Ensuring Ensuring third country green hydrogen suppliers can support Europe to meet its energy security and decarbonisation ambitions
Today the Green Hydrogen Organisation, strongly encouraged by a group of companies including Adani, AM Green, CWP Global, Fortescue, Hero Future Energies, and Hygenco, have written to European Commission Executive Vice Presidents Teresa Ribera and Stéphane Séjourné, and Commissioners Dan Jorgensen and Maroš Šefčovič to appeal to them to hold the line in making the low carbon hydrogen economy happen in Europe.
Read the letter here
We write “Now is the time to hold the line rather than water down the impressive mandates for renewable energy and green hydrogen which have been established. To do so would threaten the existence of our nascent sector.”
The much touted draft Clean Industrial Deal, due to be launched on Wednesday, 26 February, is right to observe that “Building a business case for decarbonised products also requires concrete measures on the demand side”.
While there is a lot of promising language in the Clean Industrial Deal, it is not clear if the Commission and the EU as a whole, really will hold the line. Rather than doubling down on the industrial transition, there is a clear risk that the enabling of the gas economy will kill off genuinely low carbon efforts.
In the letter, we call on the European Commission:
1) Not to dilute the targets under RED III by expanding support for “low carbon” hydrogen with fossil fuels. The draft Clean Industrial Deal refers to that the delegated act must clarify the rules for low carbon hydrogen in a “pragmatic way”. Any pragmatism resulting in a generous understanding of what is low carbon runs the risk of undermining genuinely low carbon hydrogen.
2) Not to modify the RFNBO Delegated Acts. While we are open to extending the transition period for RFNBO conditions, companies have spent two years preparing projects on the basis of the February 2023 RFNBO Delegated Acts. Changing the criteria defining RFNBOs now would bring uncertainty and potentially undermine significant decarbonisation efforts already under way. The challenge our industry is facing relates to customer demand rather than the definition of RFNBOs.
3) To urgently open the international pillar of the European Hydrogen Bank and enhance support for lead markets. The H2Global scheme which also subsidise the purchase of green hydrogen and derivatives from third countries via an intermediary has shown much promise and we see important synergies to linking both schemes under the European Hydrogen Bank for imports, and to the recent signals supporting lead markets such as steel and fertilisers in the EU. We implore the Commission to ensure funding support remains limited to RFNBO compliant hydrogen, and not introduce financial support for ‘low carbon’ fossil hydrogen.
4) To clarify the concept of “bidding zone” for third countries. While the European Commission allows for “equivalent concepts [to “bidding zone”] provided the objective of this Regulation is maintained and the provision is implemented based on the most similar concept existing in the third country concerned”, third country producers would benefit from the ability to confirm with the European Commission which equivalent concepts are acceptable by country. This certainty would lower the investment risk associated with our multibillion Euro projects.
Companies in third countries with plans for large scale production of renewable green hydrogen and associated derivatives such as green ammonia wish to support Europe in reaching its targets for renewable green hydrogen.
The bigger picture is grim. The falling price of renewable energy and battery storage is not translating into green fuels and products. The transition of the hard-to-abate sectors such as steel, fertilisers, cement and shipping is too slow. The business case is not yet clear. Governments need to do more through both rules and support, so that genuinely low carbon alternatives can compete with fossil-fuel alternatives.
The EU Commission has in recent years been ambitious in driving change. It has however not been sufficient in lead markets like steel and fertilisers. Under President’s Von der Leyen’s leadership, Teresa Ribera, Stéphane Séjourné, Dan Jørgensen and Maroš Šefčovič deserve everyone’s support in standing firm.
Jonas Moberg,
CEO, GH2