The delegated act on additionality has finally been adopted
The European Commission has finally published the delegated act on additionality. The definition is the key to determining that the proposed targets of the Renewable Energy Directive are being met. Goals that would make industrial and transport sectors gradually replace grey hydrogen with green hydrogen and create new markets.
It has taken over three years for the European Commission to provide a framework defining renewable hydrogen and hydrogen-based fuels. The process has been long and bumpy, but the announcement is welcomed by the hydrogen sector, which has been eagerly waiting for the rules to be finalized so companies can finalize investment decisions and business models.
“A far from perfect regulation is better than no regulation at all. Finally, there is clarity for industry and investors and Europe can kick-start the market for renewable hydrogen. This comes at a critical time, with the US setting a very high benchmark with its production tax credits, in the form of the Inflation Reduction Act, attracting more and more investment towards their clean hydrogen gas market.”Jorgo Chatzimarkakis, CEO Hydrogen Europé
This new regulation requires that renewable hydrogen is exclusively produced with additional renewable power sources and that the hydrogen is only produced during the hours that the renewable energy resource produces electricity (hourly temporal correlation), and only in the area where the renewable electricity resource is located (geographical correlation). These strict rules can be met, but will inevitably make green hydrogen projects more expensive and will limit their expansion potential, reducing the positive effects of economies of scale and affecting Europe’s ability to achieve the targets set in RepowerEU. The role of governments will be crucial in supporting this sector and narrowing the price gap between renewable and conventional hydrogen.
“Thanks to the involvement of the European Parliament, many parameters have improved significantly,” said Chatzimarkakis. “The European Commission will carry out a review process by 2028 at the latest on the introduction of hourly correlation from 2030, and so it could avoid treating renewable hydrogen unequally to any other electricity-consuming sector,” he added.
Importantly, the regulation also comes with a transition period, which means that so-called “first-movers” can be exempted from additionality until 2038 for installations that were commissioned before 2028, something that is needed to get the sector going.
Vätgas Sverige’s CEO, Björn Aronsson, believes that it is a shame that people want to over-regulate the clean hydrogen that is needed in our industry, energy system, transport sector, etc.
“There is still a relatively large room for manoeuvre until 2038 for those who build correctly today, and at that time the market and its mechanisms and tools are more developed, so you will still have made a good choice.”Björn Aronsson, CEO of Vätgas Sverige
For more information:
- European Commission press corner: Commission sets out rules for renewable hydrogen