By Akinbiodun Kehinde Tosin
The European Commission has tabled long-awaited rules defining the circumstances under which hydrogen can be labelled as coming from “renewable” energy sources. Last minute, Paris also won recognition for low-carbon hydrogen produced from nuclear electricity.
As Europe turns to hydrogen, there are fears that electrolysers producing the gaseous fuel will drive up demand for power and cannibalise renewable electricity intended for other uses.
To prevent this, the European Commission has been working on a set of rules to ensure green hydrogen uses only “additional” sources of renewable electricity.
After more than a year of delay due to intense lobbying from Paris and Berlin, the EU executive finally adopted those rules on Friday evening (10 February), according to documents obtained by EURACTIV.
To ensure green hydrogen is made only from “additional” renewable power, the Commission sought to correlate its production in time and space. According to this principle, a Spanish hydrogen producer, for instance, would be unable to claim hydrogen as renewable if the electricity used came from Sweden.
How closely the two would have to be correlated – hourly or quarterly, 50 kilometres apart or from a neighbouring country – have since been subject of intense debate, with industry pushing for looser rules and green campaigners insisting on a close correlation to avoid cannibalisation.
After months of hesitation, the Commission finally took a decision and set out two important criteria:
By 2030, hydrogen production must be matched to renewable energy production on an hourly basis. Until then, the correlation is set on a monthly basis.
By 2028, hydrogen producers must prove that their electrolysers are connected to renewable energy installations no older than 36 months.
With those criteria, Europe’s hydrogen industry is now relieved.
“It is of paramount importance that legal certainty can now at last be ensured so that investments can begin,” said Jorgo Chatzimarkakis, CEO of Hydrogen Europe, a lobby group.
Until now, hydrogen investors were “chomping at the bit” to make final investment decisions in Europe, he told EURACTIV.
Hydrogen Europe had earlier warned against an exodus of hydrogen firms across the Atlantic following the adoption of the Inflation Reduction Act in the US.
In principle, the European Commission expects the time and space correlation criteria to become irrelevant once 90% of electricity production in a given country comes from renewable sources.
This is where France scored a major victory.
For months, French politicians have lobbied Brussels to hammer the point that green hydrogen should also come from low-carbon nuclear electricity, not just renewables.
“There is a real risk today that the discussions in Brussels will lead to the imposition of very high targets of renewable hydrogen for industry […] without taking into account the share of hydrogen that can be produced from electricity of nuclear origin,” said French energy minister Agnès Pannier-Runacher.
According to her, this means a country like France risked being prevented from using its carbon-free electricity to produce hydrogen.
“It obviously doesn’t make sense, it’s absurd and it’s above all contrary to our European decarbonisation objectives,” she told a small group of journalists last week.
That risk now appears to be eliminated. Under the rules adopted Friday, countries with a low-carbon electricity mix will be exempt from the additionality rule provided they can demonstrate that the power came from renewable energy sources – including existing ones.
To demonstrate this, hydrogen producers will have to produce so-called “power purchase agreements” (PPAs), which allow buyers to purchase renewable energy at a predictable price while helping generators secure financing for their projects.
The exemption will apply if the average carbon intensity of the electricity used for hydrogen production “is located in a bidding zone where the emission intensity of electricity is lower than 18 gCO2eq/MJ,” according to the Commission’s proposal.
This means the exception will apply as long as a country’s electricity production emits less than 65 grammes of CO2 equivalent per kilowatt hour, EURACTIV understands.
And among all 27 EU countries, only France and Sweden meet this criteria. In 2021, when its nuclear fleet was almost fully operational, French power emissions stood at 56g CO2e per kWh. Sweden, for its part, stands at an average of 28gCO2e/Kwh.
In addition, all green criteria imposed on European producers will apply equally to hydrogen imported from abroad, another win for France which fought against pressure from Berlin to impose looser criteria on imported hydrogen.
Altogether, “this goes in the direction of pro-nuclear countries as well as those hostile to imports,” confirms Mikaa Mered, a lecturer on hydrogen markets, diplomacy and geopolitics at Sciences Po in Paris.
France in new row with Germany and Spain over nuclear-derived hydrogen
A new row has erupted between France, Germany and Spain over nuclear energy, with Paris furious about a lack of support from Berlin and Madrid for its efforts to have nuclear-derived hydrogen labelled as ‘green’ in EU legislation, sources said.
According to Hydrogen Europe, credit also goes to the European Parliament for making the rules more flexible for EU producers.
Indeed, lawmakers in Parliament cancelled a planned round of talks on the EU’s renewable energy directive earlier this week, citing the absence of hydrogen “additionality” rules as the reason – a move which piled pressure on the EU executive to press ahead with its proposal.
Josche Muth, head of regulatory and public affairs P2X at Danish electricity major Ørsted, was among those expressing satisfaction with the EU’s new set of rules.
“Great that it finally has been adopted, because so far less than 10% of projects have made a final investment decisions,” Muth told EURACTIV. The industry was “very keen” to make the “hydrogen market take shape more quickly,” he added.
The actual texts, seen by EURACTIV, have yet to be officially published in the EU’s register of delegated acts. However, last-minute changes are not expected.