A number of firms have objected to a clause in the EU’s delegated acts on hydrogen that they say will limit investment decisions on some hydrogen projects.

The delegated acts aim to provide a definition of what can be defined as renewable hydrogen, a renewable fuel of non-biological origin (RFNBOs), and a recycled carbon fuel (RCFs) in order to ensure adequate emissions savings on the pathway to the EU’s goal of being net zero by 2050.

RFNBOs are produced by combining green hydrogen with CO₂. That CO₂ can come from industry, classed as non-sustainable, or direct air capture (DAC), classed as sustainable. The laws that will define how much RFNBOs are mandated across the EU are still moving through the legislative process but at a minimum they will create demand for 300TWh of RFNBOs by 2030, according to modelling by the European Commission.

“It seems too optimistic to believe that as of 2035 there won’t be plenty of carbon emissions available in the industry sector” Eon

The specific act defining RFNBOs and RCFs contains a clause saying that CO₂ used for the production of the fuels can be from any source before 2035.

But after that date it proposes that fuels from industrial projects that are equipped with carbon capture and utilisation (CCU) cannot be considered as avoided emissions by fuel manufacturers—however high their capture rates. The clause argues that, in the long term, the use of RFNBOs and RCFs “produced using non-sustainable carbon is not compatible with climate neutrality as the use of carbon from non-sustainable processes entails a continued use of non-sustainable fuels and the related emissions”.

Objections placed

A number of firms have objected to this clause in their responses to a recent consultation on the delegated acts, saying it will limit investment decisions and lead to less emissions savings in the short-term.

“Investments and realisation of complex and capital-intensive projects take time and need a long payback time to become profitable,” says a submission by Norwegian energy firm Equinor.

“Instead of encouraging industrial processes to change to sustainable carbon sources, there is a risk that the proposed delegated act discourages investment in projects that will capture emissions also before 2035 and which will deliver needed [greenhouse gas] emission reductions at scale and in a cost-efficient manner,” it continues.

Several potential projects are under consideration where such fuels could be produced from unavoidable CO₂ emissions in industrial processes, Equinor says, adding that the EU should ‘delete or extend’ the 2035 cutoff.

These concerns are echoed by Germany energy company Eon in its response to the proposals, which recommends extending the cutoff until 2045.

“In practice it seems too optimistic to believe that as of 2035 there won’t be plenty of carbon emissions available in the industry sector anymore,” says Eon.

“Investments and realisation of complex and capital-intensive projects take time and need a long payback time to become profitable” Equinor

“Some industrial sectors (steel, cement, lime, etc.) are hard-to-abate and their decarbonisation will most probably materialise between 2040 and 2050, when Europe will be converging to net-zero emissions.”

A position paper from industry body Cefic also recommends deleting the clause, noting that with an investment horizon of 15-20 years, industrial CCU projects require a longer-term period of regulatory predictability than the 2035 cutoff provides.

“If it is deemed necessary to introduce a phaseout date…we recommend that phaseout date be anticipated by a cost-benefit analysis on carbon capture from different sources and the availability of necessary supply infrastructure,” the body’s response says.

Alternative solutions

The clause is designed to encourage the use of DAC technology, which is at an early stage of development and will require strong policy support to achieve economies of scale and cost reductions, according to non-governmental organisation Transport & Environment (T&E).

To achieve this T&E proposes—instead of the proposed cut-off date of 2036 for non-DAC-sourced CO₂—a mandated phase-in of DAC-sourced CO₂ from 10pc in 2030 rising to 100pc by 2050.

“We welcome the... commitment to move in the longer term beyond fossil carbon and only allow the use of sustainable sources of carbon,” T&E says in its response to the consultation.

The feedback period is now closed and the European Commission is evaluating the responses. A Commission spokesperson did not respond to Hydrogen Economist's request on the timeline for a revised draft of the proposals.

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Author: Tom Young