Delivery on climate neutrality goals only works without discriminating hydrogen

The year of 2021 will be remembered by extreme weather conditions across the world: devastating floods in Belgium and Germany, massive wildfires in Greece, Turkey and Italy, heatwaves on the US Western Coast, and damaging hurricanes on the US East Coast.

The COP26 taking place in Glasgow in a couple of weeks aims to put pressure on policymakers to find solutions to tackle global warming in the most efficient, cost effective and socially acceptable way.

It is undeniable – climate change is real. The time to act is now.

As we embark on transitioning to a carbon-neutral economy by 2050, it is imperative that our choices are robust and future-proof, that policies create opportunities, not barriers and that they deliver on the climate objectives.

The EU has so far been a champion of global climate mitigation efforts, favouring hydrogen as an agent of climate mitigation.

The EU is on track to becoming the world’s first hydrogen economy ever created. This ambition is backed by the Fit for 55 legislative proposals: increasing the EU renewable energy target to 38-40%, introducing a 50% binding target for renewable fuels of non-biological origin used as feedstock or as an energy carrier, setting a 13% GHG reduction target for transport, to name a few.

Will the EU be able to champion on a hydrogen economy though? ?

As the EU institutions shape climate policies, they should bear in mind one factor: no initiative must create regulatory barriers to the creation of a net-zero economy.

From a hydrogen perspective, it is primary to make sure the targets and incentives of the Fit for 55 package do not get watered down in the Parliament and in the Council. Equally, it is key that structural challenges are adequately addressed to boost the deployment of renewable hydrogen across Europe.

To give a clear example: the draft Delegated Act on renewable fuels of non-biological origin could impose critical barriers on renewable hydrogen producers. If not adequately addressed, it will bring irreparable harm to investments in renewable hydrogen production and therefore undermine the EU’s efforts to build a climate-neutral economy.

Hydrogen Europe supports the principle of additionality but sees major risks for the development of the EU hydrogen market should it be implemented in a way that puts additional burden of complexity albeit not needed. We identify the following challenges stemming from the requirements to prove additionality, temporal, and geographic correlation:

1. ?It doesn’t allow electrolyser projects to develop and reach financial maturity. It doesn’t allow them to fully benefit from ready-to-make and perfectly timed investments and commissioning of the renewable energy. This heavily disincentivises investments into clean hydrogen technologies.
2. It doesn’t provide incentives to build electrolysers for grid balancing and flexibility services. This means curtailed renewable electricity is simply lost and taxpayers pay for flexibility services that could be generating value.
3. It imposes the need to prove the use of renewable electricity every 15 minutes. There is currently no technological, practical, and legal way of aligning hydrogen production and energy production within a 15-minute interval.

These risks will have a snowball effect on the development of the most promising EU energy innovation technology – electrolysers. In its current form, the additionality criteria disincentivises the business case for electrolysers at a time when scaling their deployment is key to delivering net zero.

Fewer electrolysers will mean less renewable hydrogen produced in the EU. Not only does this demotivate the hydrogen industry from developing, it also risks taking away jobs from Europeans and displacing European hydrogen know-how to other countries.

Another thing worth noting: these requirements apply to hydrogen producers only, and not to all users of renewable electricity. Not only is this discriminatory, this can also lead to higher uptake of additional fossil energy, which goes against the whole principle of building a net-zero economy.

Time is pressing and concrete action is needed to abate GHG emissions. This is why Hydrogen Europe urges the European Commission to not discriminate hydrogen and to remove the critical barriers in key pieces of EU climate legislation and ensure that the EU delivers on its climate objectives efficiently and effectively.