Hydrogen Industry Scores EU Win With Draft ‘additionality’ Proposal

By May 24, 2022 5   min read  (888 words)

May 24, 2022 |

Fuel Cells Works, Hydrogen Industry Scores EU Win With Draft ‘additionality’ Proposal

The European Commission has drafted new rules clarifying how “green” hydrogen produced from renewable energy can be legally counted as “additional” and verified as such. The draft rules are seen as a boon for the fledgling European industry.

Green hydrogen produced from renewable power is seen as a potential silver bullet to decarbonise hard-to-abate industrial sectors like steel and chemicals, which currently rely on fossil fuels and cannot easily switch to electricity.

Earlier this month, the EU’s electrolyser industry committed to increasing its manufacturing capacity tenfold – to 17.5 GW per year by 2025 – in an effort to boost green hydrogen production in Europe.

However, there is concern that the EU’s push for green hydrogen will cannibalise renewable electricity meant for other uses – such as providing clean power for industry or electric vehicles.

To avoid this issue, the European Commission is drafting rules to ensure that power installations providing electricity for green hydrogen are “additional” to other uses of electricity.

On Friday (20 May), the EU executive published draft rules – known as a “delegated act” in EU jargon – to decide what can be counted as “additional”.

These draft rules, which are up for a four-week public consultation, could be a boon for the fledgling European hydrogen industry. In December 2021, a broad industry coalition sent a wish-list to the EU executive, saying the additionality delegated act “is a decisive factor determining whether the EU will achieve its Hydrogen Strategy 6GW target by 2024 and 40GW by 2030”.

All of their major demands, including a softer transition from the current fossil gas-based hydrogen production to green hydrogen, seem to be met by the draft Commission rules.

“In order to ensure that the renewable hydrogen is produced from renewable electricity, the production of renewable electricity should take place at the same time as the consumption of electricity for the production of renewable hydrogen,” the draft rules stipulate.

In addition, “there should be no electricity grid congestion between the electrolyser producing renewable hydrogen and the installation generating renewable electricity,” they add.

In order to demonstrate that production and consumption take place at the same time, “hydrogen producers should show that production of renewable hydrogen takes place in the same calendar hour as the production of the renewable electricity or that renewable electricity that has been locally stored during such time periods is used.”

To be considered “additional”, the renewable power capacity will have to enter operation “not earlier than 36 months before” the electrolyser is installed.

“Where additional production capacity is added to an existing” electrolyser, “the added capacity shall be considered to be part of the existing installation, “provided that the capacity is added at the same site and the addition takes place no later than 24 months after the initial installation came into operation,” according to the draft rules.

But environmental groups are not so happy.

“These appallingly lax rules would turn what could have been a clean fuel of the future into a polluting one reliant on yet more fossil fuels,” said Dominic Eagleton, senior gas campaigner at climate NGO Global Witness.

“This is pure greenwashing,” he said.

Similarly, Michaela Holl of the German climate think-tank Agora Energiewende was sceptical of the draft.

The “last-minute addition of a grandfathering clause for renewable hydrogen-producing installations pre-2027 that can contract existing [renewable energy] capacity could result in a shopping spree for electrolysers within the next five years,” she warned.

“Facilities under the grandfathering rule can profit from existing renewables that taxpayers and consumers paid for over the past 20 years,” she said.

In essence, this could mean that companies would load up on electrolysers to make use of the laxer rules before 2027. Through the use of long-term contracts, the laxer rules could then be used well into the 2040s.

“In the documents, we can see no limits on the duration of these contracts with already existing renewables capacity,” Holl said. According to her, this means “the grandfathering clause effectively allows for non-additionality without a time limit going also beyond the end date for the transition period”.

The industry has described the draft rules as “a decisive factor” for meeting the EU’s green hydrogen goals.

“Hydrogen has become centre and core to the energy transition as seen in the REPowerEU action plan. Investment certainty and legal clarity have never been more important for our industry,” said Jorgo Chatzimarkakis, CEO of the industry association Hydrogen Europe.

“We stand ready to work to further improve the delegated acts to ensure climate action is at its core,” he added.

The issue remains contentious as the European Commission may not be on sound legal grounds.

“With this grandfathering clause [the European Commission] moves away from the need to ensure additionality for the electricity directly and indirectly used in the transport sector set out in the underpinning renewables directive,” Holl said.

The draft rules are open for a four-week public consultation ending on 17 June, after which the Commission will then table its final proposal. The draft text will then be submitted to scrutiny by the European Parliament and the 27 EU member states in the Council, which have four months to scrutinise it.

“Delegated acts” are sensitive because the two EU co-legislators can only reject the Commission proposal, but cannot amend it. If EU countries fail to reach the required majority to reject the plan, it is automatically approved after four months.



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