European Commission sets out rules on renewable hydrogen

The European Commission has proposed detailed rules to define what constitutes renewable hydrogen in the European Union (EU), with the adoption of two delegated acts required under the Renewable Energy Directive.

The acts are part of a EU regulatory framework for hydrogen which includes energy infrastructure investments and state aid rules, and legislative targets for renewable hydrogen for the industry and transport sectors.

They are expected to ensure that all renewable fuels of non-biological origin (also known as RFNBOs) are produced from renewable electricity.

According to the Commission, the two acts are interrelated and necessary for the fuels to be counted towards member states’ renewable energy target.

It said the acts will provide regulatory certainty to investors as the EU aims to reach 10 million tonnes of domestic renewable hydrogen production and 10 million tonnes of imported renewable hydrogen in line with the REPowerEU plan.

The acts will now be transmitted to the European Parliament and the Council, which have 2 months to scrutinise them and to either accept or reject the proposals. At their request, the scrutiny period can be extended by 2 months. There is no possibility for the Parliament or Council to amend the proposals.

The first delegated act defines under which conditions hydrogen, hydrogen-based fuels, or other energy carriers can be considered an RFNBO.

The commission said it clarifies the principle of ‘additionality’ for hydrogen set out in the EU’s Renewable Energy Directive. To note, electrolysers to produce hydrogen will have to be connected to new renewable electricity production.

The principle is expected to ensure that the generation of renewable hydrogen incentivises an increase in the volume of renewable energy available to the grid compared to what exists already. According to the commission, this way, hydrogen production will be supporting decarbonisation and complementing electrification efforts, while avoiding pressure on power generation.

The Commission estimated that around 500 TWh of renewable electricity is needed to meet the 2030 ambition in REPowerEU of producing 10 million tonnes of RFNBOs. The ambition corresponds to 14% of total EU electricity consumption and is reflected in the Commission’s proposal to increase the 2030 target for renewables to 45%.

The commission noted that, to take into account existing investment commitments and allow the sector to adapt to the new framework, the rules will be phased in gradually, and designed to become more stringent over time. Specifically, the rules foresee a transition phase of the requirements on ‘additionality’ for hydrogen projects that will start operating before 1 January 2028. To note, member states will have the option of introducing stricter rules about temporal correlation as of 1 July 2027.

The requirements for the production of renewable hydrogen will apply to both domestic producers as well as producers from third countries that want to export renewable hydrogen to the EU to count towards the EU renewables targets. A certification scheme will ensure that producers can demonstrate their compliance with the EU framework and trade renewable hydrogen within the single market.

The second delegated act provides a methodology for calculating life-cycle greenhouse gas emissions for RFNBOs.

The methodology takes into account greenhouse gas emissions across the full lifecycle of the fuels, including upstream emissions, emissions associated with taking electricity from the grid, from processing, and those associated with transporting these fuels to the end-consumer.

The methodology also clarifies how to calculate the greenhouse gas emissions of renewable hydrogen or its derivatives in case it is co-produced in a facility that produces fossil-based fuels.

In 2020, the Commission adopted a Hydrogen Strategy setting out a vision for the creation of a European hydrogen ecosystem from research and innovation to production and infrastructure, and the development of international standards and markets.

As part of the ‘Fit for 55′ package, the Commission has introduced several incentives for hydrogen’s uptake, including mandatory targets for the industry and transport sectors.

Hydrogen is also a part of the REPowerEU plan to get rid of Russian fossil fuels.

The Commission is also supporting the emergence of the hydrogen sector in the EU via Important Projects of Common European Interest (IPCEIs).

The first one called ‘IPCEI Hy2Tech’ was approved in July 2022 and aims at developing innovative technologies for the hydrogen value chain to decarbonise industrial processes and the mobility sector, with a focus on end-users.

The second one called ‘IPCEI Hy2Use’ was approved in September 2022. It will support the construction of hydrogen-related infrastructure and the development of innovative and more sustainable technologies for the integration of hydrogen into the industrial sector.

Kadri Simson, Commissioner for Energy, said: “Renewable hydrogen is a crucial component of our strategy for a cost-effective clean energy transition and to get rid of Russian fossil fuels in some industrial processes.”

“Clear rules and a reliable certification system are key for this emerging market to develop and establish itself in Europe. These delegated acts provide much-needed legal certainty to investors, and will further boost the EU’s industrial leadership in this green sector.”

Recently, the EU rolled out a Green Deal Industrial Plan for the Net-Zero Age, which aims to provide a more supportive environment for the scaling up of the EU’s manufacturing capacity for the net-zero technologies and products required to meet Europe’s climate targets. The plan builds on previous initiatives and relies on the strengths of the EU single market.

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