UNLOCKING THE TRUE POTENTIAL FOR HYDROGEN IN BRISTOL

Bristol plays such an important role in driving the demand case

CREATING A GLOBAL MARKET FOR HYDROGEN: CERTIFICATION TO ENABLE TRADE

In order to create a global hydrogen market, certification models need to be widely and universally implemented so frameworks can be followed and the key pillars in the energy transition can be utilised for maximum impact.

A recent report released by IRENA highlights ways in which certification can be improved and how essential it is for the development of trading hydrogen as a commodity.

The report began: “Certification is an essential element of any trade, especially for the development of a new trade in hydrogen.”

“Certificates for hydrogen and its derivatives would contain information on compliance with standards and regulatory requirements and enable verification through data on sustainability criteria, such as carbon footprint and renewable energy content, thereby allowing differentiation from other less green products.”

Certification allows for compliance on multiple levels

Additionally, certification would also allow compliance with additional environmental, social and governance criteria to be verified and would enable hydrogen consumers to signal the demand for greener products by purchasing hydrogen that is certified as low-carbon or renewable.

IRENA, together with RMI, conducted an assessment of existing certification systems around the world to look for holes within the current process and how this will hinder hydrogen trade across the globe. The assessment was conducted by identifying the key components of a functioning hydrogen certification system and comparing these components with existing and emerging hydrogen certification mechanisms. Eight voluntary and five mandatory schemes were assessed. Within the executive summary, it was stated that: “This report is a contribution to the work on the G7 Hydrogen Action Pact – specifically on supporting the creation of regulatory frameworks for low-carbon and renewable hydrogen and its derivatives. None of the existing hydrogen certification systems is suitable for cross-border trade.”

Gaps in the standards prove to be a hindrance to hydrogen development

In addition, the report found: “There are gaps in standards and in ecolabelling and certification design, resulting in insufficient information in certificates to allow fair comparison across borders. Significant gaps exist in the following: clear information on greenhouse gas emissions produced during hydrogen production and/or transportation; common standards used; eco-labelling; and compliance with environmental, social and governance criteria.”

Offering a handful of recommendations to fix these bottlenecks, a modular approach to certification at different stages along the supply chain, where each part of the supply chain has its own sustainability criteria scope and thresholds and a single methodology to calculate the emissions intensity of all hydrogen production pathways, building on other schemes, where possible, to address key emissions sources was at the top of the list.

Further recommendations to close the gaps and avoid hydrogen market fragmentation include the need for countries to adopt the following:

• Alignment between accounting methods and policy requirements for additionality, temporal and geographical criteria for hydrogen produced using grid electricity.

• Internationally accepted methodologies to manage the blending of traded hydrogen in order to link production criteria with market requirements.

• Harmonised systems of quality infrastructure for national standards bodies to ensure fairness and accountability of hydrogen certification.

• Establish a process to facilitate mutual recognition between certification schemes for hydrogen and derivatives.

• Think beyond hydrogen and ensure continuity for the hydrogen derivatives most likely to be traded, such as ammonia.

Standards and certification (including design, governance and enforcement operational elements) ensure that the differentiation between rules and validation processes is transparent for both producers and buyers.

IRENA articulated that: “The technical components of a certification scheme are typically embedded in a standard. A standard is an agreed methodology for conducting a process.

“A standard document is agreed upon by experts in national or international settings. Standards are the result of discussion and co-operation between stakeholders – such as manufacturers, sellers, buyers, customers, trade associations, users and regulators –in a determined process.”

In the case of hydrogen, a standard is needed to provide the accounting guidance and criteria to assess renewable or low-carbon credentials.

Source: International Renewable Energy Agency

The minimum technical components that should be present in any renewable or lowcarbon hydrogen standard are outlined in the following sections.

And Business Model

Ecolabel Standards

Sustainability criteria:

• GHG footprint - scope and threshold

• Accounting guidance (data inputs, quality, measurement type, conversions)

• Other ESG compliance

Scale adoption

Roles and responsibilities of:

• Standard and certification owner

• Certificate issuing body and registry

Data handling protocol

Enforcement mechanism and non-compliance clauses

• Audit and verification based on standard criteria

• Awards certification based on audit

• Quality infrastructure

Chain of custody mode:

• Mass balance

• Book and claim

Digital credit issuing and retirement platform

• Registry

• Tradability

• Credit value

Product service

• Consumer offering (emission reductions)

• Policy and regulation - ambition and integration

• Demand aggregation

• Market engines (normalisation to other metrics)

• Common frameworks (accounting guidance)

• Harmonisation with voluntary corporate standards for emissions accountings (GHG protocol)