MEPs vote to remove additionality principle for renewable hydrogen production

Additional reporting by Gary Hornby

LONDON(ICIS)–Members of the European Parliament voted to approve an amendment to the renewable energy directive on Wednesday that dramatically altered the criteria for producing renewable hydrogen, potentially overriding key components of the European Commission’s draft delegated act.

When voting on the Renewable Energy Directive (RED) on Wednesday, MEPs narrowly carried the key amendment, which alters the rules for producing renewable fuels of non-biological origin (RFNBO), also known as renewable hydrogen, by 314 votes in favour to 310 against.

Overall, hydrogen is considered renewable if the power source is from a renewable asset. This can take the form of direct connection between an electrolyser and a renewable asset, or it can be via a renewable power purchase agreement.

However, further criteria to label hydrogen as renewable were included in the directive and via a draft delegated act from the commission, which Amendment 13 on Wednesday largely overrode.

ADDITIONALITY SCRAPPED

One of the most debated points to the directive’s Article 27, which described the rules for producing RFNBOs, was the principle of additionality. It stated that a renewable asset “comes into operation after, or at the same time as, the installation producing the renewable liquid and gaseous transport fuels of non-biological origin”.

This meant that only new renewable capacity could be used to produce renewable hydrogen, preventing hydrogen producers from potentially singing a renewable power purchase agreement with existing assets.

However, Amendment 13 does not include an additionality principle. Therefore, following the MEP vote, no such criteria will apply to producers of RFNBO.

Markus Pieper, the rapporteur responsible for the revision of the directive, said at a press conference following the vote that “we have ensured that [the criteria for hydrogen production] doesn’t become excessively complicated”.

One of the key arguments for the inclusion of additionality criteria was to prevent current renewable power being directed away from the decarbonisation of the current power system, rather than being distributed to hydrogen production.

The European Commission’s draft delegated act to Article 27 also included principles of additionality for both direct and indirect connection between a renewable asset and a hydrogen production facility.

For direct connection, the renewable asset needed to come online within three years of the hydrogen plant, whereas with indirect connection additionality was not set to come into place before 2027. After 2027, the renewable asset needed to come into operation within three years of the hydrogen plant.

“We have sent a message to the commission, that you do not need to make the energy transition so complicated, so expensive. We don’t need gold-plated hydrogen,” Pieper said at the press conference. “We need hydrogen now.”

QUARTERLY MATCHING AND LOCALISED PRODUCTION

Another key component to Amendment 13 was how it handled the balancing and reporting of power produced from a renewable asset and used by an electrolyser.

Under the commission’s draft delegated act, power from a PPA needed to be used within the same calendar month of its production up to 2027. After 2027, power had to be used within one hour.

This is known as temporal correlation and has also been a key debate across the hydrogen sector, with some participants arguing it is too restrictive.

Amendment 13 allowed for quarterly balancing of power used for renewable hydrogen production. This means that an electrolyser operator could still consider their hydrogen as renewable power production and offtake was aligned over the course of one quarter.

The amendment noted that from 1 January 2030, the balance of power could be achieved either on a monthly, quarterly or yearly basis, but that temporal correlation would depend on assessment from the commission. New temporal criteria would apply to plants in existence prior to 2030.

Further, within the draft delegated act, a PPA could only be signed with a renewable asset within the same bidding zone or, if in a neighbouring bidding zone, the power price must reflect exports to a more expensive bidding zone.

Amendment 13 however noted that PPAs could be signed with assets in the same or neighbouring countries.

Lastly, the amendment noted that the criteria apply to imports of hydrogen to the EU.