Hydrogen has seen an unprecedented development from an innovative niche technology to a systemic element in the EU’s efforts to transition to a climate-neutral society in 2050. It will become a crucial energy vector and the other leg of the energy transition – alongside renewable electricity – by replacing coal, oil, and gas across different economy segments.
Meeting the increased EU net greenhouse gas (GHG) emission reduction target of at least 55% by 2030 and the ambitious targets of the EU Hydrogen Strategy requires a substantial adjustment of carbon markets, rational regulatory measures, and favourable conditions for investments. Only on top of appropriate state aids, EU funding, and quotas, a well-designed carbon pricing policy will be increasingly essential to provide price signals reflecting the costs of carbon emissions and trigger the right incentives for producers and consumers to switch to clean solutions such as clean hydrogen. As such, Hydrogen Europe welcomes the European Commission’s proposals under the Fit for 55 Package of reshaping the EU’s carbon pricing policy.
Hydrogen Europe published a series of five position papers on Carbon Market Reforms. They tackle the following legislative proposals:
- the EU Emission Trading System (ETS) revision
- the phasing out of ETS free allowances and the phasing in of a Carbon Border Adjustment Mechanism (CBAM)
- the EU ETS reform for aviation
- the creation of a new, separate EU ETS for road transport and buildings emissions
- the Energy Taxation Directive (ETD) reform