic approach and commercial optimization would drive down the LCOH to
         approximately JESS and creating a level playing field towards green electricity would further bring
         down LCOH to approximately [J SUKISIN         for phase 1 (from 2027 onwards).
         Depending on the willingness of end-users to pay a price premium compared to alternatives, and the
         development of CO2 prices (ETS), that would still leave a gap that can only be closed by policy.
         CONFIDENTIAL                                                                                                   17
                                                                                                                           2220
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<pre>13969444
                                                        (10)(1c)
         Figure 2 —
                    LCOH breakdown     (using PBL discount factor)
         3.2.5     Summary results of feasibility study                 to date  (December 2020)
         Technically     feasible
              =
                   No technical    showstoppers identified,      but  significant technology    and  supply   chain development
                   required
         Market
              =
                   Green   hydrogen    can  be cost  competitive    in hard-to-abate industrial sectors     against other
                   decarbonisation     options  if provided with    a  level playing  field.
              =
                   Large demand potential identified.
              =
                   Potential for green H2 value chain to balance the power market and               grid.
         High   initial costs but    potential  to reduce
              =
                   Main cost components in windfarms and            electrolysis;  result in a base   case price of approximately
                       (10)(1c)
              =
                   Programmatic approach on the basis of a [li lprogram to lower component costs and allow
                   optimization over the value chain to approximately               ESS]
                   Providing      level  playing  field for green hydrogen (socializing the cost of the offshore power
              =
                                a
                   infrastructure) can reduce the LCOH towards approximately J                   YIgIy
              =
                   Policy  measures     are needed   to close  the gap   between  initial LCOH     and the willingness to pay on
                   the demand side (grey + CO2).
         3.3     Scope feasibility study             towards end Q2 2021
              »
                   The program      currently being worked by the consortium with delivery by the end of Q2 2021 1s
                   aimed at two    goals. Firstly, the NortH2 consortium will demonstrate a credible roadmap towards
                   realising  market   potential of green H2 in NW Europe. The second goal 1s to establish a line of
                   sight to a technically feasible and investible business case, working towards an FID in 2024. The
                   remaining work towards end Q2 2021 is broken down into 3 main workstreams with
                   corresponding key objectives:
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<pre>13969444
            1.  Technical  Development
                    a.  Proof technical  feasibility: identify at least one overall value chain configuration that 1s
                        feasible in terms of technology and supply chain readiness and can be delivered within
                        the project critical path and budget
                    b.  Ensure all scale and integration levers of the 4 GW program towards 2030 have been
                        pulled to meet or exceed the cost target for green hydrogen
                    c.  Ensure all legal, environmental and local stakeholder requirements have been duly
                        captured in the project development plan
                      . Ensure all technical risks can be managed
                    e.  Mature the   ‘Beyond   2030” technical   concept based  on  offshore electrolysis, and develop
                        the pre 2030  pilot
            2.  Market  Development
                    a.  Map out sectorial demand scenarios based on end-user business cases and identify
                        required market making mechanisms, confirming the competitiveness of green hydrogen
                        in hard to abate sectors and associated implementation at lowest cost to society
                    b.  Produce the full range of market development scenarios and establish both sectorial and
                        overall green hydrogen implementation plans with necessary enabling policy instruments
                        identified
                    c.  Optimize the overall value chain configuration leveraging the partial grid connection and
                        hydrogen storage to further drive green hydrogen production cost
                        Maximize the value and benefits of green hydrogen implementation to society
                    e.  Identify launching customer base and move towards letters of intent to underpin market
                        interest
            3.  Policy Development
                    a.  Identify level playing field policy framework based on sectorial market implementation
                        scenarios and closing the overall value gap
                    b. Gain support for green hydrogen pathway towards 2050
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         4     Policy development                           in relation to           project development
         To manage     a  project of this   size and      complexity,      the consortium partners are using an integrated stage-
         gate project management framework. This framework 1s an industry standard and best-practice in capital
         intensive projects across industry. It 1s a project management technique in which a project is divided into
         distinct stages or phases, separated by decision points known as gates. At each decision point,
         continuation of the project 1s decided or re-considered. The decision is made based on forecasts and
         available   information. including the business case. risk analysis, and availability of necessary                  resources
         including anticipated governmental decisions.
         Energy transition projects such            as NortH2 have       an  additional layer  of complexity: the business     case   and
         project  risks  are  driven by  an     ambiguous policy landscape           —
                                                                                       both at national level   as well as EU level. It
         is apparent that    one project will not drive the timeline on policy development. However, at the request of
         the Ministry, it 1s insightful to share what the project needs at each stage in terms of policy clarity.
         NortH2 with 4 GW in 2030 can materially contribute to the Dutch and European hydrogen ambition,
         starting in the Netherlands and Germany. Thinking about what needs to be in place in 2021 and the
         following years to enable such a contribution in 2030 will not only benefit the NortH2 ambition it will                 —
         also support other hydrogen projects in development and provide a useful starting point for a public-
         private collaboration and dialogue around policy development.
         As described in ‘3.1 Ambition and              design principles’, the NortH2 consortium has ambitions to realize 10+
         GW offshore wind and 1+ MTPA green hydrogen production by 2040. Phase 1 of the project is 4 GW
         offshore wind and green hydrogen production via onshore electrolysis by 2030. The immediate activities
         predominantly concern the development of Phase 1.
         Figure 3 displays the integrated stage-gate project management approach towards realizing Phase 1. As
         the project progresses through the stages, the commercial/engineering work is matured, risks are detailed,
         quantified and managed and uncertainty in the business case is reduced.
         The two    key  milestones for the         project (FID     and First  Hydrogen)    are set by two drivers. Firstly, NortH2
         would like to contribute to the          European,       the Dutch and German      hydrogen ambitions set for 2030 and
         therefore has    an  ambitious construction            speed of 1 GW / year     starting with the 1¥ GW in 2027. Secondly,
         looking at offshore wind, the typical project execution from FID to first power takes about 3 years. This
         puts FID in 2024. At FID. the typical uncertainty in the business case 1s 10% or less. That means that, in
         order to take FID by 2024, the consortium should have clarity on key aspects of the policy and regulatory
         landscape at that moment.
              2019                                              2022          PAPE         2024      2025-2030
                        FEASIBILITY                              ENGINEERING                                EXECUTION
                                                                                                                            2029   2030
                                                                                                                      2028
                                                         Select
                                           Proof
                                        Feasibility     Concept       FEED
         Figure 3 —
                    NortH2 Phase 1  integrated stage-gate project management       framework
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                                                                                                                                             2223
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         HOW       TO USE TABLE        1?
         The     integrated  overview of project maturation and the               policy needs are captured in Table 1. It 1s the
         overview of the sections in this           chapter.    The first row,    highlights the project milestones and timeline. The
         integrated and programmatic approach also applies within a stage. Looking at the first column and bullets
         in Table 1, the availability of the offshore wind plots dedicated to hydrogen production, will make the
         NortH2 opportunity feasible or infeasible. Hence, this is captured as part of the feasibility phase. The
         exact location of the wind plot will determine seabed conditions, cost of the windfarm construction, the
         size and cost of the power transmission system, wind turbine size. etc. These elements may impact the
         concept of the project development and hence are captured in the phase ‘Select Concept’ in the second
         column.
         Details    are  provided    in the  following      sections:
                =
                     Section 4.1    provides    an   overview of the NortH2 stage-gate approach including an associated
                     budget   indication and      project timeline. In relation to each stage-gate and for each component in
                     the value   chain, the associated policy instruments and political decisions are identified. For the
                     sake of clarity    descriptions and explanations are kept short in this paragraph.
                =
                     In the remainder of this chapter political decisions in association with the project stage-gates
                     process are detailed out. The policy instruments are discussed following the ‘four policy pillars of
                     focus’ analogue to the Dutch ‘Government Strategy on Hydrogen’ (4.2) Legislation and
                     regulation, (4.3) Cost reduction and scaling up green hydrogen. (4.4) Sustainability of final
                     consumption and (4.5) Supporting and flanking policy                   .*
         *
           Kamerbrief over Kabinetsvisie waterstof (2020)
         https: //www.rijksoverheid  nl/documenten kamerstukken/2020/03/30/kamerbrief-over-kabinetsvisie-waterstof
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                                                                                                                                       2224
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         Table 1 Policy development in relation to  project  maturation
                                                          2021                                                    2022                                        Mid 2022  -
                                                                                                                                                                           2024
          Phase 1                               Demonstrate      feasibility                 Select  concept    before detailed engineering              Final Investment Decision
          Project milestones           Fundamental     strategic policy decisions                                                              4 GW Offshore wind and     electrolysis by 2030
          Offshore wind           =
                                       Identify at least  a 4 GW offshore wind lot         =
                                                                                                Offshore wind lot   designated to NortH2.    =
                                                                                                                                                  Offshore wind secured for green hydrogen.
                                       above NNL     on  top of the Offshore Wind          =
                                                                                                Allocation mechanism implemented.            =
                                                                                                                                                  Sufficient outlook on offshore wind
                                       Energy Roadmap 2030                                 =
                                                                                                Start permitting and award process.               expansion capacity for green hydrogen.
                                  =
                                       Decision to dedicate (identified) offshore
                                       wind plots for hydrogen production
                                  =
                                       Commence design of allocation and award
                                       mechanism of dedicated ‘wind+H2'
                                       offerings
          Infrastructure          =
                                       Socialize power infrastructure costs to                                                               =
                                                                                                                                                  Clarity on roles of TSO’s and mandate     to
                                       maintain level playing field between green         Power infrastructure                                    operate public hydrogen transport
                                       electrons and    hydrogen                           =
                                                                                                Ensure   spatial planning process to              infrastructure
                                                                                                accommodate power tracés
                                 Power infrastructure
                                  =
                                       Clarity on  the TSO role     regarding  the        Hydrogen infrastructure
                                       electrical direct connection between the            =
                                                                                                Develop a hydrogen specifications      and
                                       offshore windfarm and the onshore         landing.       standards
                                  =
                                       Clarity on  the TSO role     regarding the
                                       onshore   electrolyser   —
                                                                   grid connection.
                                 Hydrogen   infrastructure
                                  -
                                       Provide Gasunie with the mandate to
                                       support   and start to  develop the required
                                       infrastructure in  stages.
                                  =
                                       Determine backbone phasing.
                                  =
                                       To support FIDs for the first stages a
                                       financing mechanism is agreed and
                                       approved.
          Market  development     =
                                       Decision to develop     policy framework (at        »
                                                                                                To  certify the carbon content and origin of      Legislative process completed     and
                                       national and EU     level) to incentivise                hydrogen, a GoO system is implemented.            implementation started
                                       demand for    green hydrogen in selected
                                                                                           =
                                                                                                Start of legislative process on policy to
                                       hard-to-abate sectors                                    incentivise sectoral demand trough
                                                                                                specific instruments (e.g. targets).
          Electrolysers;          =
                                       Governmental      support for   a large-scale       =
                                                                                                Targeted    instruments to stimulate cost         Targeted   instruments  granted
          upscaling and cost           programmatic approach                                    reductions, upscaling and innovation to
          reduction                                                                             support the large-scale programmatic
                                                                                                approach
          Hydrogen storage        =
                                       Government decision       on developing             n
                                                                                                FID for first two  caverns  and above             FID for other  caverns  and above   ground-
                                       hydrogen storage capacity                                ground-installations                              installations
          Intemational            =
                                       Further  strengthening     the NL energy hub        =
                                                                                                Ensure match     legislative and regulatory       Legislative and regulatory frameworks
          cooperation                  function, decision to support international              frameworks between       neighbouring             adjusted and aligned
                                       trade of green    hydrogen                               countries to   support cross-border green
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         4.1       NortH2       stage-gate approach
         The NortH2      project development     can be divided in four stages  as displayed in Figure 3.
                   DEMONSTRATE FEASIBILITY            | DECEMBER 2020 MID 2021 | BUDGET: €JlJiglS)
                                                                           —
         NortH2 is in the middle of the feasibility phase. In this phase, the opportunity is studied from all angles:
         technically, costs, economics, potential end-users and the policy landscape. Based on the insights
         provided through the studies, the key ambitions and design principles are set for the project (Section 3.1
         and 3.2). At the end of this stage, there is a good understanding of (1) what it takes to realise a robust,
         investible project and (11) that realising the necessary conditions 1s realistic and feasible.
             From    a  government policy perspective, we believe that the following fundamental strategic
             decisions    are  needed in 2021:
                 =
                       Government declares the intent to       develop the hydrogen economy in the Netherlands in
                       accordance with the NortH,       large-scale programmatic approach and strategic umbrella
                       interlinking technology     and  supply chain development along the green hydrogen value
                       chain to enable a cost-reduction and scale-up of green hydrogen;
                 =
                       Additional dedicated offshore wind lots for hydrogen on top of the existing offshore wind
                       roadmap 2030 should be assigned in 2021;
                 =
                       A decision to develop the required policy framework (at national and EU level) 1s needed
                       to incentivize demand for green hydrogen in hard-to-abate sectors; and
                 =
                       A mandate for Gasunie and TenneT to support and accommodate the development of the
                       required hydrogen transportation and power infrastructure and also securing a level
                       playing field.
         Mid 2021, at the end of the      feasibility phase, and the start of the development of the technical concept,
         certain prerequisites need to be in place to enable a positive stage-gate decision. An overview of these
         prerequisities is provided below. Each element refers back to bullets provided in Table 1.
                   Offshore wind
              =
                   The “decision in    principle’ to dedicate offshore wind lot for hydrogen on top of the existing
                   offshore wind    roadmap 2030 should be made. To underpin this decision, we believe that:
                      o    Offshore wind sites should be located north of the Northern Netherlands planned nearby
                                                                                                          -
                           strategic onshore electrolyser (NortH2) locations to enable a power connection landing
                           directly to the electrolysers.
                      0    The size should at least match the national green hydrogen ambition of 4 GW. The
                           awarding of offshore wind plots and associated green hydrogen production should allow
                           for the necessary cost reduction economies of scale.
                      0    The offshore wind lot should be      designated for hydrogen  production  and the integrated link
                           between offshore wind and       electrolysers should be explored through  dedicated ‘wind+H2’
                           awarding   processes.
                      o    Government should start      preparation of award process and permitting process (e.g. indicate
                           lot, develop required permitting for lot, etc). All to enable the NortH2 project timeline,
                           which are tied to the national / EU green hydrogen ambitions.
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                                                                                                                                2226
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                   o   In light of this paragraph we welcome the plans of MEAC to further develop various
                       potential tender options for combined offshore wind and hydrogen, based on the initial
                       assessment done by Guidehouse. We are available to contribute to this process by
                       leveraging insights from the NortH2 feasibility study.
                Power Infrastructure
                Clarity on the offshore power TSO role regarding the electrical direct connection between the
                offshore windfarm and the onshore landing; Who will design and operate the offshore electricity
                connection?
                Clarity on the TSO role regarding the partly onshore electrolyser grid connection.
                Alignment of decisions with relevant anticipated European frameworks.
                Feasibility established of power transmission to Eemshaven / Groningen.
                Initiate the necessary steps for spatial planning and permits for realizing infrastructure to
                accommodate power traces.
                Hydrogen     Infrastructure
                A “decision in   principle’ on developing the national H2 backbone should be taken. As soon as
                possible  after that the backbone  phasing should be determimed. The phased development of the
                backbone sections should be aligned with the market development approach.
                Gasunie needs a clear mandate to start developing national H2-infrastrucure as legislation is not
                anticipated to be timely in place. This means the role of Gasunie in public hydrogen transport
                should be made clear as soon as possible by the government. Decisions should be robust and
                aligned with relevant anticipated European frameworks. Basic rules and regulation on third party
                access to backbone should be in place when it is ready for use.
                Because this infrastructure is being built for the future and existing pipelines are used, there will
                be some pipeline capacity that will not be used in the beginning. In addition to the Gasunie
                mandate, it 1s important to understand how to deal with the risk and cost of the unused capacity.
                To mitigate this specific risk, a subsidy or guarantee of 30-50% of the investment from the
                government will be     necessary.
                To  support the FIDs of the first backbone sections,  a financing  mechanism for   developing
                hydrogen   infrastructure should be  agreed, approved  and in line with EU  regulations.
                A clear view on the hydrogen market design would be welcome. It should highlight the future
                roles and responsibilities of market and regulated players in the production and supply of
                hydrogen (who can own, operate and offer integration services to the market), set clear rules for
                the injection of hydrogen and state specific rules for connecting electrolysers to the grid.
                Market    Development
                A decision to   develop the required policy framework (at national and EU level) to incentivize
                demand for green hydrogen in hard-to-abate sectors (for more details, see Section 4.4
                Sustainability of final consumption: Creating a green hydrogen market).
                Electrolysers; upscaling      and cost reduction
                Governmental support for a large-scale programmatic (electrolyzer) approach and        strategic
                umbrella interlinking technology and supply chain development (for more details,       see Section 4.3
                Cost reduction and    scaling up green hydrogen).
         CONFIDENTIAL                                                                                                24
                                                                                                                        2227
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                  Hydrogen Storage
              =
                  Timely decisions are needed to be able to develop hydrogen storage infrastructure. It takes five to
                  seven years to develop salt caverns and the above ground installations. Decisions need to be taken
                  early in the process. Gasunie aims to take FID’s in 2021 and 2022.
              =
                  Start of the miming permit and spatial coordination (RCR, rijkscoordinatie regeling) process.
                  International     Cooperation
              =
                  Further   strengthening the NL     energy hub    function, decision   to  support international trade of green
                  hydrogen.
                  DEVELOP & SELECT CONCEPT              |  MID 2021    —
                                                                          2022   | BUDGET: €           (10){1c)
         Once the basic design principles are distilled from the feasibility studies and the principle policy decisions
         are in place, the project can move to Concept Development. The goal of this stage is to select the best
         technical concept based      on a broad evaluation framework.
         The  prerequisite   for this work 1s that fundamental      strategic decisions have been made such          as the mandate
         of the TSOs 1s clear and the     strategic policy direction 1s set. During this phase more detailed studies
         commence     regarding the commercial venture structure, the end-user needs, the vendor ecosystem,
         potential electrolyser technologies, operating modes, etc. A number of technical concepts are explored
         and at the end of the phase. the most optimal concept is selected.
         Concept Select: this milestone marks the moment that the high-level project design elements are fixed.                  In
         addition to the development of the technical concept, and the policy landscape, the commercial
         agreements    start to take  shape. The certainty of (un)favourable conditions for an investible project
         increase  significantly throughout this phase and as much certainty as possible has to be attained on               the
         bullets addressed below. It is key that the offshore wind area 1s secured.
         Once the concept 1s     selected. the frame has been     set. Between that moment and       FID, the project     team
         “works the details”. This detailed engineering phase requires a massive ramp up of resources (€ X00
         mln). It is time to detail out the project: the subcontractor ecosystem is set up, the first signatures are set.
         In this phase, the selected high-level project design is detailed to a level that allows for construction of the
         project. For instance, binding long-term Sales and Purchase Agreements are in place for nearly all the
         hydrogen to be produced (similar to PPAs for wind developments). The goal is to get to a level of detail,
         commitment and certainty that allows for the final investment decision (FID).
                  Offshore wind
              =
                  Offshore wind lot     designated.  The wind concession allows for         a dedicated wind for      hydrogen
                  development.
              =
                  Allocation mechanism       implemented.
                  Permitting    process 1s     track and      showstoppers     identified: Timeline   aligned with delivery      of
              =
                                            on             no
                  first GW in 2027.
              =
                  Site  preparations planned    and  on   track for first GW in 2027.
              =
                  The IPCEI status 1s awarded to the Dutch         proposal,   this helps  the project as   f.e. lots can be
                  awarded    as  part of IPCEL
                  Power Infrastructure
              =
                  After the role of the offshore power TSO is broadened, take the next step in design of Power
                  Infrastructure. In this phase ensure spatial planning process to accommodate power traces.
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                    Hydrogen Infrastructure
                    Develop hydrogen specification and standards, for example, the pressure regime, allowed
                    impurities and their thresholds, standard contracting templates etc. This specification should align
                    with NW Europe countries to ensure that hydrogen can flow cross-border.
                    Furst FID’s of staged development of the backbone are taken.
                    Market       Development
                    To   certify the carbon content and origin of hydrogen, a GoO system is implemented.
                    Start of legislative process on policies to incentivize green hydrogen demand in hard-to-abate
                    sectors.
                    Electrolysers; upscaling and cost reduction
                    The    preferred concept of the electrolyser will be further developed in 2021. Innovation will take
                    place within the project from 1 GW towards 10 GW in 2040. Targeted instruments to stimulate
                    cost reductions, upscaling and innovation to support the large-scale approach should be provided.
                    Hydrogen Storage
                    FID for first two        caverns   and above   ground-installations.
                    Financial mechanisms to            mitigate the commercial risks of building storage      for the future, that 1s
                    not   completely       used   in the beginning.
                    International        Cooperation
                    Ensure match         legislative and regulatory     frameworks between      neighbouring   countries to support
                    cross-border green hydrogen trade
                    FINAL INVESTMENT DECISION                 | 2024  | BUDGET     €    IIIS]
         The    largest  evaluation takes        place  at FID: technical   concept,  cost levels, schedule, economics and risks
         are understood, allowing the consortium partners to take the decision to invest in the project, the Final
         Investment Decision. Subsequently. the construction phase completes the project development cycle. The
         project will come on-stream in phases, the first GW being planned in 2027.
         For   FID, the following boundary elements need                to be in place:
                    Offshore wind         (GW scale) secured for green hydrogen
                    Award       process finalized. and NortH2 successful in securing           offshore wind for  hydrogen
                    concessions
                    Sufficient outlook         on   offshore wind  expansion capacity for green hydrogen (post 2030)
                    Clarity on the roles of the future H2 TSO to operate public hydrogen transport infrastructure
                    Legislative process completed and implementation started to secure market development
                    Target instruments (to reduce costs of electrolysers) are granted
                    FID for other caverns and above ground-installations has been taken
                    Legislative and regulatory frameworks are adjusted and aligned for international cooperation.
         4.2      Legislation          and     regulation
         The    anticipated     NortH2 set up involves the        following   three infrastructure interfaces’:
               1    a  direct    coupling between the offshore wind farm(s) and the electrolyser(s)           to ensure  green
                    hydrogen production and reduce potential grid congestion.
         *
           For more details see Section 3.1 and 3.2
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               2   a  partial   connection to the       public high voltage grid (no expansion needed) for operational/
                   commercial reasons and to allow for grid balancing activities (not to produce hydrogen).
               3   a connection to the hydrogen backbone for hydrogen transportation purposes.
         Each of these elements          requires supporting mandates and regulations to enable smooth tegration, reduce
         inherent project risks and optimize cost reductions. What is common. is that with energy transition
         projects such as NortH2 the existing regulatory framework does not have the right provisions to kickstart
         large infrastructure transformations, or quickly assess roles and responsibilities of incumbent TSOs. We
         believe existing regulations do not provide the mandate for the TSO (on the electricity and future
         hydrogen infrastructure) and we encourage the government to assess whether the current regulations can
         be modified to accommodate hydrogen distribution or if a new set of regulatory frameworks is needed’.
         It 1s the role of the government to orchestrate infrastructure                  development underpinning energy transition
         and to enable      projects    such   as  NortH2 to      come    to fruition. We will need    governmental and political
         support to make this project           a  global flagship project.
         These elements        are  also  captured     in Table 1 under        Offshore  Wind and   Infrastructure.
         4.2.1      Physically        connected         electrolyser:         Offshore wind
         The Dutch government has set a target of 10.6 GW offshore wind in 2030. Greater ambition 1s needed to
         meet the Dutch Climate Accord and more will be needed to contribute to the newly released European
         offshore wind ambition           (EU Strategy       on  Offshore Renewable        Energy, 2020) and the North     Sea Energy
         Outlook.
         A critical component to the           success    of this   large-scale integrated project will be an assured, timely and
         direct  physical     connection of the offshore           windfarm(s) to the electrolyser. This provides numerous
         benefits including operational synergies which can unlock scale of production and cost reductions
         essential to the success of NortH2 and the Dutch energy transition. Realizing NortH2 on Dutch soil can
         help the Dutch government build-out their own (offshore) portfolio, secure a competitive position in
         Europe for offshore wind, hydrogen and the other innovations associated with this integrated project and
         can also serve to address those potential congestion issues that could arise from power import. Also
         NortH2 can add to the creation of local employment which in light of economic impact following COVID-
         19   can contribute to the Dutch economy.
         The aim of the NortH2 consortium is to realize 4 GW installed offshore wind                        capacity before 2030 North
         of the Netherlands        (N-NL) and grow the installed offshore wind capacity to more than 6+ GW after 2030.
         To realize    this, offshore wind lots need to be identified, secured and dedicated for hydrogen. NortH2 1s a
         project with multiple partners that have extensive experience in offshore wind (ranging from Shell
         Netherlands and Equinor to RWE). To fully unlock the NortH2 potential an award, open door policy, or
         dedicated/combined offshore wind tender is required to create the integrated value and cost reduction of
         the programmatic NortH2 approach. The Dutch government can support the market development non-
         monetary (in-direct support)           or  directly (subsidies).        Another  option 1s to demarcate the consortium
         controlled    or  arranged     offshore wind build out.           Also,   an IPCEI status could  help realize awarded lots or a
         bigger part     of the value chain.
           The cost of construction of the power infrastructure needs to be socialized to ensure a level playing field
         between electrons and molecules. This is in line with current                    policies for wind for electricity.
         ®
           Kamerbrief Rijksvisie Marktontwikkeling   voor de Energietransitic (2020)
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         4.2.2     Grid connected          electrolysers:    Green    hydrogen through        Guarantees of      Origin
         As shared in the    design principles     Section 3.2.3, NortH2 1s  anticipating partial
                                                                                           a        connection to the  high
         voltage grid   for operational/ commercial       reasons and to allow for   grid balancing activities.
         In absence of power from the direct connection between the           electrolyser and the renewable power plant,
         the so-called risk of  “backfilling”     of the grid can manifest itself. Backfilling is said to occur, when a
         carbon tensive source of power is used (instead of a renewable source) to obtain the required load of
         electricity to the electrolyser. Especially in areas with a lower penetration of renewable production,
         backfilling is more likely to occur, especially during periods of low sun or wind.
         However,    to allow the   electrolyser    a favourable load pattern, the electrolyser  should not be  required to
         ‘load follow’ the renewable power plant. During summer, there are often extended periods of low wind,
         severely straining the business case of the green hydrogen producers. Instead. the electrolyser should be
         allowed to continue to     produce    at its required load and should be   required to prove  it only uses renewable
         electricity. When power intake 1s from the grid connection, this proof can be provided by retiring an equal
         number of Guarantees of Origin (GoO) over the amount of power used. This 1s the only standard of proof
         currently  available to prove renewable electricity was used. GoOs are created by the Renewable Energy
         Directive   (RED) and are the standard across Europe and are therefore an appropriate means to prove only
         renewable power      was  used to   produce green hydrogen.
         When    more  granular conditions are required to prove only renewable power was used (for example, to
         use  green hydrogen as a compliance fuel towards the RED II Transport target), most preferably the
         following conditions should apply, to allow the electrolyser sufficient flexibility over its load in order not
         to undermine its business      case:
              =
                  The GoOs     are  still required to be retired, to prevent double counting.
              =
                  The temporal matching can be done on basis of meter-based tracking or another industry
                   application, on the basis of transparent production data from TenneT for instance. Currently
                   several early initiatives are under contemplation in various study groups, beside the standard the
                  EC will set for the mobility sector in lieu of the REDII art 27 Delegated Act.
              =
                  An accounting timeframe of one month is preferred.
              =
                  A geographical scope beyond the Netherlands bidding zone should enable the electrolyser to
                   source renewable power from other bidding zones.
              =
                  Allowing a monthly temporal matching, not only ensures sufficient flexibility, but also allows the
                   GoOs to be used for this end, without further amendments to the standard.
              =
                   We believe there is no risk of double compensation with renewable power coming from
                   subsidized power plants because the degree of subsidized income of newly awarded SDE++
                   decisions 1s reduced with any income over the sale of the GoOs (to the green hydrogen producer).
         Similarly, when the electrolyser 1s directly connected to the wind farm, there may be periods of wind
         power shortage where power from the grid may be used. The means of proving only renewable power                    is
         taken from the grid should therefore be allowed to be used complementary to the proof of using
         renewable power from the direct connection. By use of solar power from the Northern region the
         electrolyser may contribute to debottlenecking of the grid in periods of high solar supply.
         4 2.3     Hydrogen transport and storage
         Having   pure  hydrogen transport infrastructure in place is a key and critical success factor for NortH2. By
         2027, Gasunie could have         developed pure hydrogen transport infrastructure (based on its existing natural
         gas  pipelines) that connects all industrial clusters in the Netherlands, including storage and
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<pre>13969444
         interconnection. Gasunie has           already converted its first 12 km natural gas pipeline to hydrogen transport
         infrastructure in 2018.       That pilot-project demonstrates that existing infrastructure can be refurbished for
         hydrogen transport.
         However, there     a  few    prerequisites   to enable the  development   and/or  exploitation of the hydrogen
         infrastructure   on a   large scale:
              1.   NortH2 believes that the         hydrogen transport- and storage infrastructure should be open to all
                   future users (producers, shippers, suppliers and customers). Thus, the infrastructure should be
                   open-access with NortH2 as one of the launching customers. To ensure this, basic lawsand
                   legislation on third party access and launching customers should be timely in place, especially              for
                   transport.
              2.   NortH2 also believes that         hydrogen transport infrastructure should be developed and exploited by
                   an  unbundled      hydrogen grid operator. That also means that network related activities should be
                   separated from activities open to competition. This 1s an important step to create a level playing
                   field across market parties engaging in the commercial competitive space and thus driving down
                   costs. Basic rules and legislation covering the market design aspect for transportation should
                   timely be in place.
              3.   Gasunie will     use   its existing natural gas pipelines, meaning that the hydrogen infrastructure
                   already has a fixed capacity. Most pipelines that will be used have a diameter of 36 or 48 inches
                   leading to a potential hydrogen backbone with a capacity of 10-15 GW. However, at the
                   beginning of the project not all the capacity will be used and the costs related to this underuse
                   cannot fully be charged to the market. This situation creates a large commercial risk of which
                   Gasunie is prepared to take a big part, but a fall-back guarantee from the government should be in
                   place for some certainty.
             4.    NortH2 foresees that four salt-caverns need to be          developed   for hydrogen storage. Developing
                   salt caverns    takes considerable time and investment decisions need to be taken          even  before there
                   is certainty in that largescale electrolyser capacity will be built. It will take Gasunie five to seven
                   years to  develop the caverns and the above ground mstallations. Gasunie expects totake FID’s in
                   2021   en 2022.
         Together with MEAC Gasunie is working on HyWay27: a joint effort to investigate how and under what
         (regulatory and financial) conditions the current natural gas pipelines can be used for the creation of
         national public hydrogen transport infrastructure. There are three important pillars in the project:
              =
                   Usefulness and       necessity of national hydrogen      mfrastructure
              =
                   Technical    possibilities
              =
                   Legal/regulatory and financial conditions
         The  HyWay27 project is         to be finished   by April 2021. Swiftly after the publication of HyWay27,
         government is     urged    to take   a  ‘decision in principle’to build a national backbone and to develop the legal
         framework, including support instruments             to deal with the value gap described earlier.
         In the  recently published      North Sea     Energy Outlook, it 1s concluded that it 1s essential  to start realizing
         the infrastructure that is needed for transport of green molecules to end-users. even though there 1s still
         uncertainty on the exact development of markets.” There are two arguments that highlight why a start is
         needed: the infrastructure will be necessary and it will take time to build.           Using already   existent
         'DNV- GL (2020). ‘North  Sea Energy Outlook’
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         infrastructure like natural gas pipelines is seen as an opportunity, both technically as well as from a
         societal costs point of view. The infrastructure will be rolled out in several steps starting in industrial
         clusters and     growing towards a full national system in 2027. The infrastructure will be built with existing
         pipelines   with    a specific capacity. Although using the existing infrastructure is cheaper than using new
         infrastructure, investment costs cannot fully be transferred to market parties. Gasunie 1s prepared to invest
         and take risks for the large part. However, some form of support or guarantee of 30%-50% of the CAPEX
         is needed to make sure a transport tariff can be put forward to market parties. Concerning this issue, the
         Minister of MEAC has announced that he 1s looking into the needed public investments.
         We    are aware    that  securing     the right rules and regulations in time before FID will be a challenge, partly
         because the EU framework for rules and regulations will remain unclear. A solution needs to be found to
         deal with this developing framework. A precedent for the first issue can be found in Gasunie’s
         development of the heat transport network. In that case MEAC gave Gasunie a task to start with the
         development of the infrastructure in anticipation of a legal task and appropriate regulation.
         Next to   transport, storage is of eminent importance;               not only in relation to the  balancing function green
         hydrogen     can   provide    for the energy system, but also because it enables Gasunie to             provide a baseload
         service of hydrogen transport. The storage infrastructure will be built in a                 staged and robust manner for
         growth and future developments. In analogy to the transport infrastructure there                    are costs that cannot be
         transferred to market        parties   and therefore    some    form of support   or  guarantee 1s needed: preferably
         European funding         or national support that fits within         a fixed and  agreed  state aid framework.
         The first investment decisions for the            staged roll-out     of hydrogen   transportinfrastructure and storage are
         expected    in 2021 and 2022. However, to be able to                create national hydrogen infrastructure that connects
         all industrial clusters with each other with storage and interconnection the investment decisions all have
         to be taken in the next four years. That means that a financial support mechanism for the hydrogen
         transport and storage needs           to be in place   as soon as    possible.
         4.3      Cost reduction and                 scaling    up green hydrogen
         The   success    of green    hydrogen     will  depend on the lowest cost for society, meaning the lowest LCOH and
         the highest spill-over effect to society. As part of the Dutch Cabinet Vision on hydrogen, three levers of
         success were identified for green hydrogen: upscaling, cost reduction and innovation.®
         As   explained mm 3.2.3, NortH: has a long-term programmatic approach and strategic umbrella interlinking
         technology and supply cham development along the green hydrogen value chain. This allows for a cost
         reduction through two main principles. The large-scale allows economies of scale in all parts of the value
         chain (e.g. electrolysers, offshore wind), both in CAPEX as well as OPEX. The second one 1s the
         integrated design and development, e.g. optimised pressure regime, optimised electrical infrastructure
         design.
               =
                   Since the cost of hydrogen           supply   is a combination of capital,     operational cost and energy
                   efficiency, all levers to reduce cost or increase energy efficiency have been mapped and evaluated
                   for potential to reduce LCOH, resulting in a LCOH reduction of almost 1 EUR/kg (Figure 2).
               =
                   The scale of NortH2 incentivizes electrolyser manufacturers to transform their manufacturing
                   process. Today, these manufacturing processes are small scale, non standard and labour intensive.
                   Factories need to be build to accommodate the dramatic step up towards GW scale green
                   hydrogen projects. The ability to further modularize, standardize and automate the manufacturing
         https://www.dnvel .com/publications/north-sea-enerey-outlook-192287
         #
           Kamerbrief Kabinetsvisie waterstof (2020)
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<pre>13969444
                     of electrolyzer     equipment      in dedicated      assembly lines provides the biggest immediate opportunity
                    to significantly drive down electrolyzer cost.
                =
                    Research and innovation of electrolyser technology will become an important branch of science
                     and technology development. This lays a foundation for future low-carbon, synthetic energy
                     carriers that will be able to contribute to a low-carbon energy supply in various ways. They offer
                     a solution for the future problem of a time- and place-dependent imbalance of electricity. There 1s
                     scope for innovation on (micro-)electrons, membranes and materials needed for the
                     electrochemical conversion of water into hydrogen (and oxygen). ECCM. TNO and FME have
                     explored the potential of the electrolyser ecosystem in the Netherlands and found 80+ companies
                     and research institutes that either do research, develop technology or provide sub-components to
                    the electrolyser ecosystem.”!”
                =
                    For scaling up green hydrogen there 1s a need for funding, e.g. for exploitation. Because the
                    European framework 1s very relevant in this regard, this point is elaborated in section 4.5.
         Although indirect, NortH2 and other hydrogen production projects have a spillover effect to R&D and
         innovation. At feasibility stage, itis a challenge to quantify this contribution. What is apparent is that the
         cost reduction and upscaling through the NortH2 programmatic approach 1s significant. This approach is a
         strategic decision. The success of NortH2 will depend on the governmental support that a (long-
         term) large-scale programmatic approach needs.
         4.4       Sustainability          of final     consumption: Creating                    a  green       hydrogen       market
         Green     hydrogen     has   an  essential role to            in
                                                                play decarbonizing            sectors that    are hard-to-abate    through
         electrification, especially industry and heavy-duty transport. Given the long investment cycles and
         complexity of overturning industrial processes. it is essential to incentivize the use of green hydrogen
         simultaneously with incentives on the production side. A hybrid approach of different policies will be the
         best    option to stimulate a green hydrogen demand in industry. Policies                       will   only be  impactful    if they are
         introduced together, i.e. policies on the producer and purchaser alike.
                     STIMULATE GREEN HYDROGEN DEMAND AND USE IN INDUSTRY
         The    following policies       should be considered to stimulate the demand and                    use  of green   hydrogen.
                =
                    Policies that achieve          a higher     carbon     price.  A   higher carbon price 1s crucial for green hydrogen
                    to be considered        as a  decarbonization solution and the            upcoming review of the EU-ETS offers an
                     important opportunity. However, CO2 prices will not work to initiate use of green hydrogen
                     market on their own. they need to be flanked by other policy measures. At this point in time, the
                     CO:2 abatement cost through consumption of green hydrogen is relatively high compared to
                     available alternatives.
                =
                    Together with        a robust level of carbon         pricing, specific policy       measures    should be considered to
                     drive demand such as targets for industrial users set at EU level that promote the uptake of
                    renewables, including hydrogen as defined in the EU Taxonomy. Such targets could drive
                     decarbonization of hard-to-abate sectors such as chemicals and boost the uptake of green
                    hydrogen, sending a clear signal to producers and triggering investments. We recommend that
                     any target should be progressive and achievable. It should be accompanied by policies to ensure
                     adequate supply and alternative means of compliance. The upcoming review of the EU
                    Renewable Energy Directive is an important opportunity in this respect.
         #
           Elektrochemische Conversie & Materialen   (2017), “Naar  een CO2 -neutrale energievoorziening in 2050”
         https: //www .coZneutraalin2050.0l/docs/reports/advies-elektrochemische-conversie-materialen-ecem%eE  2%080%9 3september-201 7 pdf
         1
            FME & TNO    (2020). "Elektrolysers: Kansen voor de Nederlandse Maakindustrie’
                                                                                            andse-maakindustrie/
         https://www tno.nl/nl/over-tno/nieuws/2020/1 1/elektrol ysers-kansen-voor-de-neded
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              =
                  In  parallel, these hard-to-abate sectors should receive    policy support to  ensure   that  they  are
                  enabled to make the necessary investments for this transition. This could include:
                    =
                        Carbon Contract for Differences (CCfD) awarded to low carbon material producers                   (e.g.
                        steel, chemicals manufacturers) based      on  the volumes of low carbon material      produced and
                        attributed via auctions. This mechanism would need to be        carefully  assessed   against other
                        policies and should work in combination with extra CAPEX support to incentivise
                        businesses to switch to low-carbon production processes.
                    =
                        Promotion of the    use of “low-carbon” and     “green” products in end-use    sectors. The
                        following policy options    could be considered:
                           *
                                Voluntary market initiatives and the use of certificates for emissions reductions.
                           =
                                Strengthen public procurement rules (e.g. for low carbon intensity steel) to support
                                early market creation.
                           *
                                Tax credits and incentives to stimulate customer to purchase products with a lower
                                carbon footprint.
                           *
                                Gradual modification of building codes to encourage adoption of materials with
                                lower carbon intensity.
         Simultaneously, policies to address the risk of carbon leakage should be implemented (e.g.,             a Carbon
         Border Adjustment mechanism), as these industries face international competition.
                  STIMULATE GREEN HYDROGEN DEMAND AND USE IN THE HEAVY-DUTY VEHICLE SECTOR
         Green  hydrogen is expected to play an important role in decarbonising the heavy-duty vehicle sector.
         However, this requires aligning policies that impact vehicles, fuels, infrastructure and customer
         choice. It 1s essential to complement supply policies (e.g. RED II) with demand policies to enable the
         simultaneous development of hydrogen heavy-duty vehicles (strengthening of the CO; standards),
         hydrogen re-fuelling infrastructure (review of the Alternative Fuel Infrastructure Directive, TEN-E and
         TEN-T) and green hydrogen supply. Key in creating demand for green hydrogen in this sector is
         increasing the number of fuel-cell trucks on the road through mandates on Truck Original Equipment
         Manufacturers (OEMs) combined with fiscal support to lower the Total Cost of Ownership for
         customers. In parallel, customer support measures such as tax rebates to encourage the uptake of
         hydrogen vehicles, financial support for retail sites construction, acceleration of permitting processes as
         well as policies to enable the development of the supply infrastructure should be in place.
         4.5    Supporting        and   flanking policy; supportive           EU   policies
         NortH2   supports the EU’s Climate      Neutrality objective   for 2050 and the ambition to increase the 2030
         GHG emissions target. As part of the Green Deal agenda, we welcome the EU Commission’s Hydrogen
         Strategy (July 2020). It sets a clear direction of travel, such as the ambitions to have 6GW of installed
         electrolysis capacity by 2024 and 40GW by 2030.
         In addition to those mentioned in the     previous section,   the following  EU  policies  are important    for
         NortH2:
              =
                  Funding:     NortH2 is  a project that -
                                                           due to its nature and size —
                                                                                        needs  more   policy   instruments
                  than   solely public contributions to enable investments. Time-limited subsidies        are  needed, similar
                  to  the instruments that have been used to stimulate the     rapid development     of offshore wind. We
                  wish to underline that the Resilience and     Recovery Fund offers great potential, in particular for
                  cross-border    large-scale projects such as NortH2 and we would welcome the Netherlands and
                  Germany joining forces under an IPCEI project which includes NortH2. We would also welcom >
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<pre>13969444
                the NL Government to      explore the other relevant funding mechanisms as well as the possibilities
                becoming available as a result of the review of the Energy and Environment state aid guidelines.
                Swift adoption of the RED-II delegated acts establishing flexible and market-based criteria for
                accounting of the renewable content of green hydrogen and demonstrating additionality.
                To enable the infrastructure, review of both TEN-E and TEN-T directives is important also as
                part of the fit for 55 package. These should enable the development of hydrogen infrastructure
                along core network corridors, support the retrofitting of existing cross border gas infrastructure
                (including storage facilities) to transport hydrogen. Next to that it should simplify the Project of
                Common Interest (PCI) selection processes that reflect the ambitions of the EU Green Deal by
                incorporating a sustainability dimension based on GHG emissions reduction potential. NortH2
                needs a PCI status to be able to receive CEF funding.
                The Review of the Alternative Fuels Infrastructure Directive (AFID) should lead to the inclusion
                of hydrogen and hydrogen-based products and fuels as ‘mandatory’ fuels. Appropriate incentives
                should be in place at the European and national level (e.g. grants, subsidies, tax rebates) to
                support the construction of a hydrogen infrastructure network in strategic locations. The already
                existing co-funding and financing schemes such as Connecting Europe Facility (CEF) should be
                further strengthened and provide greater funding for hydrogen.
                To enable the market, the upcoming decarbonized gas market reform should include principles
                for the trading of hydrogen such as unbundling; non-discriminatory third-party access to network
                infrastructure; transparent and non-discriminatory tariffs for access to networks. It should also
                include a coherent classification system and an EU-wide system of Guarantees of Origin; based
                on the life-cycle GHG emissions that is consistent with the criteria defined in the taxonomy and
                Renewable Energy directive.
                Tax: the review of the EU Energy Tax Directive should ensure that the European energy tax
                framework supports uptake of green hydrogen in the EU. The review should not create obstacles
                but instead incentivize activities such as hydrogen storage and electricity supply to electrolysers.
                For instance, at the moment, some energy tax regimes were designed without consideration of an
                energy product (e.g. electricity) being purchased for conversion to another retail energy product
                (e.g. gas), potentially leading to “double” taxation. The review should ensure that hydrogen is a
                separate energy carrier, taxed at a zero-ct. A general or partial tax break for tax on energy
                consumption in general or from the supplementary tax (ODE) to raise the SDE funds. could
                materially strengthen the business case for green hydrogen.
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         5       Working together
         The energy transition forces a transformation of the energy system towards ultimately green electrons and
         green molecules, which will be predominantly hydrogen or hydrogen based. The hydrogen economy
         needs to be built and there            are  only   30 years left to     accomplish      the  redesign and meet the 2050 climate
         targets. This huge challenge also offers large opportunities for the Netherlands (and the Dutch economy)
         and seizing these opportunities will be instrumental in preserving the future earning power of the Dutch
         economy.
                =
                     The   production and distribution of green H2 will create thousands of jobs.!!
                =
                     Green    chemistry, adding value to green hydrogen molecules, presents a huge opportunity for the
                     Dutch chemical industry, representing about 100,000 jobs.
                =
                     Specialized Dutch manufacturers are well positioned to deliver valuable components to the
                     renewable energy industry, representing (tens of) thousands of jobs."
         The Netherlands 1s          uniquely positioned          with   large renewable low-cost offshore wind potential, a natural
         gas grid that can be refurbished at low-cost for hydrogen transportation, hydrogen storage potential, a
         large chemical industry, world-class universities and researchers and large, capable companies willing to
         invest in and deliver the transformation.
         We     are at  a point in time comparable to when we transformed our economy from coal-based to gas-based.
         with     one major difference: we only have 30 years to accomplish the transition and an even smaller
         window to seize the economic opportunities associated with it and turn the Netherlands into a leading
         hydrogen economy.
         For the Netherlands to meet the climate ambitions set in the Dutch Climate Accord and in the Dutch
         Hydrogen Strategy and realizing the associated hydrogen opportunity potential can only be accomplished
         (1) if we accelerate and scale-up now and (11) if we go for innovative and effective public private
         collaboration.
         NortH2 is      more    than    a project: it 1s a pathfinder, a proposal to kickstart the acceleration and scale-up                 of
         the   hydrogen economy together: developers, TS Os, (industrial) customers and the government.
         Our    approach is to tackle the problem with the result in mind: what do we need to do now to develop the
         hydrogen economy to meet the 2050 climate challenge at the lowest cost to society? None of us has all
         the answers, but together we are confident we can find them.
         NortH2 invites the Dutch government to work                       together on developing that roadmap towards              an  investable
         public-private project to           accelerate and       scale up the hydrogen economy in NW Europe.
         Over the last      couple     of months, since the announcement of NortH2,                    we  have closely  worked     together with
         the Ministry of Economic Affairs and Climate. A relationship that could be intensified further to speed up
         the process. Energy transition is a team sport. Only by working together can we tackle the climate change
         challenges and realize the energy system of the future. Together we can make this happen and pave the
         way for a truly green future against the Paris timeline and at the lowest costs to society.
         1                                                   *
            CE Delft  (2018). "Werk door groene waterstof
         https://www .ce.nl/publicaties/2202/ werk-door-groene-waterstof
         1
           FME. Ekinetix,   Stratelligence (2019). "Waterstof: kansen  voor de Nederlandse industrie*
         https:  www  .fme nl/waterstof-kansen-voor-de-nederd   andse-industrie
         Bart Los and Jouke van Dijk (2020), ‘The Employment Impact of the NortH2 Project’, Rijksuniversiteit Groningen. in opdracht van
         Gasunie/NortH2
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         List of abbreviations
         ‘Hydrogen’ taxonomy in this paper follows the EU taxonomy        as laid out in the EU Hydrogen Strategy    ‘A
         hydrogen strategy for a climate-neutral Europe’ (2020):
             =
                 ‘Renewable     hydrogen’, ‘clean hydrogen’ or ‘green hydrogen’ is hydrogen produced through the
                 electrolysis  of water (in an electrolyser, powered by electricity), and with the electricity stemming
                 from renewable sources. The full life-cycle greenhouse gas emissions of the production of
                 renewable hydrogen are close to zero.
             =
                 ‘Electricity-based hydrogen’ refers to hydrogen produced through the electrolysis of water (in an
                 electrolyser, powered by electricity), regardless of the electricity source. The full life-cycle
                 greenhouse gas emissions of the production of electricity-based hydrogen depends on how the
                 electricity is produced
             =
                 ‘Low-carbon hydrogen’ encompasses fossil-based hydrogen with carbon capture and electricity-
                 based hydrogen, with significantly reduced full life-cycle greenhouse gas emissions compared to
                 existing hydrogen production.
          AFID                 Alternative Fuels Infrastructure Directive
          CAPEX                Capital Expenditure
          EC                   European Commission
          ECCM                 Elektrochemie Conversie     en Materialen
          ENTSO                European Network of Transmission System
          EPC                  Engineering   and Procurement   Company
          ETS                  European Trading System
          EU                   European Union
          FEED                 Front-End   Engineering  and  Design
          FID                  Final Investment Decision
          GHG                  Green House Gas
          GoO                  Guarantees of Origin
          GW                   Gigawatt
          HV                   High-Voltage (Grid)
          IPCEIL               Important Project of Common European      Interest
          LCOH                 Levelized Cost of Hydrogen
          MEAC                 Ministry  of Economic Affairs and Climate
          MKB                  Midden   en Klein  Bedrijf
          MTPA                 Million tonnes per   annum
          MW                   Megawatt
          (N)NL                (North-)Netherlands
          NW                   North West
          ODE                  Opslag  Duurzame    Energie
          OEM                  Original Equipment Manufacturer
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          OPEX                   Operational Expenditure
          PEM                    Polymer Electrolyte Membrane (Electrolysis)
          RCR                    Rijkscoordinatie Regeling
          RED                    Renewable   Energy Directive
          SDE                    Stimulermg   Duurzame  Energieproductie
          TEN                    Trans-European Transport Network
          TSO                    Transmission  System Operator
         In case  of questions please reach out     to:
            UIC           (Shell)
         BERESI sell.com or RUD)
          UCONN     (7 casunie.nl  or    [RIE
               (10)(2e)        (Shell)
              (10)(2e)       (@shell.com  or   EYED
         CONFIDENTIAL                                                        37
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