The European Commission is preparing to launch an EU-wide database to certify the carbon footprint of hydrogen and other low-carbon fuels in a harmonised way.
The carbon certification of hydrogen production – currently 96% reliant on fossil fuels – is seen as crucial to introduce some transparency and traceability in the emerging EU market for low-carbon fuels.
To achieve this, the Commission is planning an EU-wide database, which is due to be unveiled in December as part of a package of EU laws aimed at decarbonising the gas sector.
The new scheme was first announced earlier this year by the EU’s energy commissioner, Kadri Simson as part of the revision of the bloc’s renewable energy directive.
“This will include a comprehensive certification for renewable and low-carbon fuels and gases. And it will come with an updated set of incentives to promote the use of these fuels in various sectors,” she said back in February.
Aiming for 100% green hydrogen
“All renewable and low-carbon fuels need robust certification across the life-cycle to help achieve both energy and climate targets,” the European Commission later wrote in its July amendment to the EU’s renewable energy directive.
Western European countries, which need large quantities of clean hydrogen to decarbonise their energy-hungry industries, have already told the Commission they would welcome such a move.
“Common definitions for hydrogen…as well as a robust, transparent and easy to implement certification mechanism for hydrogen, are prerequisites for informed decision-making by consumers and the development of a fast growing hydrogen market contributing to climate neutrality in 2050,” reads a position paper signed by Austria, Belgium, France, Germany, Luxembourg, the Netherlands and Switzerland.
“The development of a harmonised certification system, in both a European and international context, should be of the highest priority for the European Commission,” the seven countries wrote in the paper.
Clean hydrogen is seen as a potential silver bullet to decarbonise industries like steel and chemicals, which cannot fully electrify and need energy-dense fuels to generate high-temperature heat for their industrial processes.
The European Commission says it will play a key role to achieve the EU’s climate goals, estimating that 24% of global energy demand in 2050 could be met with clean hydrogen.
The business case for certification
96% of hydrogen consumed in Europe today is fossil-based, which is why the European Commission is putting its hopes on so-called “green hydrogen” produced from renewable energy sources.
However, green hydrogen is currently more expensive than fossil-fuel alternatives, making carbon footprint certification a crucial prerequisite to grow the market.
“The real purpose of certification is capturing the premium value of renewable and low-carbon hydrogen,” said Matthieu Boisson, manager at hydrogen strategy consultancy firm Hinico.
“Without a certificate, you cannot prove that you’ve produced a premium product,” explained Boisson who is also project manager at CertifHy, an EU-led initiative for hydrogen certification.
These certificates, which are so far voluntary, are called “Guarantees of Origin,” or GOs.
Electricity producers already rely on GOs to certify power generated from renewable sources like wind and solar. This allows them to sell their electricity at a premium, and enables companies like Google to validate claims about carbon neutrality.
Hydrogen certificates are a recent addition to the GO family. They were introduced in 2019, and are delivered by a coalition called CertifHy, which delivers information on the energy source, the production plant, the time of production, the product’s carbon intensity and the date of issuance of the certificate.
But the GO system is not mandatory at the moment, and calls have been growing in the industry to put a harmonised system in place at EU level.
The regulatory incentive of certification
Another major incentive to put an EU-wide certification system in place is regulatory compliance.
To meet the EU’s 2030 climate objectives, the European Commission has proposed doubling the share of renewables in the EU’s energy consumption – from 20% currently to 40% by the end of the decade.
In order to be counted as a renewable fuel under the EU’s renewable energy directive, hydrogen and other e-fuels must be certified as a so-called “renewable fuel of non-biological origin,” or RFNBO. In addition, they must be able to demonstrate emissions savings of “at least 70%” compared to fossil fuels while meeting sustainability criteria such as those defined by the German energy agency (DENA).
To do this, EU countries “shall require economic operators to show that the sustainability and greenhouse gas emissions saving criteria…for renewable fuels and recycled-carbon fuels have been fulfilled,” the Commission says in its proposed update of the EU’s renewable energy directive.
EU countries therefore have a vested interest in making the certification system work, as they risk having to pay fines if they fail to meet their targets.
The emission saving criteria
A central question, however, is to define these “sustainability and greenhouse gas emissions saving criteria”.
According to the EU’s green finance taxonomy, hydrogen production must achieve a 70%-73.4% reduction in emissions compared to fossil fuels in order to qualify as a “sustainable” economic activity.
Whether that 70% emission reduction threshold is appropriate will be subject to further debates in Brussels as the Commission prepares its gas package that will further define the criteria for hydrogen and other synthetic fuels.
“There are concerns that the 70% target in the taxonomy for hydrogen production is too lax to ensure a true net-zero pathway,” says Michaela Holl, energy expert at think-tank Agora Energiewende.
Industry associations have echoed these concerns. Even a 75% threshold would leave “room for a more ambitious approach,” said Jorgo Chatzimarkakis, the chairman of industry association Hydrogen Europe.
The Commission will further clarify the criteria for sustainability and greenhouse gas savings in its upcoming gas package, expected on 14 December.
“Additional criteria on capture and leakage rates will be necessary as part of the December package,” Holl pointed out.
The wide scope of the EU’s future e-fuels and hydrogen database also brings up a host of other challenges related to implementation.
To ensure full transparency and “prevent cheating,” hydrogen “must be founded on the ‘five Ts principle’,” Chatzimarkakis said. This means “they must be: traceable (where does it come from), trackable (where does it go), tradeable, transparent (with digital information), and trustworthy,” he told EURACTIV in a recent interview.
However, there are concerns that the complexity of the database may increase compliance costs for operators and push up the price of green hydrogen, which is already struggling to compete on the market.
“To gather all the data from economic operators regarding all fuels will be very complex,” Boisson noted. A related challenge will be “to make sure that the Union Database is properly fed by economic operators and that the data inside is qualitative,” he added.
The European Commission acknowledges this, saying the upcoming EU database “may to a certain extent increase the administrative burden and costs for economic operators, voluntary schemes and member states.”
One way of keeping costs down could be to rely on the expertise of established voluntary certification providers, Boisson said, citing CertifHy for hydrogen and RFNBOs, ISCC and REDcert for biofuels and ERGaR for cross-border trades of biomethane through the European grid.
Those “could be the gateway between data provided by economic operators and the Union database,” and make certification smoother, Boisson explained. Certification providers would also act as a filter for the EU database because they would “add a layer of expertise before receiving any data,” he said.
[Edited by Frédéric Simon]