European Council, European Parliament reach provisional agreement on hydrogen, RFNBOs

LONDON (ICIS)–The European Council and the European Parliament came to a provisional agreement on the use of hydrogen within certain sectors as part of an update to the Renewable Energy Directive, where member states agreed to a binding target of 42.5% of all energy consumption was expected to be renewable by 2030.

The provisional agreement has large implications for hydrogen demand in Europe. For the transport sector, a target of 5.5% of total consumption was to come from advanced biofuels, mostly non-food-based feedstocks, and renewable fuels of non-biological origin (RFNBO), mostly renewable hydrogen and hydrogen-based synthetic fuels.

There is also a minimum requirement of 1% of RFNBO in the share of renewable energies supplied to the transport sector by 2030.

Chief executive officer of Hydrogen Europe, Jorgo Chatzimarkarkis, noted earlier in the week at Reuters Events Hydrogen 2023 conference that he was concerned that sharing the transport target between biofuels and RFNBO would reduce total hydrogen demand, stating the biofuels could be cheaper initially and therefore market participants would opt to minimise use of hydrogen.

For industry, the provisional agreement provides that industry increases its use of renewable energy by 1.6%/year, as well as an agreement that 42% of the hydrogen used in industry is to come from RFNBO by 2030 and 60% by 2035.

However, member states can discount the contribution of RFNBO to 20% if their contribution to the overall EU target is met, or the share of hydrogen from fossil fuels in the member state is not more than 23% in 2030 and 20% in 2035.

The provisional agreement will now be submitted to member states in the Committee of Permanent Representatives in the council and then to the parliament for approval, before being formally adopted by both the parliament and the council.

COUNCIL VOTE ON LOW CARBON GASES

Earlier this week, the council agreed on negotiating positions on two proposals that set common market rules for renewable and natural gases and hydrogen.

The council clarified that tariff discounts on the gas grid for renewable gases was at 100% and at 75% for low carbon gases, as well as allowing for a general approach for a 2% hydrogen blend by volume to ensure a harmonised quality of gas.

Member states would keep the full ownership unbundling as the default model for future hydrogen networks, but may allow the independent transmission system operator model under certain conditions.

The EU has a target of a 20 million tonne/year hydrogen economy by 2030, made up of 10 million tonnes/year of renewable hydrogen and 10 million tonnes/year of renewable hydrogen imports.