EU DELEGATED ACT

Controversial Eu Delegated Act Defining Green Hydrogen Near Clearance

With the parliamentary committee on industry, research, telecoms & energy voting against official objections to definitions of green hydrogen, the European Parliament has now effectively agreed to the somewhat controversial Delegated Act.

The approval of the Delegated Act, which provides rules on how green hydrogen can be produced, regulated and subsidised, has had significant delays due to objections to definitions from centre-right European People’s Party.

With the vote against the objections passing, it cannot now be heard by the full European Parliament in a plenary session and, therefore, cannot be upheld.

While this is a significant hurdle passed for the European Commission, the key piece of EU regulation which solidifies rules still needs approval from member states. Controversial definitions of green hydrogen have caused a stir amongst some states, but the Act is still expected to pass.

Approval of the Act is imminent

The Act could be passed before the end of April 2023, with many people expecting it to come even sooner as the Council of ministers meets to discuss the Renewable Energy Directive and the Delegated Act, which is an appendix of the Directive.

High on the agenda of discussions will undoubtedly be whether nuclear hydrogen can be considered renewable. If passed, this could speed up the processes of delivering a healthy capacity for hydrogen production, but issues around emissions and decommissioning may go against the very agenda of net zero set by the European Commission.

If negotiations break down and the sector remains without a clear definition of green hydrogen, additionality and temporal correlation issues, which are already highly complex issues, may become even more compounded. This will see a continuation in the trend of FID and hamper the growth of the hydrogen economy across Europe. This has led to industry leaders in the sector taking the position of ‘any definition is better than no definition’ with future talks and improvements being able to react to the changing landscape of the hydrogen sector as it unfolds.

Issues around additionality seemingly cleared

Previously publishing the proposed Delegated Act in February 2023, additionality issues were at the heart of debates to ensure that green hydrogen is not produced using renewable energy that would otherwise have been used to provide zero-carbon electricity to the grid. There were wide conclusions that all renewable electricity used to produce hydrogen would need to be new to ensure emissions wouldn’t rise with fossil fuels making up for the loss in renewable capacity used for green hydrogen production.

Hopes that an agreement can be met on this issue are growing after an agreement on additionality was met. This explained that the additionality principle is renewable projects that came into operation no earlier than three years before the installation of the hydrogen project or its derivatives, otherwise known as RFNBOs.

Monthly Correlations are still on the cards - for now

With green hydrogen comes serious debates surrounding the intermittency of renewable power and whether the grid will be used to supply the electricity in downtime periods. Power from the grid may be from fossil fuel use, which then breeds debate around the fair correlation between grid electricity and renewable electricity.

Larger debates are swirling around under what circumstances this would be allowed and how this will be regulated to ensure it isn’t used as an off-setting mentality with extra steps. One side of the argument suggests that allowing grid use might become the default, and investment could be better spent on R&D to improve storage and tackle intermittency.

Others argue that allowing the use of grid electricity intermittently will help keep the levelised cost of electrolysers lower than if they were turned on and off, allowing for a continuous stream of hydrogen to be produced and keeping costs lower.

Trade associations have called for monthly correlations to help balance the use of the two, with the European Commission originally indicating it could be hourly. Monthly correlations are permitted until December 2029; thereafter, only hourly correlations will be acceptable.