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Following the recent adoption of the Delegated Act (DA) on low-carbon fuels, the EU has completed the regulatory framework for both renewable (RFNBO) and low-carbon hydrogen production. The worst case scenario has been avoided. The default emissions value for natural gas excludes key segments such as Liquified Natural Gas (LNG) liquefaction, shipping and regasification, that must be calculated separately. Yet, the prescribed emissions values still downplay the real climate impact of blue hydrogen production. The proposed rules rely on outdated methane leakage rates and fail to consider the short-term climate impacts of methane, and leave critical gaps in midstream emissions accounting. Low-carbon electrolysis hydrogen also benefits from looser rules compared to RFNBO hydrogen, creating an uneven playing field. There is a real risk of locking in high-emission hydrogen pathways under the guise of ‘low-carbon’. T&E recommends that the EU: |
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Ensures strong safeguards for calculating low-carbon hydrogen emissions: Ensure full lifecycle GHG accounting of natural gas, including an assessment of upstream methane leakage and midstream emissions as well as considering the higher short-term climate impacts of methane.
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Maintains regulatory stability : Do not reopen and weaken the GHG methodology for RFNBO rules. With both RFNBO and low-carbon hydrogen methodologies now defined, investors need regulatory stability to move projects to Final Investment Decisions.
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Focuses on supporting first-of-a-kind projects: Keep the focus on enabling Final Investment Decisions for RFNBO projects, and support long-term offtake agreements for airlines and shipping companies to ensure e-fuels can meet FuelEU and ReFuel targets, through financial mechanisms such as European Hydrogen Clearing House.
