Green Hydrogen: Another step towards EU Standards

Accordingly, a stable and clear European and international regulatory framework, as well as financing facilities, are needed to allow the development of green hydrogen projects. The European Commission recognised the potential and the needs and issued a specific hydrogen strategy as early as 2020. This was complemented by the publication, on 13 February 2023, of two long-awaited Delegated Acts under the EU Renewable Energy Directive (RED II) which define the conditions under which hydrogen, and its derivatives (ammonia, methanol) can be considered as a renewable fuel of non-biological origin (RFNBOs).

Firstly, to ensure that renewable hydrogen corresponds to an increase in the volume of renewable energy production capacity, the first Delegated Act set up the additionality criterion: RFNBOs can only be produced from “additional” renewable electricity. The hydrogen production facility may be directly connected to a renewable electricity installation and will not use electricity from the grid, or may use electricity from the grid, which is “demonstrably” renewable with respect to the Delegated Acts’ rules.

The delegated acts also set up temporal and geographical correlation conditions: renewable hydrogen is only produced when sufficient local renewable energy is available, and this electricity must be matched with electrolysers in terms of time and location. If the emission intensity of electricity in a bidding zone, for a producer who has concluded Corporate PPAs, is below a fixed amount (18 grams of CO2-equivalent per megajoule), the additionality criterion is not required.

Exceptions to the rules are granted if the electricity taken from a local grid was in a bidding zone that already had a 90% renewable mix the previous year (for the moment this criterion is only matched in two of the Swedish bidding zones) or if the electricity used is consumed during the imbalance settlement period.

A transition period is implemented to allow first movers in the renewable hydrogen sector to be exempt from certain additionality requirements even up to 2038 if the installation came into operation before 1 January 2028.

In addition, the time correlation between renewable energy production and its use for hydrogen is made on a monthly basis until 2030 and on a much stricter hourly basis from 2030. Member States are allowed to introduce stricter rules about such timely correlation as of 1 July 2027.

The second Delegated Act refers to the calculation of greenhouse gas emissions throughout the entire life cycle of the fuels (RFNBOs or recycled carbon fuels) – from generation, including electricity withdrawal from the grid, through transport to the end consumer. Recycled carbon fuels shall reduce greenhouse gas emissions for at least 70%, compared to fossils fuels they replace.

The delegated acts refer to the Renewable Energy Directive, which does not qualify Nuclear Power as Renewable Energy. Under the Hydrogen and gas markets decarbonisation package proposed in December 2021, which is still under discussion, the Commissions suggested to integrate a “low carbon hydrogen” definition. Such low-carbon hydrogen could be produced from non-renewable sources (such as Nuclear) that reduce at least 70% of greenhouse gas emissions in comparison to fossil natural gas. However, the methodology to calculate such a 70% emission savings is not to be expected before end 2024.

The delegated acts criteria will apply to any import of green hydrogen into the European Union. The certification in and outside Europe by voluntary but approved certification bodies will be important to grant this compliance.

The Delegated Acts must be approved or rejected (with no amendment possible) by the European Parliament within two months, eventually to be prolongated for another maximum two-month period.

The acts foresee a revision process in 2028.