The European Commission has launched consultations on two delegated acts clarifying EU rules on renewable hydrogen.

The first proposal, covering renewable fuels of non-biological origin, sets the criteria for what can be defined as “renewable hydrogen”—a step seen as vital for the development of the sector. 

The second proposal, which concerns the methodology for greenhouse gas (GHG) savings, puts forward a detailed scheme to calculate the lifecycle emissions of renewable hydrogen as well as recycled carbon fuels to meet the GHG reduction threshold set in the Renewable Energy Directive.

The two acts will define what can be counted as renewable hydrogen, with the rules applying to producers within the bloc as well as those wishing to export the fuel to the EU.

The acts specify that hydrogen generated by direct connection of an electrolyser to renewable assets will always qualify as long as the renewable asset and the electrolyser come into operation within three years of each other and the producer can prove no grid electricity is being used.

On the grid

Hydrogen producers can use grid electricity to create renewable hydrogen in certain cases, however. These exceptions are when renewables form an average of 90pc of the grid mix, when the power being used would otherwise have been curtailed, and when the hydrogen producer has a power-purchase agreement (PPA) with a renewables producer.

However, in this last case, hydrogen from the PPA must be produced during the same one-hour period that the renewable electricity is generated, and the two assets must be in the same, or an adjacent, “bidding zone”.

“The detailed rules around hydrogen criteria that have now been proposed will put the brakes on needed investment in the coming years” Krebber, RWE

A transitional phase, where hydrogen can be produced in the same calendar month as the electricity produced under the renewable PPA rather than the same hour, will last until 2026.

“The requirements for additionality and temporal and geographical correlation are particularly important in an environment where electricity generation still relies to a significant degree on fossil fuels,” says the Commission proposal.

The rules are designed to ensure that hydrogen projects are powered by new renewable capacity—rather than that already existing on the grid—and to prevent hydrogen projects undermining progress towards renewable energy deployment targets.

But they have drawn stern opposition from the hydrogen sector, which argues they will undermine the development of projects.

Challenges ahead

The one-hour window between renewable electricity production and hydrogen production will strongly limit the ability of hydrogen producers to operate at over 40pc capacity for most parts of Europe—unless the projects are extremely large (e.g., 1,200MW of renewables for a 200MW electrolyser) and incorporate large batteries, according to industry body Hydrogen Europe.

“Temporal correlation should be kept to a monthly resolution to foster the optimisation of electrolysers, increase power grid utilisation, reduce administrative and compliance-related costs, and eventually limit the cost of renewable hydrogen for the whole European economy,” Hydrogen Europe says in a recent position paper.

Overall, the two delegated acts will unnecessarily increase the price of hydrogen and will make it almost impossible to ensure a continuous supply to industry, German utility RWE says in its initial response to the EU’s consultations.

“The detailed rules around hydrogen criteria that have now been proposed will put the brakes on needed investment in the coming years,” says RWE CEO Markus Krebber. “The transformation of industry will be unnecessarily delayed because the green hydrogen that is urgently needed will not be available quickly enough in the volumes required.”

After the consultations are concluded, the Commission will propose a final text to the European Parliament and the Council of the EU, which will exercise a two-month scrutiny period over the document before its final adoption by the Commission.

---

Author: Tom Young