Europe has a new definition of “low carbon hydrogen”. Unfortunately, some key provisions on methane leakage have been weakened.

As we often highlight in our weekly wraps, the emergence of a clean hydrogen industry is consistently undermined by vague labels (like “clean hydrogen”) and weak standards. While everyone nominally agrees that greenhouse gas emissions should be measured comprehensively and consistently, we often see gaps and loopholes in standards and regulations that give an unfair advantage to fossil fuel-based hydrogen and put green hydrogen at a disadvantage.  

One of the biggest loopholes relates to methane. Methane is the second most abundant anthropogenic GHG after carbon dioxide. It is 28 times more potent and accounts for about 11% of global emissions. Each year we produce nearly 100 million tonnes of hydrogen, almost all of it from coal and gas. The use of coal and gas leads to very large CO2 emissions at the point of production and the debate about “clean” hydrogen often focusses on the potential to use carbon capture utilisation and storage (CCUS) to reduce these emissions. While CCUS is unproven at commercial scale and demonstration projects have consistently failed there’s another problem: the upstream emissions associated with coal and natural gas extraction and transportation. Even if CCUS worked perfectly (which it doesn’t) – blue hydrogen isn’t “clean” unless it reduces upstream CO2 and methane leakage to near zero. 

Hydrogen standards often include these emissions, but most do not require site specific measurement. Instead, they use default values which purport to account for the average upstream emissions associated with coal and gas extraction and transportation. Unfortunately, these default values are often set too low. Independent studies of methane leakage have shown that actual emissions and much higher than estimated. At GH2, we push for mandatory measurement, reporting and verification (MRV) requirements for emissions at the source level. If this data is not available, defaults should be set at conservative level to incentivise proper measurement and interventions to reduce emissions. The fossil fuel industry – not surprisingly – often rails against MRV and “maximalist” default values.  

We saw this dynamic play out this week. The good news is that the LCH DA references a world-leading regulation focussed on reducing methane emissions in the gas industry. The EU’s methane regulation will require mandatory measurement, reporting and verification (MRV) requirements for emissions at the source level, including for non-operated assets. It will also apply to imports. However, some key features of this regulation are not yet in force, and several detailed guidelines and standards to still “to be confirmed”. In the interim, the LCH DA requires hydrogen producers to use default values to calculate their emissions.  

In April, a leaked draft of the LCH DA proposed default values for upstream emissions associated with natural gas use (see table below). This took account of upstream emissions of CO2, methane and nitrous oxide for a total of 15.1g CO2 equivalent per MJ of gas. The draft LCH DA also included a 40% penalty increase, whereby these default values would increase following the implementation of the methane regulation. Several highly credible organisations – including GH2  – pushed for these default values to be increased to reflect the observed emissions in the natural gas supply chain. See: The European Commission should not allow low credibility fossil hydrogen to be classified as a low carbon fuel 

Regrettably, in the final version published on Tuesday, these defaults were substantially lowered. And the 40% penalty clause was removed entirely. 

We join many others in lamenting this rollback under pressure from the gas industry. We agree with François Paquet, Managing Director at the Renewable Hydrogen Coalition, that this “falls short of reflecting science evidence and ensuring climate integrity” and with Bellona that: “In its current form, the DA risks enabling the production or import of hydrogen against Europe’s decarbonisation goals, as it does not adhere to strict emissions accounting rules true to real-world circumstances”. The LCH DA will now go to the European Parliament and Council, who have two months (extendable two additional months) to approve or object. Neither can amend the DA.  

In future updates we will report on additional aspects, including the treatment of LNG, the utilisation of biomass, and eligibility of renewable PPAs and nuclear energy to produce low carbon hydrogen. The developments this week also show that we need to follow the implementation of the methane regulation very closely. There is already strong pressure to weaken the regulation to accommodate more LNG imports, especially from the US where the regulation of upstream emissions is also being rolled back.  

As Europe aspires to reduce greenhouse gas emissions by 90% by 2040, it should be obvious that the role for blue hydrogen is very limited. Regulation should support fossil phase-out, not create (let alone subsidise) new demand for natural gas. We need emissions thresholds that quickly trend toward zero, and where any fossil gas use is restricted to existing production rather than underwriting new exploration and development. 

These setbacks notwithstanding, the priorities are clear. Europe needs to provide clarity and certainty for further investment in renewable hydrogen, especially through member state transposition of RED III. We are also calling for greater alignment of EU and national funding schemes, e.g., through the Hydrogen Bank.   

For more on the final LCH DA and reactions from across the sector, including GH2 CEO Jonas Moberg’s comments, see the full article in Hydrogen Insight.

Sam Bartlett,

Director, GH2