Low Carbon Hydrogen in Europe: A Call to Action

Authors: Anne-Sophie Corbeau and Erik Rakhou.

The focus of EU countries has long been on renewable hydrogen. It took at least three years for the European authorities to agree and formally define it through two Delegated Acts published in June 2023[i]. But this focus has left a definition gap regarding other types of hydrogen also providing emission reductions compared to fossil-based hydrogen, often bundled into a wider category - “low-carbon hydrogen”, a term which now requires a proper definition. This will matter not only for domestically-produced hydrogen, but also for imports of hydrogen or its derivatives.

1)???? What should be the Scope?

The discussion around low-carbon hydrogen is often centered around hydrogen produced from natural gas and occasionally from nuclear energy. But Low-Carbon Hydrogen ?should encompass hydrogen produced from a greater variety of sources with reduced carbon emissions:

• Biohydrogen: Produced from biomass feedstocks with extremely low-carbon footprints, such as agricultural or municipal waste, manure, or sewages[ii].
• Hydrogen from Natural Gas with Carbon Capture and Storage: Produced from the reforming of natural gas with integrated carbon capture and storage (CCS) technologies; this category can be enlarged to include the pyrolysis of natural gas.
• Nuclear-Made Hydrogen: Generated electrolytically using nuclear energy, which provides a stable, low-carbon electricity source. In the future, high-temperature nuclear reactors may be used to produce hydrogen thermochemically.
• Natural (or geologic) Hydrogen: Naturally occurring hydrogen, extracted with minimal environmental impact.

By-product hydrogen, such as that produced in the chlor-alkali process or during styrene or ethylene production, should also be considered within the scope of low-carbon hydrogen if the primary processes are optimized for low emissions.

2)???? Applying a Carbon Intensity consistent with the Delegated Acts defining RFNBOs

To qualify as Low Carbon Hydrogen in Europe, the carbon intensity must not exceed 3.38 kgCO2eq per kg of hydrogen, which is similar to the threshold enacted in one of the Delegated Acts for renewable hydrogen. Indeed, renewable fuels of non-biological origin (RFNBOs) need to deliver a minimum greenhouse gas (GHG) emission saving threshold of 70% against a fossil fuel comparator (set at 94gCO2/MJ)[iii]. This leads to the well-known threshold for hydrogen of 3.38 kg CO2eq/kg H2 in lifecycle emissions.

3)???? Calculating Carbon Intensity

The calculation of carbon intensity could follow international standards set by the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE). It includes calculation for all these types of hydrogen, besides natural hydrogen and methane pyrolysis[iv]. In particular, more work is needed on the carbon intensity of natural hydrogen[v]. These frameworks ensure consistency and transparency in measuring emissions.

4)???? Additionality, temporal and geographical correlation

Similar to the criteria imposed to renewable hydrogen (additionality, temporal and geographical correlation), one could impose these criteria to low-carbon hydrogen. They would be particularly relevant for nuclear-based hydrogen. However, this would also include the specific cases where the production facility is located in a bidding zone with a high share of renewables (90%+) or in a binding? zone with a low intensity of electricity (lower than 18 g CO2eq/MJ), allowing countries such as France to use nuclear for hydrogen production. A further exemption to additionality could be granted if the nuclear plant were to be decommissioned if not for the production of hydrogen from this plant. Uprates of nuclear capacity would qualify in terms of additionality.

5)???? Evaluation Timeline:

A clear evaluation timeline is critical to foster investment and scale the hydrogen industry:

• 2024-2030: Phase of substantial investments and state support to build infrastructure and production capacity, focusing on meeting the carbon intensity criteria.
• 2030-2045: Continuous evaluation of the carbon intensity of various hydrogen production methods, with a potential phase-out of domestic natural gas-based hydrogen in favor of Renewable hydrogen, contingent upon achieving the desired carbon intensity targets. Latter implies natural gas based investments,? given operational life of 20 years, to be constrained to a certain latest start-up date (eg 2030-2035).
• 2045 and Beyond: Commitment to invest in hydrogen projects subject to their even lower carbon intensity, ensuring a progressive shift towards more sustainable hydrogen production methods.

6)???? Key Risks and Mitigations

• Methane Emissions: One of the primary risks associated with natural gas-based hydrogen is methane leakage. This risk is mitigated through stringent adherence to the EU Methane Regulation and adopting best practices for methane management and capture. One potential discussion point would be which GWP should be used, either GWP100 or GWP20. The second choice would require even lower methane leakage rates. However, the IRA is currently using GREET, and the latest update is based on GWP100[vi]. Having different standards in two key markets would be utterly confusing for investors and impact potential imports from the US. Finally, methane emissions are calculated in IPHE methodology using the Global Warming Potential over 100 years (GWP100), also used by the International Energy Agency (IEA)[vii].
• Geopolitical Dependencies: Maintaining gas dependency could be perceived as a key risk in EU countries following the war in Ukraine. Eventually, any direct production of Hydrogen within EU with natural gas should be phased out to address the risk, in line with Gas and Hydrogen Package that aims to enable “shift away” and avoid “lock in” from fossil energy. To minimize geopolitical risks, Europe should adopt a wide standard for hydrogen production, encouraging diverse and decentralized sources of hydrogen – increasing portfolio effect of procuring widely globally, with market shares never exceeding 20-30%. This reduces reliance on any single geopolitical entity and ensures energy security.
• Nuclear Hydrogen Production: The role of nuclear energy in hydrogen production is subject to national decisions within the EU. Each member state has the autonomy to decide whether to opt-in or out of nuclear hydrogen production, ensuring alignment with local energy policies and public opinion.
• Biomass Utilization: Effective use of biomass is crucial, and not all types of biomass are suitable to produce biohydrogen. It is important to secure biomass feedstocks with extremely low-carbon footprints, such as agricultural or municipal waste, manure, or sewages. Hydrogen production from bioenergy must also adhere to sustainability criteria to avoid adverse environmental impacts, such as deforestation or biodiversity loss.

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7)???? Call to Action

The global upcoming period of Low Carbon Hydrogen regulation could include more stringent criteria aligned with the U.S. Inflation Reduction Act (IRA)’s objectives, rewarding faster transitions to lower carbon emissions.

Low-carbon hydrogen with the lowest emissions (for example at <0.45 kgCO2eq/kgH2, to be consistent with the lowest carbon intensity band of the IRA) would receive more support than hydrogen with higher emission intensity. Possibly, initiative like the EU Hydrogen Bank could benefit from banking on this.

The principle to follow is straightforward: the lower the carbon intensity, the greater the support and incentives.

Europe stands at a pivotal moment to lead the global transition to low-carbon hydrogen. European authorities cannot afford to spend another 3-4 years to define low-carbon hydrogen.

By setting clear standards, timelines, and robust regulatory frameworks, we can ensure the sustainable development of the hydrogen economy. Stakeholders, from policymakers to investors, must collaborate to drive innovation and scale production. Together, we can build a resilient, low-carbon future, ensuring energy security and environmental sustainability for generations to come. Join us in this transformative journey towards a greener, hydrogen-powered Europe.

[i] https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32023R1184, https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32023R1185

[ii] https://www.energypolicy.columbia.edu/publications/the-potential-role-of-biohydrogen-in-creating-a-net-zero-world/

[iii] https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32023R1184.

[iv] https://www.iphe.net/iphe-wp-methodology-doc-jul-2023

[v] https://www.sciencedirect.com/science/article/abs/pii/S254243512300274X.

[vi] https://www.energy.gov/sites/default/files/2023-12/greet-manual_2023-12-20.pdf

[vii] https://www.iea.org/reports/methane-tracker-2021/methane-and-climate-change