ICIS EXPLAINS: The rules for producing renewable hydrogen

LONDON (ICIS)–On 13 February the European Commission published its rules for producing renewable hydrogen, giving European and global hydrogen market participants much-anticipated certainty to bring the hydrogen market forward.

The rules, published in the format of a delegated act supplementing the Renewable Energy Directive recast (RED II), outline the conditions a hydrogen project developer would need to meet in order to classify the power used for hydrogen production as “renewable”.

The delegated act states that its scope includes hydrogen produced both inside and outside of the European Union, meaning international market participants seeking to contribute to the commission’s target of 10 million tonnes of renewable hydrogen imports by 2030 will need to adhere to the delegated act.

For clarity, ICIS has produced the below graphic outlining the different scenarios where hydrogen may be considered renewable.

ADDITIONALITY AND NUCLEAR POWER

Two key components of the delegated act have been causing debate in Europe over recent months.

Firstly, market participants were unsure if nuclear power would be considered an exception to the conditions for renewable hydrogen. This is because nuclear power has minimal carbon emissions, and could therefore result in hydrogen production with a low lifecycle carbon footprint.

However, the delegated act shows no allowance for nuclear-based hydrogen production, stating that even grid sourced power where a grid’s carbon emissions are equal to or less than 18gCO2e/MJ would need to be underpinned by a renewable power purchase agreement (PPA).

Secondly, market participants have also indicated issues with the principle of additionality, which can be considered too restrictive given the requirement for new renewable capacity to be associated with the hydrogen plant.

In the delegated act, an exemption to additionality was included, however, that indicates allowance for first-movers. If a hydrogen plant enters operation before 1 January 2028, the additionality principle shall not apply until 2038.