The European Commission has unveiled a set of rules that could allow for hydrogen produced from nuclear energy to be considered green. The rules also have to ensure that hydrogen production doesn’t put pressure on power generation and prices.
Two Delegated Acts required under the Renewable Energy Directive have attracted opposite reactions, with one side fearing they will put brakes on renewable hydrogen, while the other seeing them as an important step for a market ramp-up of green hydrogen.
The acts will be sent to the European Parliament and the Council of the EU, which have two months to either accept or reject the proposals. At their request, this period can be extended by two more months. There is no possibility for the parliament or the council to amend the proposals.
The acts will provide regulatory certainty to investors – the commission
The commission has said the acts will ensure that all renewable fuels of non-biological origin (RFNBOs) are produced from renewable electricity.
They will provide regulatory certainty to investors as the EU aims to reach 10 million tons of domestic renewable hydrogen production and 10 million tons of imported renewable hydrogen in line with the REPowerEU plan, the commission said.
Media reports: hydrogen made using nuclear electricity will be labeled “low-carbon”
According to Euractiv, the acts introduce a special derogation allowing countries with a low-carbon electricity mix (i.e. nuclear) to derogate from the additionality principle, provided they can demonstrate an equivalent amount of renewables was used, via a system of power purchase agreements (PPAs).
Rather than being labeled as “renewable,” hydrogen made using nuclear electricity will be classified as “low-carbon” hydrogen, Euronews reported.
France and Sweden have been pushing for “pink” hydrogen, produced with electricity from nuclear power plants, to be labeled as green, while Germany and Spain have opposed the idea.
In its documents accompanying the two acts, the commission said the proposed rules stem from the Renewable Energy Directive, where nuclear power is not listed among the renewable energy sources.
The commission: a methodology for assessing GHG emissions savings from low-carbon fuels will be set out by the end of 2024
However, as part of the hydrogen and gas markets decarbonization package, proposed in December 2021 and currently being negotiated by the co-legislators, the commission defines low-carbon hydrogen as hydrogen derived from non-renewable sources that produces at least 70% less greenhouse gas emissions than fossil natural gas across its full lifecycle.
A methodology for assessing GHG emissions savings from low carbon fuels will be set out in delegated legislation by December 31, 2024, the commission said.
The “additionality” principle – hydrogen production should incentivize an increase in the volume of renewable energy
The acts also clarify the principle of “additionality” for hydrogen set out in the EU’s Renewable Energy Directive.
The rules are to ensure that these fuels can only be produced from “additional” renewable electricity generated at the same time and in the same area as their own production, the commission said.
Around 500 TWh of renewable electricity is needed to meet the 2030 ambition in REPowerEU
The idea is to ensure that the generation of renewable hydrogen incentivizes an increase in the volume of renewable energy available to the grid compared to what exists already. In this way, hydrogen production will be supporting decarbonization and complementing electrification efforts, while avoiding pressure on power generation.
It is estimated that around 500 TWh of renewable electricity is needed to meet the 2030 ambition in REPowerEU, of producing 10 million tons of hydrogen.
The rules foresee a transition phase of the requirements on “additionality”
The proposed framework also provides producers with the possibility to prove that hydrogen is renewable if they can guarantee additional power production and ensure that production is both temporarily and geographically optimized vis-à-vis the production of the renewable electricity used.
The rules foresee a transition phase of the requirements on “additionality” for hydrogen projects that will start operating before January 1, 2028.
According to Euractiv, hydrogen production must be matched by additional renewable energy production on an hourly basis. However, this condition will only apply as of 2030. In the transitional period, the principle will be applied on a monthly basis.
Reactions – CEO of RWE, Germany’s ministry, industry…
Markus Krebber, CEO of RWE, welcomed the acts, but criticized the rules they propose to introduce.
The good part, in his words, is that the acts have been completed after two years of negotiations.
The industry has now got a framework with at least some flexibility for the initial years to start the ramp-up of the hydrogen economy and the decarbonisation of energy-intensive processes, he added.
Krebber: Europe can currently learn a lot from the US
However, he thinks the rules put brakes on renewable hydrogen in the medium term.
“From 2028 onwards, green hydrogen can only be produced exclusively and almost simultaneously with electricity from newly built, unsubsidized renewable plants. This unnecessarily limits production for electrolyzers and thereby increases costs of domestic hydrogen production, putting the EU at a competitive disadvantage,” he explained.
Krebber believes that a completely new approach is needed if Europe is to achieve its climate goals and stay competitive with less bureaucracy and more pragmatism. Europe can currently learn a lot from the US when it comes to setting the framework for a successful energy transition, according to him.
Germany’s ministry: an important step for a market ramp-up of green hydrogen
However, other voices could be heard in Germany, and elsewhere. The Federal Ministry for Economic Affairs and Climate Action of Germany said that the EU rules were an important step for a market ramp-up of green hydrogen. Similar thoughts were shared by Ralf Diemer, CEO of the eFuel Alliance, a lobby group representing the synthetic fuel industry.
Diemer said that the EU had to react quickly, and answer to the US’ Inflation Reduction Act, which offers generous tax credits to companies interested in investing in hydrogen.
This argument was echoed by Jorgo Chatzimarkakis, secretary general of Hydrogen Europe. However, he also said that a far-from-perfect regulation is better than no regulation at all.
“At last, there is clarity for industry and investors and Europe can kick-start the renewable hydrogen market,” Chatzimarkakis said.