Hold the line on renewables and green hydrogen in Europe
The European Commission should ignore the fossil fuel industry’s aggressive efforts to water down the EU’s support for renewable hydrogen.
The call by industry associations dominated by the fossil fuel lobby for the new European Commission to adopt a “technology neutral approach to enable cost-competitive hydrogen production” is a thinly veiled attack on the EU’s support for the deployment of renewables and green hydrogen.
Here our key points:
Do not dilute the EU’s climate friendly framework of mandates and financial support for renewable green hydrogen by expanding the use of “low carbon” hydrogen made with fossil fuels that have questionable climate credentials
To its credit the European Union has put in place demand mandates for green hydrogen introduced under the Renewable Energy Directive (REDIII). Industrial users of hydrogen must use 42% green hydrogen instead of unabated fossil-based grey hydrogen by 2030. The FuelEU maritime and ReFuelEU aviation rules also require the use of at least 1% of green hydrogen-based fuels in shipping by 2031, and 1.2% for planes leaving EU airports by 2031, rising to 35% in 2050. The EU’s renewable fuels of non-biological origin (RFNBO) framework sits within the EU’s wider binding renewable energy target of 42.5% with an aspiration to reach 45% by 2030.
The push from the fossil hydrogen industry for a “technology neutral” revised EU Hydrogen Strategy and associated financial incentives risks locking in fossil fuel dependency and inferior emissions reduction potential.
Many standards for measuring emissions from blue hydrogen (including the draft EU low carbon hydrogen delegated act) still have too many loopholes, especially with respect to upstream carbon dioxide and methane emissions and verifying the permanence of carbon capture and storage.
A weak approach to measuring emissions associated with blue hydrogen together with incentives which actually promote such hydrogen is the wrong way to go. The EU should hold the line on prioritising green hydrogen together with other major production centres like Australia and India.
There are already enough opportunities for genuinely credible blue hydrogen projects. CCS can be used to reduce emissions through the ETS. In addition, blue hydrogen and blue hydrogen derivatives are eligible under the FuelEU Maritime and ReFuelEU Aviation initiatives. There’s simply no good reason to weaken the RFNBO mandates and financial incentives by opening up for even more blue hydrogen.
In parallel to developments in the EU, the International Maritime Organization (IMO) will take important decisions this year on a global carbon pricing mechanism and fuel standard in support of its goal of net zero emissions from ships “by or around, i.e. close to, 2050” with indicative checkpoints set at reducing GHG emissions from ships by at least 20% - striving for 30% - in 2030 and at least 70% - striving for 80% - in 2040. The strategy also sets an important target of at least 5% - striving for 10% - uptake of zero or near-zero GHG emission technologies, fuels and/or energy sources by the end of this decade.
As GH2’s CEO Jonas Moberg and Professor Tristan Smith of University College London note in an opinion piece this week:
“if implemented judiciously, the additional demand for green ammonia [made using green hydrogen] from the shipping sector could have a profound and immediate impact on the development of renewable H2 and green ammonia markets globally.”
However, weak instruments could allow LNG, biofuels and blue hydrogen with questionable climate credentials to dominate which would be a disaster for truly sustainable solutions: renewable energy and green hydrogen. We need to guard against these risks in the EU and IMO.
Unlocking permitting, better infrastructure and financing to deploy renewables and green hydrogen is the better answer
The priority should be to address renewable energy permitting bottlenecks and grid development so that the share of renewables in the grid continues to increase and the dependence of fossil fuels continues to decline.
Financing for green hydrogen could also be improved through greater funding from carbon taxes and better instruments such as ensuring there is a demand side element in the European Hydrogen Bank taking inspiration from H2Global.
We know that the market for green products has not taken off as quickly as we all hoped and many of the solutions suggested across industry make sense including demand side incentives, targeting lead markets like steel, fertilisers and shipping, as well as a smarter approach to infrastructure. We just need to make sure that the solutions help renewables and green hydrogen to scale rather than allowing fossil products to flood the market.
With the right conditions in place, we can make progress. Witness the positive news in Spain with the recent announcement by Moeve that it expects to begin construction of the first 400MW phase of a 2GW green hydrogen project in Spain this summer and other positive developments on green hydrogen in the country in the last few days.
It can be done!
Joe Williams
Deputy CEO, Green Hydrogen Organisation