Ensuring clear and rigorous standards and methods for GHG emission measurement for low-carbon hydrogen
GH2 Letter to the European Commission - 13 December 2024
Dear Commissioners Ribera and Jørgensen,
On behalf of the Green Hydrogen Organisation (GH2) allow me to congratulate you on your appointment to the Commission. We look forward to supporting your efforts to advance the EU’s energy and climate change priorities. Your work on implementing the climate and energy framework for 2030 and enshrining 90% emission-reduction target for 2040 are vital, especially for Europe’s nascent renewable hydrogen industry.
Noting that the Delegated Act on low carbon fuels is a high priority, we take this opportunity to provide further feedback1 on the methodology for assessing greenhouse gas emissions savings from low carbon fuels. Noting recent commentary from some industry participants2, we wish to reiterate the importance of robust measurement, independent verification and public reporting of GHG emissions to ensure that low carbon hydrogen supports the realisation of the EU’s energy policy and decarbonisation objectives. To lower carbon emissions in key sectors like fertilisers, steel, shipping and aviation, we need clear and rigorous standards and methods for GHG emission measurement. Without such rigour, truly low carbon hydrogen threatens to be undercut by hydrogen with significant associated emissions undermining our climate goals.
The European Union has led the world in establishing mandates for renewable hydrogen production and use. These demand side signals are playing a crucial role in stimulating green hydrogen project development in Europe and beyond.
Any calls for flexible low carbon hydrogen definitions, fast tracking and grandfathering for early-stage project bring uncertainty to genuinely low carbon projects' viability. Allowing for low credibility fossil hydrogen to be classified as a low carbon fuel and incentivising these projects would deal a fatal blow to the renewable hydrogen industry and to the EU’s decarbonisation and energy security goals.
Recommendations
1. Require site specific emission factors for lifecycle GHG emission reporting.
We take note of oil and gas industry arguments that the DA should include “the possibility to recognize and provide adequate proof of better performance of individual projects, at each step of the production process, for all types of GHG, compared to the default values set in the Delegated Act – the latter needing regular review by the European Commission”, calling on the Commission to “explicitly clarify how economic operators will be able to showcase better performance”.
This formulation neglects the underlying problem and an obvious solution. It is well documented that the use of default values for natural gas inputs often results in the underestimation of GHG emissions3. As several oil and gas companies have acknowledged, methane and CO2 emissions in natural gas feedstocks are highly variable due to project-specific physical and operational conditions and can represent a significant source of upstream emissions4. This is particularly important when considering the values used by governments outside the EU targeting exports into Europe.
The Commission should require site specific emission factors for upstream and midstream GHG emission reporting for all economic operators, with genuinely conservative default values to be allowed only as a last resort and for this practice to be phased out this decade. As several organisations have noted, credible and verifiable carbon dioxide and methane loss data can be readily obtained from all participating natural gas supply chain segments. Requiring independently verified site specific emission factors is technically feasible, cost effective, and reinforces the incentive to decarbonise the natural gas supply chain. The costs associated with achieving this are manageable and can be offset by tariff benefits for low carbon fuel designation.
Recent analysis by the Green Hydrogen Catapult and GH2 with analysis led by RMI5 underscores the importance of robust measuring, monitoring, and verification of emissions to ensure that truly clean hydrogen can lead to national decarbonisation objectives. Our analysis shows that blue hydrogen imports from most countries (except for perhaps Norway) will not help Europe reach its decarbonization objectives and may stall emissions reductions across heavy industry and transport, even with optimistic assumptions for upstream methane leakage. Exhibit 1 below uses the case of blue hydrogen produced in the US Gulf Coast and exported as ammonia to the Netherlands.
A key finding is the importance of correctly accounting for methane leakage. The scenario illustrated above utilises an optimistic assumption for upstream methane leakage rate based on the average US national value set by the U.S. EPA (1.4%). However, actual upstream methane leakage rates for the Permian Basin upstream can be as high as 9.4%.
In the RFNBO Delegated Acts, the Commission used 9.7gCO2e/MJ as a default value for methane, corresponding to an upstream methane leakage rate of ~1%. In the most recent draft, the default value has been increased to 10.45gCO2e/MJ. This default value is still too low, especially considering the observed values in countries that are importing gas into the EU. The draft foresees a 40 percent increase on the methane intensity default value if no specific emission data has been reported. Applying only a 40 percent increase on the methane intensity default value is not sufficient and still not conservative enough.
2. The Delegated Act should not allow for early mover grandfathering where default values are fixed from the time of project FID throughout the asset's lifetime
We note calls to “maintain stable regulatory requirements during [project] operating lifetimes” to provide certainty for low carbon hydrogen first movers. Allowing producers to lock in theoretical upstream and midstream methane and CO2 leakage values creates a perverse incentive to fast-track projects with manifestly unsustainable GHG emissions. The solution for credible first movers is clear. They can achieve certainty (and remove the risks associated with default values) by adopting global best practice for robust site-specific measurement, independent verification and public reporting of GHG emissions.
3. Ensure a level playing field for the utilisation of renewable electricity
Finally, we note industry commentary that monthly matching should be allowed for low-carbon hydrogen. It is crucial that the utilisation of renewable electricity is treated consistently across all hydrogen production pathways. Some low carbon hydrogen production methods – especially ATR – utilise a substantial amount of electricity with substantial direct and indirect emissions. For renewable hydrogen, the RFNBO DAs establish strict criteria for when renewable electricity qualifies as zero greenhouse gas emissions. The same conditions should apply where LCH hydrogen producers wish to claim that they are utilising renewable electricity.
We look forward to continued strong collaboration with the Commission in addressing these issues.
Footnotes
1 Our submission to the public consultation process is available here.
2 Including the 25 Oct 2024 “Joint Statement on the Low-Carbon Fuels certification draft Delegated Act” by Eurogas et al
3 See https://www.nature.com/articles/s41467-023-40671-6
4 See DNV (2023) Review of Greenhouse Gas Emissions from Blue Hydrogen - https://theicct.org/wp-content/uploads/2023/07/ISO_blue_hydrogen_GHG_ICCT_DNV.pdf. Blue hydrogen production using ers using natural gas with steam methane reforming (SMR) captures only 55% of the CO2 emissions provides very little, if any, GHG benefit relative to fossil fuels
5 Tatarenko, Janzow and Essa (2024) Weak Emissions Accounting Can Undermine Hydrogen’s Role in Global Decarbonization, Green Hydrogen Catapult https://gh2.org/sites/default/files/2024-09/H2-Emissions-Accounting-White-Paper-Sept%202024-compressed.pdf