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Redefining renewable hydrogen

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Renewable hydrogen will play a pivotal role in Europe’s journey to climate neutrality, however this sector, which has so much potential, needs pragmatism to ensure its scalability and competitiveness.

The EU was, at one-point, leading hydrogen development from the front but other continents have since caught up and have already passed legislation to incentivise and protect their production.

The US Inflation Reduction Act, for example, came into effect in August introducing tax credits considered so generous that shares in hydrogen companies went up by at least 75% following the announcement.

The Act reserves the highest tax cuts for truly zero emission hydrogen – channelling public resources into green solutions on a “technology neutral” basis.  

The Inflation Reduction Act’s $3/kg incentive for zero-carbon hydrogen makes green hydrogen cheaper than grey and will spur a boom in the most cost-effective forms of renewable hydrogen. This also means the cost of imported green hydrogen to Europe could be lower than any European producer can match.

In Europe, incentives for hydrogen-based fuels under the EU’s Renewable Energy Directive (RED) are reserved only for the so-called Renewable Fuels of non-Biological Origin or RFNBOs.  These are made from low carbon electricity using an electrolysis process.  While RFNBOs offer great promise there is no reason to believe that they will be the sole or even most sustainable solution to providing zero carbon hydrogen throughout the EU.

It has been argued that the European Commission would do well to understand, and recognise, the huge potential of advanced renewable hydrogen derived from sustainable waste feedstock and broaden the sources of hydrogen that can compete under the green umbrella beyond just RFNBOs. 

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Renewable hydrogen can be made from a number of green sources including wind, solar, nuclear, hydro, tidal, geothermal and biomass.  Of these, perhaps the most controversial is biomass. 

Many environmental activists have a complete aversion to the use of trees to generate energy which, they claim, drives deforestation, proposing instead that agricultural land should be dedicated to food rather than fuel production.

However, this, it has been argued, is not the full picture: increasingly, we see the enormous potential of advanced biomethane-based hydrogen from ultra-sustainable feedstocks such as straw and other agricultural  waste residues. 

When production is twinned with carbon capture and storage they together deliver a sustainability profile better than that of the RFNBOS, even net carbon negative.   Additionally, they produce large volumes of sustainable zero-emission hydrogen that will help meet the EU’s overall objectives for hydrogen and ensure that the “Repower EU” objective of producing 35 bcm of biomethane is implemented in the most sustainable and carbon-efficient manner possible.

As part of the Renewable Energy Directive (RED), the European Commission should, it has been said, redefine the term “renewable hydrogen”  through a Commission Delegated Act and address whether any non-RFNBO forms of renewable hydrogen will receive the same treatment as RFNBOs. 

The current framework heavily prioritises the RFNBOs community, which, after years of massive investment and subsidies, has, it is claimed, distorted the marketplace.

An energy sector source said, “The EU is seeking to protect an expensive sector that will not reach the bloc’s desired targets. This is preventing an open market for the rapidly changing new advanced renewable technologies.”

RFNBOs have an additional problem, and that’s the concept of additionality.  The RED ‘additionality’ clause requires operators to guarantee an hourly correlation between renewable electricity generation and the production of hydrogen via electrolysis to ensure the stable use of the electric grid. Due to the intermittent nature of wind and photovoltaic electricity, RFNBOs, which are made with renewable electricity, can only be made at specific times (that is, when the wind blows) and must have their capacity matched to available renewable power in order to avoid grid congestion.

Insider sources have it that the Commission may ditch this ‘additionality’ clause in favour of a monthly target which would allow “RFNBOs” to be partly made from fossil fuel-based electricity.

After numerous delays, this Commission Delegated Act is now imminent.  Currently, only RFNBOs have a special mandate, but renewable hydrogen is defined more broadly as hydrogen produced through the electrolysis of water (in an electrolyser, powered by electricity stemming from renewable sources), or through the reforming of biogas or biochemical conversion of biomass, if in compliance with sustainability criteria set out in Article 29 of Directive (EU) 2018/2001 of the European Parliament and of the Council. 

The Commission has a critical choice before it about whether to enforce a relatively narrow view of Europe’s hydrogen future or allow a broad set of renewable and sustainable hydrogen sources to compete to deliver cost effective zero emission hydrogen.

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EU Reporter publishes articles from a variety of outside sources which express a wide range of viewpoints. The positions taken in these articles are not necessarily those of EU Reporter.
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