Report from GH2’s expert roundtable on the development of the Green Hydrogen Standard on 1-2 December
Summary of the discussions
- GH2 Chair Malcolm Turnbull opened the meeting by highlighting green hydrogen’s potential to solve the decarbonization conundrum for sectors like shipping, fertilizers and steel. With the right conditions in place, including through the agreement of global green hydrogen standards, green hydrogen will quickly outcompete blue hydrogen and other fossil fuel-based hydrogen. (Note: A recent OpEd “Our climate emergency requires huge amounts of green hydrogen” by Malcolm Turnbull and Andrew Forrest is available on the GH2 website here.
- Kieran Coleman introduced the guiding principles agreed by the UN High-Level Climate Champions. The principles state that “Rigorous accounting of lifecycle emissions from hydrogen production, and ambitious ceilings on those emissions, are key to prioritize climate-aligned hydrogen deployment” and that “Renewable hydrogen is the only option strictly aligned with a reliably 1.5-degree energy sector pathway”.
- Jonas Moberg, CEO of GH2, introduced GH2. GH2 was launched in September 2021 as a Swiss non-profit foundation. On 4 November, GH2 announced the development of the GH2 Green Hydrogen Standard, rejecting the use of the term ‘clean hydrogen’ to conflate the outlook for green hydrogen based on renewable energy and hydrogen based on expanding the use of fossil-fuels.
- Sam Bartlett, a Director at GH2, outlined GH2’s approach. The GH2 Green Hydrogen Standard comprises three pillars:
- Rigorous accounting of greenhouse gas emissions – guaranteeing close to zero emissions. The GH2 Standard addresses total greenhouse gas emissions, guaranteeing that green hydrogen is based on renewable sources with close to zero emissions. The GH2 Standard is rigorous, yet practical, with carbon accounting procedures and thresholds that can be applied consistently to grid and off grid production.
- Environmental, social and governance performance. The GH2 Standard tracks the overall social, environmental and governance impact of GH2 certified green hydrogen.
- The development impact. The development of the green hydrogen sector can provide developing countries with zero-carbon energy to support energy sector development, increase energy security and create export opportunities. The GH2 Standard requires that the development impact of any GH2 Standard certified green hydrogen is assessed based on the Sustainable Development Goals (SDGs).
The expert roundtable was structured around these three pillars.
- Parallel session 1 discussed the emerging consensus on the methods for accounting for greenhouse gas emissions, as outlined in the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE) Working Paper on Methodology for Determining the Greenhouse Gas Emissions Associated with the Production of Hydrogen. Neha Rustagi, Technology Manger- U.S. DOE Hydrogen and Fuel Cell Technologies Office introduced the IPHE methodology, highlighting the consensus achieved to date and the issues that are subject to further discussion, including materiality consideration and the emissions associated with delivery and storage. She also highlighted recent developments related to the bipartisan Infrastructure Investment and Jobs Act (the Bipartisan Infrastructure Law) and the DOE Hydrogen Program. Tasnim Choudhury, Senior Policy Adviser, Hydrogen Production Strategy at the UK Department for Business, Energy & Industrial Strategy (BEIS) introduced the work undertaken to consider options for a UK low carbon hydrogen standard. Antoine Vagneur-Jones from BloombergNEF and Anna Freeman from the Clean Energy Council Australia highlighted the need to avoid duplication and align GH2’s work with emerging standards and lessons learned at the regional and national level.
- Parallel session 2 considered the ESG performance of green hydrogen projects. Guiding questions included: (i) How should the GH2 Standard be aligned by other renewable energy sustainability standards? (ii) What ESG considerations specific to green hydrogen need to be addressed? (iii) Should the GH2 Standard require renewable additionality? And (iv) Which transparency and accountability standards should be included (e.g., contract transparency, beneficial ownership, free prior and informed consent)? Nienke Homan, former regional minister of Groningen province, Northern Netherlands and GH2 Board member highlighted the importance of integrating the concerns of communities where green hydrogen is produced and where it is consumed. Ms Homan shared her experience of building trust on green hydrogen with communities in Groningen where fossil gas extraction has led to earthquakes in the region. Gavin Hayman from the Open Contracting Partnership highlighted the importance of a consultative approach to green hydrogen contracting including innovative feedback mechanisms and access to information to ensure that relevant contracts are open, fair and efficient. Erica Westenberg from the Natural Resource Governance Institute shared her observations on the wider ESG ecosystem including the proliferation of standards and materiality of financial and non-financial information (and “double materiality”) drawing on experience from the oil, gas and mining sectors. She emphasised the importance of addressing the sector-specific governance and political risks in host countries that are often overlooked by ESG standards. João Costa from the International Hydropower Association (IHA) highlighted the need to align GH2’s standards with existing best practices in the energy sector. He emphasised the usefulness of ESG reporting to help better understand and communicate the benefits and risks related to projects and the views of affected stakeholders on sustainability issues. The group also discussed the importance of identifying appropriate criteria for measuring water and electricity use.
Day 1 concluded with a presentation from Sara Edmonson from Fortescue Future Industries who delivered a clear message about the urgent demand for a credible green hydrogen certification process to unlock market opportunities and scale-up of supply and use.
- Parallel session 3 focussed on how can GH2 can reinforce emerging regional and national standards. Bert den Ouden introduced the HyXchange project in the Netherlands, noting that green hydrogen imports would need to be eligible for Renewable Fuels of NonBiological Origin (RFNBO) status under the EU’s Renewable Energy Directive. He highlighted the urgency of this work, and the need for GH2 to align with these efforts. In subsequent discussions, participants highlighted a number of issues of wider relevance in the EU, including concerns regarding blending and additionality. Thomas Koch Blank, from RMI and the Hydrogen Catapult, presented a series of insights, drawing on RMI’s experience in developing MiQ to tackle methane emissions from the oil and gas sector. Noting developments in the US (clean hydrogen hubs, production tax credits), Germany (CCfD), the EU clean hydrogen alliance and Australia’s clean hydrogen industrial hubs, he noted the need for “comprehensive compatibility”. Simon Baker from Fortescue Metals Group highlighted the momentum in the market, noting that proposed additionality requirements and geographical/temporal matching of renewable power production and consumption in some jurisdictions could sharply curtail and disincentivize green hydrogen production. Noting recent research, the group briefly considered whether 1kg CO2E / 1kg H2 was a reasonable threshold. This required further clarity on the system boundary.
- Parallel session 4 focussed on how to address the potential development impact and SDG performance of green hydrogen projects. Heino von Meyer from the International PtX Hub Berlin presented the environmental, economic, social and governance (EESG) Framework. The group discussed opportunities for green hydrogen projects to demonstrate direct contributions towards in particular SDG 7 (Ensure access to affordable, reliable, sustainable and modern energy for all) and SDG 8 (Decent work and economic growth). There are opportunities to draw further lessons learned from renewable energy and hydrogen projects and develop principles for how to maximise development potential. A common and evidence-based approach to describing expected development outcomes with reference to key SDGs could also be used to demonstrate development impact of projects to development finance institutions. In addressing SDGs in a green hydrogen certification scheme, it was emphasised how such a component should prevent setting the bar higher for green and making it less competitive with grey and blue hydrogen.
Day 2 concluded with a wrap up session chaired by Jonas Moberg, CEO of GH2. The closed the meeting by outlining GH2’s plans to establish a Technical Committee to advise the GH2 Board on the adoption of the GH2 Green Hydrogen Standard. He also highlighted GH2 plans to convene the Green Hydrogen Global Summit and Assembly co-hosted with the Spanish government, on 17-18 May 2022 in Barcelona.
Action items from the GH2’s inaugural workshop on the development of the Green Hydrogen Standard, 1-2 December 2021
- GH2 to establish a Technical Committee to advise the GH2 Board on the adoption of the GH2 Green Hydrogen Standard, with diverse representation from government, industry and civil society.
- The GH2 Secretariat and the Technical Committee to make a proposal to the GH2 Board on a rigorous framework for accounting of greenhouse gas emissions associated with green hydrogen production, including:
- Application (and elaboration where needed) of the IPHE Methodology for Determining the Greenhouse Gas Emissions Associated with the Production of Hydrogen, taking into account stakeholder feedback on the IPHE working paper, further refinements and ongoing work, including on delivery and storage and the materiality thresholds for defining emissions sources;
- Incorporating considerations that are out-of-scope for IPHE, in particular life cycle analysis and embodied emissions, e.g., by drawing on the work undertaken by the National Renewable Energy Laboratory (NREL, September 2021).
- Reviewing existing and emerging certification approaches at the national and regional level to ensure “comprehensive compatibility”
- Establishing a clear procedure for certification and accreditation, including thresholds, data standards, requirements for onsite emissions monitoring and independent / third party verification to assess compliance.
- The GH2 Secretariat and the Technical Committee to make a proposal to the GH2 Board on a rigorous framework for addressing the ESG performance of green hydrogen production, including:
- Incorporating sustainability assessments into investment analysis and project decision-making processes at an early stage. Key ESG issues include: Are the social and environmental impacts of new projects fully considered? Can free, prior and informed consent be verified? Are human rights respected and promoted where the energy is produced? The GH2 Standard should address the impact on affected communities, labour and working conditions, and the prohibition of all forms of slavery, child and forced labour.
- Exploring opportunities to align GH2’s treatment of ESG considerations with emerging best practice in the renewable energy sector, such as the International Hydropower Association (IHA) Hydropower Sustainability Guidelines on Good International Industry Practice, and similar efforts in the wind and solar power sector.
- Further consideration of good governance considerations regarding the rule of law, fiscal regime, benefit sharing, local content and CSR. This should also address transparency and accountability requirements, including contract/PPA transparency, beneficial ownership disclosure, and other considerations.
- The use and management of water resources requires close attention, ensuring that water is sourced responsibly from renewable sources without compromising the needs of the future.
- The GH2 Standard also addresses adherence to best practice health and safety standards in green hydrogen production, storage and transportation.
- Addressing additionality. Accelerating the production and utilisation of green hydrogen requires a large increase in the production and utilisation of renewable energy, particularly wind, solar and hydroelectricity. There are concerns that green hydrogen could overwhelm existing renewable energy capacity. There are also concerns that additionality requirements and geographical/temporal matching of renewable power production and consumption is discriminatory and will sharply curtail green hydrogen production, paradoxically bolstering the case for (unproven) blue hydrogen as an interim solution for establishing hydrogen markets.
- The GH2 Secretariat to host a closed-door meeting with international financial institutions and multilateral development banks to consider how to rapidly increase support of renewable energy and green hydrogen production in developing countries and emerging markets. To achieve the necessary scale-up of green hydrogen production and use, the development finance community will need to join forces to increase public and private capital for green hydrogen development. This in at least three ways:
- By scaling-up concessionary and blended finance;
- By sharing, managing and lowering political and other risks for private investors;
- By delivering technical assistance and capacity building of hosting governments
Subject to feedback from with international financial institutions, the GH2 Secretariat to convene and facilitate additional meetings.
- The GH2 Secretariat to explore opportunities to test and pilot certification methods together with supporting companies.
- The GH2 Secretariat to consult widely and address the expected costs for developers and funding considerations related to maintaining / monetising the GH2 standard.