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EU countries urged to align green H2 rules for refining

EU countries urged to align green H2 rules for refining

Brussels, 20 November (Argus) — EU member states must harmonise the incentives they offer refineries to switch to renewable hydrogen in order to simplify investment decisions and ensure a level playing field, delegates heard at the European Hydrogen Week event in Brussels. Frontrunner countries have diverged. Germany has proposed simpler and more lucrative incentives for its fuel producers compared with the neighbouring Netherlands, while Belgium has drafted its plans but is yet to cement them until its new government settles, industry participants said at the event. To stimulate demand, these governments are working on versions of a scheme sometimes called "the refinery route" which allows transport fuel producers to generate tradeable credits if they substitute renewable hydrogen into their processes. But implementation of the scheme has been put in the hands of each EU member, which has yielded different designs even between neighbours. Industry groups from Germany, Belgium and the Netherlands argued this week that aligning their hydrogen policies would have an outsized impact and could set a direction for others. The trio account for 30pc of Europe's industry and 40pc of its hydrogen consumption, according to Dutch industry group NLHydrogen's chairman Marcel Galjee. "If we can't find agreement even in these three countries, then it becomes impossible at the European level, so let's take these countries as a start and build from there," Galjee said. Having uniform rules would simplify the calculation of the value of the incentives which is "the only way to drive investment", according to Galjee. "If we would align Germany, Belgium [and] the Netherlands, it would be much easier to determine the value of a refinery route in your business case. That is currently very difficult and it's preventing progress," he said. The Netherlands' recent proposal to deploy a correction factor to curb the value of its credits angered some refiners and industry groups . The Dutch approach to deploy a correction factor to drive more renewable hydrogen use in refineries was good thinking but bad execution, according to Galjee. The Netherlands would be better copying Germany's policies without a correction factor and then increasing the size of the Dutch quota for renewable hydrogen use in transport as a simpler way to get the demand stimulus it wants, he argued. Boosting demand was not the only intention of the correction factor, however, as the Netherlands also wanted to stop the refinery route undermining direct use of hydrogen and derivatives in vehicles. Fully copying Germany may not be a "realistic option in the Dutch environment today", and while Galjee hopes the Netherlands can move closer to Germany's refinery route system, the top priority must be that some form of the Dutch refinery route starts on time in January 2026, he said. Belgian industry also wants its government to replicate the system devised by Germany, according to Belgium Hydrogen Council chair and Port of Antwerp-Bruges chief operations officer Tom Hautekiet. "Don't try to be smart, just copy and don't change anything from the German system. I want it exactly the same, with the same multipliers, the same objectives," he said. Belgium will likely confirm its plans publicly in a matter of months, and Hautekiet is hoping the government will hear the message from industry. There could even more divergence across the rest of the bloc. Industry participants said they have found it impossible to track every country. France has also proposed a version of the refinery route, but it differs from Germany in certain other areas of hydrogen policy, which has meant the other three have found it easier to present cohesive views as a trio. The issue of fragmentation may deepen in coming months as EU member states start to transpose into national law EU mandates relating to hydrogen in industry ahead of the May 2025 deadline. This will mean even more autonomy and room for divergence. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.