For years, hydrogen’s place in the EU’s climate framework has been uncertain. The fuel, which can be produced in a variety of ways, has come to be classified by a confusing array of colour codes. Green hydrogen is produced by using electricity from renewable sources to split water into hydrogen and oxygen. (If the electricity comes from a nuclear power plant, it becomes pink hydrogen.) Grey hydrogen is produced by reacting natural gas with steam, and can turn into blue hydrogen if the resulting emissions are captured and stored underground. Brown hydrogen is produced from the gasification of coal.

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So far, most hydrogen has been fossil-based, but this is changing, according to a recent report by the world’s leading producers. Technological breakthroughs have opened a new world of decarbonisation possibilities with green hydrogen. The question has become how that fits into the EU’s climate targets, particularly those for renewable energy. Last week, the European Commission adopted two long-awaited delegated acts within the union’s Renewable Energy Directive that will define the conditions under which hydrogen, ammonia and other derivatives can be considered renewable.

New EU green hydrogen rules

In future, electrolysers to produce hydrogen will have to be connected to new renewable electricity production to count as renewable. To make sure hydrogen production is not diverting renewable energy away from the grid, the rules say green hydrogen can only use “additional” amounts of renewable electricity that would otherwise not be used. EU green hydrogen production will have to be matched by additional renewable energy production on an hourly basis. The act requires proof that renewable hydrogen is only produced when and where sufficient renewable energy is available, and from 2038, that the renewable energy installations they are getting their electricity from are no older than 36 months.

The Commission has also devised a methodology to calculate greenhouse gas emissions savings from green hydrogen and its associated fuels (which can contain carbon), taking into account the full life cycle. The emissions savings must be more than 70% compared with fossil fuels to count toward the EU’s renewable energy targets.

However, all these conditions will only kick in from 2028 at the earliest. The EU’s rules for green hydrogen – domestically produced and imported – that can count towards its targets will actually be relaxed between now and then, and hydrogen from electricity produced from coal and gas could count in the interim. This is designed to stimulate the near-term roll-out of electrolysers, says the Commission. The NGO Transport & Environment (T&E), while welcoming the new rules, worries that the free-for-all over the next five years will spur a gold rush mentality.

Geert Decock, electricity and energy manager at T&E, says the clarity provided by the acts “will kick-start investments in hydrogen and e-fuels [hydrogen-derived synthetic fuels], which are crucial for decarbonising our ships, planes and heavy industry”, and that it will prevent “renewables being diverted from the grid” to produce that hydrogen. At the same time, he worries that the acts open the risk of a hydrogen rush that could displace the direct use of traditional renewable power in end-use applications. Adding to this concern is that the requirement to only use electricity from new renewable installations won't kick in until 2038, adding to the possibility that the use of those installations to produce hydrogen will mean gas and coal will have to be burned elsewhere to make up the difference.

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“Hydrogen is not a silver bullet; it still requires significant amounts of electricity to produce," Decock says. "It should only be used in sectors that need it. It makes no sense to use hydrogen whenever direct electrification is possible."

Industry welcomes clarity

Jorgo Chatzimarkakis, CEO of the Brussels-based industry association Hydrogen Europe, says that while the new rules are “far from perfect, it is better than no regulation at all”. He says the stringency of the EU green hydrogen rules due to take effect in 2028 will inhibit development of the market. “These strict rules can be met but will inevitably make green hydrogen projects more expensive and will limit its [hydrogen's] expansion potential, reducing the positive effects of economies of scale.” He notes that the Commission has promised to carry out a review process by 2028 to decide whether to actually introduce the stringent limits.

However, overall, the European hydrogen industry has welcomed the delegated acts and says they need to be urgently ratified by the European Parliament and member states. “This comes at a critical time, with the US setting a very high benchmark with their Production Tax Credits, offered under the Inflation Reduction Act [IRA], and attracting more and more investments towards their clean hydrogen market,” Chatzimarkakis says.

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The European hydrogen sector got another piece of good news one day after the acts’ publication, when the Commission issued a proposed revision to CO2 performance standards for heavy-duty vehicles (HDVs) that sets a new, broader green fuel definition. The proposal would allow a wider range of hydrogen powertrain propulsion systems to meet new, tougher green HDV standards. Hydrogen Europe estimates that at least 50,000 hydrogen trucks will be in commercial operation in the EU by the end of the decade.

E-fuel producers have also welcomed the acts but are similarly wary of the stringent conditions that will kick in later. “The industry has been waiting for legal clarity, investment and planning certainty [since 2018],” says Ralf Diemer, managing director of the industry association eFuel Alliance. "The process was at times very bureaucratic and became extremely ideologically charged. The result is a very bureaucratic act.” Diemer points to the double test EU green hydrogen must pass: one, the renewable power used to produce it would otherwise go to waste, and two, that renewable power must be proven 'additional' every hour (from 2030 at the latest; it only has to be proven additional every month until then).

“Despite the highly attractive carrot offered by the US IRA for green technologies, the Commission is holding on to the stick and pushing for bureaucratic and sometimes impractical rules,” says Diemer. He notes that a lot of decisions have been left to national governments, such as whether to start the more stringent rules in 2028 or 2030. “We risk having to wait for national implementation before we can achieve final planning certainty,” he says.

So far, national governments have reacted positively to the acts. Germany’s economy and climate ministries called it an “important step for market ramp-up of green hydrogen”, in a joint statement. France and Sweden have also welcomed the act, emerging as technological winners after three years of lobbying yielded a last-minute change that lets countries with a low-carbon electricity mix, including from nuclear power, use it to produce green hydrogen – provided they procure a similar amount of renewable power via a power purchase agreement. The exemption kicks in if the average carbon intensity of the electricity used for hydrogen production is less than 18g of CO2 equivalent per megajoule, equivalent to 65g of CO2 per kilowatt-hour. Only France and Sweden would meet this criteria through their use of nuclear energy.

Campaigners want hydrogen, but not a boom

Not everyone is excited about the stimulus to the hydrogen market. The NGO Global Witness has called the Commission’s acts “a gold standard for greenwashing” that will allow energy from coal and gas to be counted as green for the rest of this decade. “Plans to swap out the fossil gas in Europe’s pipes and boilers with hydrogen from renewables simply will not work – there is not enough of it to go around,” says Dominic Eagleton from Global Witness. “The only way to replace gas is to roll out a massive wave of renewables and energy savings.” The European Parliament and Council cannot amend delegated acts like they can with normal legislation, but they can reject them within the next two months if they choose. Global Witness is urging them to do so.

The NGO Bellona agrees, warning “the text leaves too much space for greenwashing in the short term, with a risk of increased emissions due to hydrogen production”. Ana Šerdoner, Bellona’s senior manager for industry and energy systems, says the 2030 start date for the conditions is too late, but it is still important that the new rules are there – which is better than the lack of clarity that has existed until now.

“This text means that a link between hydrogen production and renewable generation is established,” she says. “What is important now is that hydrogen is only used where better alternatives aren’t available. It will be a scarce resource for the foreseeable future and should be handled accordingly.”

So far there is no indication that MEPs or national governments will reject these acts – especially since they have been waiting for them for so long. If no objection is made, green hydrogen can start counting toward the EU's climate goals under loose conditions for the next five years, and under strict conditions thereafter. Industry has been waiting for this signal to dive headfirst into the hydrogen pool, and big investment decisions lie ahead. The question is whether the hydrogen bubble will grow so large as to displace traditional renewables. Campaign groups say they will remain vigilant to make sure it doesn’t. The next battle will likely come with the Commission’s review of green hydrogen in the EU by 2028, when industry will fight to delay the stricter conditions.