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European Commission proposes new hydrogen regulations

The European Commission has proposed detailed rules to define what constitutes renewable hydrogen in the EU with the adoption of two Delegated Acts, required under the Renewable Energy Directive, the Commission announced on Monday (13 February).

The two Acts are part of a broad 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 aim to ensure that all renewable fuels of non-biological origin (also known as RFNBOs) are produced from renewable electricity. The Acts are interrelated and necessary for the fuels to be counted towards Member States’ renewable energy target.

The proposed rules would provide regulatory certainty to investors, the Commission said. The bloc aims to reach 10 million tonnes of domestic renewable hydrogen production and 10 million tonnes of imported renewable hydrogen, in line with REPowerEU.

“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 would further boost the EU’s industrial leadership in this green sector,” said Kadri Simson, European Commissioner for Energy.

Unpacking the new legislative proposals

The first Delegated Act defines under which conditions hydrogen, hydrogen-based fuels or other energy carriers can be considered an RFNBO. The Act aims to clarify the principle of “additionality” for hydrogen set out in the EU’s Renewable Energy Directive. As part of this, electrolysers used to produce hydrogen would have to be connected to new renewable electricity production.

This principle aims 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. In this way, hydrogen production would be supporting decarbonisation and complement electrification efforts, while avoiding pressure on power generation, the Commission said.

While initial electricity demand for hydrogen production would be negligible, it would increase towards 2030 with the mass rollout of large-scale electrolysers, according to the Commission. 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 10Mt ambition in 2030 corresponds to 14 per cent of total EU electricity consumption, the Commission said.

The Act also sets out different ways in which producers can demonstrate that the renewable electricity used for hydrogen production complies with the “additionality” rules. If adopted, it would introduce introduces further criteria aimed to ensure that renewable hydrogen is only produced when and where sufficient renewable energy is available (known as temporal and geographic correlation).

To take into account existing investment commitments and allow the sector to adapt to the new framework, the rules would 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 would start operating before 1 January 2028. This transition period corresponds to the period when electrolysers would be scaled up and come onto the market.

In addition, hydrogen producers would be able to match their hydrogen production with their contracted renewables on a monthly basis until 1 January 2030. However, Member States would have the option of introducing stricter rules about temporal correlation as of 1 July 2027.

The requirements for the production of renewable hydrogen would 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 relying on voluntary schemes would ensure that producers, whether in the EU or in third countries, can demonstrate in “a simple and easy way,” their compliance with the EU framework and trade renewable hydrogen within the bloc’s single market, according to a press release from the Commission.

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. In addition, the methodology 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, the Commission said.

The Acts will now be sent to the European Parliament and the European Council, which both have two months to scrutinise them and to either accept or reject the proposals. At their request, the scrutiny period can be extended by two months. However, there is no possibility for the Parliament or Council to amend the proposals.

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