New EU legislation sets out what is counted as “green” hydrogen in the EU
It is finally official - the European Commission delegated act for methodology under which hydrogen, hydrogen-based fuels or other energy carriers can be considered renewable (Renewable Fuels of Non-Biological Origin, RFNBOs) enters into force on 10 July 2023.
The long-awaited legislation is binding in its entirety and directly applicable in all member states and applies to import as well, providing operators and investors in the field regulatory certainty.
The rules are relatively strict and establish e.g., requirements for additionality and temporal and geographical correlation to ensure that the increased hydrogen demand is supported by the creation of new renewable electricity generation capacities. The RFNBOs must be produced from additional renewable electricity generated at the same time and in the same area as the RFNBO production, or certain other requirements must be met to demonstrate that the hydrogen production supports decarbonisation and complements electrification efforts.
However, the delegated act provides several different options, i.e., criteria for counting the electricity used in the RFNBO production and further the produced RFNBO renewable, and transition period rules are in place providing operators time to adjust to some the requirements. Hence, there is some flexibility for the fuel producers in the criteria. It remains to be seen how effectively the different criteria can be met in different bidding zones.
Electricity can be acquired in two ways to an RFNBO production facility, either through a direct connection or from the grid. When there is a direct connection between the electricity production and the RFNBO production facility, additionality is required. Additionality means that the electricity generating facility needs to be additional new production. When electricity is taken from the grid, the first option is that the average proportion of renewable electricity exceeds 90% in the bidding zone where the RFNBO is produced and the production of RFNBOs does not exceed a maximum number of hours set in relation to the proportion of renewable electricity in the bidding zone.
The second option is that a renewable PPA is in place, emission intensity in the bidding zone is lower than 18 gCO2eq/MJ and requirements of temporal and geographical correlation are met. The third option is that there is a renewable PPA in place and the requirements of additionality and temporal and geographical correlation are met. The fourth option is that the fuel producer produces an amount of renewable electricity in its own installations that is at least equivalent to the amount of electricity claimed as fully renewable, and the requirements of additionality and temporal and geographical correlation are met. The fifth option is that the electricity used in the RFNBO production is consumed during an imbalance settlement period and the RFNBO production reduces the need for re-dispatching renewable electricity production. More detailed rules are determined in the delegated act.
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