EU renewable H2 definition to enter into force in July
The EU's delegated act defining renewable hydrogen is bound to enter into force next month, after it was published in the bloc's official journal on 20 June.
The regulations will formally enter into force 20 days following the publication, meaning on 10 July.
A four-month scrutiny period for the European Parliament and member states expired last week, with neither rejecting the definition that had been put forward by the European Commission in February. The commission's proposal had already been more than a year overdue.
The process of settling on a definition involved extensive discussions between stakeholders on specific aspects, such as whether hydrogen produced with renewable energy from existing installations would count as renewable (see infographic).
With the definition being finalised, project developers and other industry participants will at last get the certainty that they have long called for. Understanding what will count as renewable hydrogen will be crucial not only for subsidy schemes, such as the European Hydrogen Bank, but also for consumption mandates in industry and transport which took a major step towards realisation recently.
The rules will apply to projects within the EU and abroad. Industry participants have indicated that exporters in some regions, such as the Middle East, may prefer to send their supply to key demand centres in Asia-Pacific rather than to Europe because they perceive the EU's renewable hydrogen definition as too strict. The EU's rules for grid-connected projects, especially the requirement to match renewable power supply to hydrogen output on an hourly basis from the start of 2030, could drive up costs for producers, project developers have said.
While the definition brings certainty for now, it may be adjusted later in the decade. The commission is to review the definition by 1 July 2028 under a clause in the EU's revised Renewable Energy Directive (RED III).
Related news posts
Indonesia aims to launch 15 CCUS projects by 2030
Indonesia aims to launch 15 CCUS projects by 2030
Singapore, 5 July (Argus) — Indonesia aims to bring 15 potential carbon capture and storage (CCS) and carbon capture, utilisation and storage (CCUS) projects onstream between 2026-30. Indonesia has carbon storage potential in 20 basins, comprising 573bn t of saline aquifer storage and 4.8bn t of depleted oil and gas reservoirs across Sumatra, Java, Kalimantan, Sulawesi and Papua, according to the country's ministry of energy and mineral resources (ESDM). The government is pushing for the Sunda and Asri basins as well as the Bintuni basin to become CCS hubs, said the ESDM's director of upstream oil and gas business development, Ariana Soemanto. Indonesia in January issued a presidential regulation on the implementation of CCS activities, which sets out the framework for the country's CCS development. CCS development in Indonesia can be undertaken via two pathways under the regulation, said Ariana. The first is the implementation of co-operation contracts in existing oil and gas areas by upstream contractors. The second pathway allows parties to establish a separate CCS business through target injection zone exploration permits and carbon storage operation permits. The regulation also allows CCS operators to set aside 30pc of the storage capacity from international sources. Singapore was the first country to sign an agreement with Indonesia after the regulation was issued, to co-operate on cross-border CCS. Countries such as Malaysia and Indonesia have the storage space to sequester captured CO2, but not the funds to develop the infrastructure. Direct government investment is necessary to develop and install CCS infrastructure such as pipelines, and carbon pricing could be a solution . Indonesia also launched its carbon exchange in September last year. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil’s senate rejects additionality rule for green H2
Brazil’s senate rejects additionality rule for green H2
Hamburg, 5 July (Argus) — Brazil's senate has rejected an amendment to a hydrogen regulatory framework draft bill that would have introduced a green hydrogen definition with an additionality requirement. The draft law already includes a definition of "low-carbon hydrogen", describing any hydrogen with maximum life-cycle greenhouse gas emissions of 4kg of CO2 equivalent per kg. It also includes a definition of "renewable hydrogen" which refers to hydrogen made from "renewable sources, including solar, wind, hydraulic, biomass, biogas, biomethane, landfill gases, geothermal, tidal and oceanic". The proposed amendment would have added a separate narrower "green hydrogen" category to specifically denote hydrogen made from either solar or wind power assets that enter into operation not more than 36 months before the bill becomes law. This was intended to encourage the development of new renewable power assets, although an exception would have been made for projects located in "subsystems" of the electricity mix where renewables have a 90pc share. But the senate voted against adding this category, alongside other amendments that were also rejected. The EU included an additionality requirement in its definition of renewable hydrogen and derivatives . Brazilian producers not complying with this might struggle to export their products to the bloc as they would, for instance, not count towards EU targets for renewable hydrogen use. But the EU also provides an exception from the rule for projects connected to electricity systems that have a 90pc renewables share. This could include many parts of Brazil, given that the country's overall renewables share in the electricity mix was 93pc in 2023, according to the Brazilian ministry of mines and energy. Additionality is also a key requirement for accessing hydrogen production tax credits in the US, but Australia recently decided against such a rule for its own production tax credits . Brazil's senate had already approved the main hydrogen regulatory framework bill on 19 June . Having now decided on the proposed amendments, the senate has forwarded the bill to the chamber of deputies which already passed the law once but has to review it as some changes were made in the senate. Besides defining the different types of hydrogen, the draft bill also outlines plans for certification and for incentives in support of hydrogen production, consumption and transport. These include low-carbon hydrogen production and consumption tax credits, for which an 18.3bn Brazilian reals ($3.3bn) budget has been set aside for 2028-32. Producers could get tax credits of up to R6.58 per kg of output . By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU, German banks eye H2-focused fund for Argentina
EU, German banks eye H2-focused fund for Argentina
London, 4 July (Argus) — Argentina could gain a €200mn ($216mn) hydrogen-focused funding to spur investment in the country, EU commissioner for energy Kadri Simson has said. "We're looking into how we can replicate [in Argentina] a €200mn funding platform currently being rolled out in Chile for developing projects for producing and using renewable hydrogen," Simson said this week. The European Investment Bank and German development bank KFW have been leading the work, she added, but she gave no firm timeline for the idea. External sources of public funding could be vital given Argentina's new leadership has told the sector it plans to provide a clear framework but to expect no public funding as the administration is short on money. Argentina plans to this month present legislation to develop its hydrogen industry. The same European institutions have previously committed €200bn towards a $1bn platform in neighbouring Chile which plans to open applications in the third quarter of 2024. It is unclear if other global financial institutions may rally around the Argentina scheme as they have done in Chile. So-called blended finance funds have gained traction over the past year to de-risk projects and unlock investment in developing countries. Similar platforms have been launched in Namibia and South Africa. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: RAG says EU lacks clear hydrogen storage rules
Q&A: RAG says EU lacks clear hydrogen storage rules
Brussels, 4 July (Argus) — RAG Energy Storage has been one of the front-runners in hydrogen storage, and established the first operational commercial underground hydrogen storage (UHS) in a depleted gas field in April 2023. Argus spoke to its managing director Georg Dorfleutner, who is calling for a clear framework. Are you OK with the EU apparently scaling back from 10mn t/yr of hydrogen imports? We base the modeling of the report for HeartforEurope more or less on 2030 projections from the RepowerEU strategy. The assumptions on our modelling to identify an investment gap for hydrogen storage were rather conservative — that the only demand would come from industry, thus a rather flat profile over the year without seasonal-shift needs yet. From our side we have multiple potential hydrogen storage projects throughout Europe, but the hydrogen market development and support regimes for infrastructure investments will define the timely realisation. How might any scaling back affect your report's projected 36 TWh H2 storage gap? Whatever happens infrastructure needs to be in place very soon. Our report really underlines the need for a clear framework for hydrogen storage. And we come with a toolbox of different possible measures to support this. Storage tariffs alone won't solve the issue of market ramp-up. Policymakers may feel relieved that the gas and hydrogen decarbonisation package was finished before the EU elections. But our report is more or less saying that this alone will not do the trick. Could a strict EU definition of low-carbon hydrogen hinder growth? The wider and more pragmatic the definitions of low-carbon hydrogen are, the easier market ramp-up will be. Market ramp-up is enormously important for infrastructure. You don't build infrastructure just for demand over the next two years but for the next 10-15 years. Do we need more tailored financial support for UHS, at EU and state levels? There's simply no tailored financial support right now. There's a little aid for hydrogen storage research projects. Currently, policy-making appears focused on whether or not hydrogen infrastructure has to be unbundled. As for financial support, we're completely out of the picture for now. And there's this idea that regulated tariffs make commercially viable projects. But that's not true. It's only booked capacity based on a cost-covering approach that delivers a financially viable project. You don't build infrastructure just to have nice infrastructure without customers. Do we need EU and member state UHS targets? We're not looking for a strict mandatory goal. But if there is a certain goal for hydrogen uptake in the market, then you should ensure that you have the necessary infrastructure in place. That said, targets may be helpful at state level in setting a framework for state aid. But we also have to recognise that Europe is very diversified. Some areas may have very well-functioning hydrogen supply while other landlocked countries might depend on longer supply chains, thus being more dependent on storage. Are markets ready for UHS? Firms are already approaching us. The market is willing, but they need to know what the costs are. The best way forward then is providing clear rules for storage and giving industry a clear pricing idea. There also need to be clear state support mechanisms until we get to cheaper hydrogen and sufficient infrastructure utilisation. In the process of creating UHS capacities we need to keep in mind the SOS for natural gas, which currently is crucial. That's why we focus on new sites — caverns, porous reservoirs and aquifers — rather than repurposing. But at some point, post-2030 with a market ramp-up, decisions on repurposing gas into hydrogen storage will need to be taken. Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more