Low carbon hydrogen methodology for Europe set out

The low carbon hydrogen and fuels methodology set out by the European Commission should boost the hydrogen market by providing legal certainty to project developers.

Under the methodology, in order to be considered low carbon, hydrogen and related fuels will need to reach a threshold of 70% greenhouse gas emission savings compared to the use of unabated fossil fuels.

This enables low carbon hydrogen to be produced in various ways including from low carbon electricity sources and from natural gas with carbon capture, utilisation and storage.

The methodology is designed to recognise the diversity of energy mixes across the member states and takes account of both elastic and rigid inputs as well as transport and distribution and combusting the fuel in its end use.

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Rigid inputs are those whose supply cannot be expanded to meet extra demand, while in principle elastic inputs are those whose supply can be increased to meet extra demand.

Commenting, Dan Jørgensen, Commissioner for Energy and Housing, said that hydrogen will play a key role in the decarbonisation of Europe’s economy.

“With a pragmatic definition of low carbon hydrogen that respects the energy mix of all EU countries, we are providing the necessary certainty to investors. In this way, we support the growth of a sector which is key for both our competitiveness and our climate objectives.”

The new regulation does not establish the share of renewable energy that can be accounted for hydrogen produced from electricity – this aspect being set out in the Renewable Energy Directive taking an annual average approach and subject to review of the Directive by the Commission.

The Commission reports stepping up its efforts to facilitate a pragmatic implementation of the methane regulation to tackle methane emissions.

The Commission also intends to assess the impact of the introduction of alternative pathways on the energy system and emission savings and in 2026 is due to launch a consultation on a draft methodology on the use of power purchase agreements (PPAs) and nuclear energy for the production of low carbon hydrogen, aka pink hydrogen, with assessment by 1 July 2028.

The act is now subject to an up to two month scrutiny by the European parliament and the council.

Hydrogen Europe, which was among a group of gas stakeholders with concerns over the draft proposals, has welcomed the publication of the methodology stating that while the text falls well short of what is needed for a thriving low carbon hydrogen market, this final version introduces several improvements compared to the last draft.

These include a lowering of the default values of upstream CO2 emissions of natural gas, introduction of country or region-specific default values of upstream emissions in the 2028 impact assessment and the use of biomass or biofuels to lower the GHG intensity of low carbon fuels when they are used as fuels driving the process rather than feedstock.

However, the delay in the sourcing of low carbon electricity through PPAs and the treatment of hydrogen from nuclear sources will negatively impact a significant number of projects that will have to report the greenhouse gas emissions intensity of their national electricity grid, even if they are sourcing their electricity from low carbon sources.

“We are glad to see that the rules are finally adopted, and we acknowledge improvements from previous versions in reaction to strong pressure from industry, the European Parliament and capitals,” said Jorgo Chatzimarkakis, Hydrogen Europe’s CEO.

“However, the low speed of preparation and adoption of this – still very stringent act – are contrary to what Europe needs today in a complex geopolitical landscape. Our common objective of decarbonisation requires clarity and agility, not additional complexity and rigidity. The hydrogen sector deserves more than recognition in speeches; it needs a regulatory environment that supports innovation, scale-up, and practical deployment."