Reflections on priorities for the forthcoming EU Hydrogen legislation

Abstract

Over the last two years, the European Union (EU) has made clear its intention to incorporate a large portion of low carbon and renewable hydrogen in the energy mix, from essentially zero today to as much as 20% of final energy consumption in just 28 years. This was made explicit in the context of the European Green Deal[1] by the European Commission (the Commission) in its Hydrogen Strategy, which was endorsed by the European Parliament and the Council of the European Union. Since then, the Commission has tabled its ‘Fit for 55’ package, in which some of the legal framework applicable to low carbon and renewable hydrogen was expanded, together with incentives for its production and consumption. These proposals must still go through the legislative process and no doubt many points of detail will be fine-tuned or revised. Once these proposals are agreed on and enter into force (around the end of 2025), the legal and support framework for the production and consumption of renewable hydrogen can essentially be considered to have been addressed. However, the Fit for 55 package has left the framework applicable to other forms of ‘low-carbon’ hydrogen almost completely unaddressed. In its Hydrogen Strategy the Commission recognised that, while it considered that renewable hydrogen should be prioritised, it would not suffice to achieve the EU's wider Green Deal and hydrogen objectives and other forms of ‘low-carbon’ hydrogen are needed – at least in the transition period – to rapidly reduce emissions from existing hydrogen production and support the growth of a hydrogen economy. A framework for the development of low-carbon hydrogen is therefore required. Establishing an appropriate framework to support the growth of low-carbon hydrogen is important. While it remains to be seen how the market and technology will develop, there are a number of indications that achieving the Green Deal and net-zero objectives in a cost-effective and timely manner will require significant quantities of clean but non-renewable hydrogen. The Fit for 55 package also contains no proposals regarding how the transmission and distribution of (renewable or low-carbon) hydrogen should be regulated. Getting the hydrogen transport framework right is of primary importance to the future growth of the hydrogen economy.These two key aspects will be covered in a ‘hydrogen and decarbonised gas market package’ to be tabled by the Commission at the end of 2021. In this contribution, we consider what legal and policy elements might be included in the future ‘hydrogen and decarbonised gas market package’ to address these two fundamental issues: (i) the framework to support the growth of low carbon hydrogen, and (ii) the transmission and distribution network for hydrogen.