The European Commission has published draft rules for the definition of low-carbon hydrogen—which includes blue hydrogen made from reforming of natural gas with CCS, as well as pink hydrogen made from electrolysis using nuclear power.

The draft delegated acts are a key component of the revised EU hydrogen and gas market legislation, which came into force in July this year, and are designed to complement previously released guidance on what constitutes “renewable hydrogen”—made from electrolysis powered by renewables.

“The delegated acts are important because there are certain pieces of legislation where low-carbon hydrogen is specifically mentioned as supporting decarbonisation targets, for example in the maritime sector, or from nuclear to meet the sustainable aviation fuel targets in aviation,” Hydrogen Europe policy director Daniel Fraile told Hydrogen Economist.

“The delegated acts are important because there are certain pieces of legislation where low-carbon hydrogen is specifically mentioned as supporting decarbonisation targets,” Fraile, Hy-drogen Europe

Furthermore, the Renewable Energy Directive (RED III) contains a target for industry to reach 42.5% of its hydrogen use with renewable hydrogen by 2030, but if the country is also consuming non-fossil low-carbon hydrogen, those targets can be reduced. Low-carbon hydrogen could also be used in other sectors that are not subject to specific objectives—such as power generation—according to Hydrogen Europe.

RED III mandates that low-carbon hydrogen must have a greenhouse gas (GHG) emissions saving of at least 70% relative to a fossil fuel comparator. The delegated act lays out formulas for how this can be calculated for various different production methods.

“The idea is that this delegated act will provide clarity on how to get this low-carbon hydrogen, which is very important in the transition phase—the next 10–15 years,” said Manuel Villavicencio, director of the Energy and Climate Economics team at consultancy Deloitte.

However, analysis carried out by Deloitte earlier this year shows that the fixed 70% threshold is actually inadequate for the EU to meet its decarbonisation targets in the long term, and that it should become more stringent over time.

“The threshold is adequate for now but will not be restrictive enough in the future,” said Villavicencio.

To be consistent with the EU’s net-zero emission target, the carbon intensity threshold would gradually need to decrease to around 1kg CO₂e/kg of hydrogen by 2050 from the 3.38/CO₂e/kg of hydrogen set by the 70% reduction figure.

Upstream emissions

The delegated act also lays out how upstream methane and CO₂ emissions will be calculated for hydrogen produced by reforming natural gas. This has been cited by many non-profits and industry associations as an important part of the rules, as upstream methane emissions can greatly affect the overall carbon intensity of blue hydrogen.

While bespoke, project-specific emission values will be allowed for methane, CO₂ emissions calculations will be based on a single EU-wide average value. The methane regulation—passed earlier this year—is not yet in force yet but, once it is, all projects that continue to use the default methane value rather than calculating their own emissions will have to add 40% to the total.

“In doing so, this makes it nearly impossible for low-carbon hydrogen projects to comply with the emissions threshold [for low-carbon hydrogen production],” said Fraile.

“Also, while the single EU-wide CO₂ average value is not subject to the 40% addition, the fact there is no option for project-specific calculations there is not good enough and should be changed,” he added.

Hydrogen from nuclear

Prior to the release of the rules, one of the more controversial aspects in the discussions was whether industry stakeholders would be allowed to sign bilateral contracts with nuclear plants or waste incineration plants to produce low-carbon hydrogen.

Member states have had differing views over whether producing hydrogen from nuclear power should be included in the delegated act.

“Countries without nuclear power would be at an unfair disadvantage in the production of low-carbon fuels, but this could bring benefits for the hydrogen industry as a whole by accelerating electrolyser deployment and end-user adoption,” said Villavicencio.

Member states have had differing views over additionality and geographical and temporal criteria—issues that were also the source of disagreement in the renewable hydrogen delegated acts.

The controversy led the Commission to delay a decision on the issue, and in the draft delegated act it says will not revisit it until July 2028.

If the acts are passed in their current form, these two decisions on methane emissions and bilateral nuclear PPAs may seriously affect timelines for low-carbon hydrogen projects due to the ongoing regulatory uncertainty for developers.

Adding to this uncertainty is the fact the acts say that, even if producers can classify the hydrogen as low carbon, the Directorate-General for Competition still has the possibility to rule on whether a country can support the projects with state aid or not: a vital tool for project initiation and development.

“This is overly complicated, and it is creating an environment of huge uncertainty,” said Fraile.

The French government is particularly affected by this uncertainty. A scheme developed to support low-carbon hydrogen based on nuclear power—which meets over 70% of French electricity demand—originally planned to launch the first €700m ($769m) auction later this year, but is now facing delays.

“They are still discussing with the commission whether this support scheme is compatible with EU rules on state aid,” said Fraile.

Positive measures

The delegated acts do contain some measures that industry has welcomed, including a technology-neutral framework that allows for new pathways such as pyrolysis, and allows those technologies to classify CO₂ stored as solid carbon as being permanently stored.

The acts are also largely consistent with the delegated acts on renewable hydrogen in their methodologies for assessing GHG savings from renewable liquid and gaseous transport fuels of non-biological origin and from recycled carbon fuels.

The draft rules are out to consultation until 25 October.

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Author: Tom Young