The European Commission (EC) proposed on Monday detailed rules to define what constitutes renewable (green) hydrogen in the EU, underlining the necessity of connecting electrolysers to newly-added renewable power generation only.
The EU's executive arm has adopted two inter-related Delegated Acts under the Renewable Energy Directive in a bid to make sure that all renewable fuels of non-biological origin (RFNBOs) are produced from renewable electricity. They are expected to provide regulatory certainty to investors.
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The first Act defines the conditions under which hydrogen can be deemed an RFNBO and clarifies the principle of “additionality”. It stipulates that renewable hydrogen must be produced exclusively with power from additional renewable energy plants and during the same period they generate electricity. Moreover, hydrogen production should only take place in the area of the associated renewable power plant.
The document sets out different ways in which producers can prove that the electricity used for hydrogen production complies with additionality rules.
The regulation envisages a transitional phase for hydrogen projects that will begin operations before January 1, 2028, essentially granting first movers an exemption from additionality until 2038.
Meanwhile, the second Delegated Act establishes a methodology for calculating life-cycle greenhouse gas emissions for RFNBOs.
These Acts are part of the EU's broader regulatory framework for hydrogen, including energy infrastructure investments and state aid rules, and legislative targets for renewable hydrogen for the industry and transport sectors. The European Parliament and the Council will now have two months to review and decide on the proposed regulation. It is possible for the scrutiny period to be extended by two months.
The announcement of the rules on additionality was welcomed by Hydrogen Europe, but the industry body’s CEO Jorgo Chatzimarkakis still referred to the new regulation as “far from perfect”.
“At last, there is clarity for industry and investors and Europe can kick-start the renewable hydrogen market. This comes at a critical time, with the USA setting a very high benchmark with their Production Tax Credits, offered under the Inflation Reduction Act, attracting more and more investments towards their clean hydrogen market,” Chatzimarkakis stated. He added that many parameters in the proposal have been substantially improved.
Hydrogen Europe is positive that, while strict, the newly-announced rules can be met. However, it expects these rules to inevitably make green hydrogen projects more expensive and limit the growth potential.
Under the REPowerEU Plan released last year, the EU aims to achieve 10 million tonnes of domestic renewable hydrogen production in addition to 10 million tonnes of imports by 2030. The Commission estimates that around 500 TWh of renewable electricity will be required to achieve the green hydrogen production ambition.