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Utilities that invest in renewable energy have asked the
European Commission (EC) to drop current plans to include fossil
fuel-origin hydrogen, aka blue hydrogen, in a revision to the EU's
main renewable energy growth policy, the Renewable Energy Directive
(RED).
Spanish electric utility Iberdrola, which plans to double its 33
GW of renewable energy capacity, as well as Italian power and
natural gas company Enel, with 49 GW of renewable energy capacity
held by its renewable generation subsidiary, both signed a 31 March
letter calling for blue
hydrogen's exclusion to better align with the bloc's long-term
Paris Agreement commitments.
Wind power industry body WindEurope and the European Renewable
Energies Federation, representing sectors such as wind, solar, and
bioenergy, also signed the letter. Other trade bodies on the letter
hailed from heating-related sectors, like biofuel and heat pumps,
that often compete with natural gas.
Blue hydrogen is one of the low-carbon fuels the signatories are
hoping to exclude. "When we speak of low-carbon fossil fuels, we
refer to any form of fossil-based fuel including steam methane
reforming from natural gas and carbon capture and storage. This
includes so-called blue hydrogen," WindEurope Press and
Communications Manager Christoph Zipf told IHS Markit.
The RED's aims should be as clear as its name. "As the headline
puts it, we believe that the directive should be kept for
renewables," added Zipf.
The directive drives state support for not only renewable power
generation, but also for renewable gases like biomethane and
hydrogen from electrolysis of renewable electricity, aka green
hydrogen.
A 2018 revision (RED II) to the directive provided laws
encouraging cross-border sales of green hydrogen to companies to
use toward corporate greening targets, the Guarantees of Origin
(GO) framework, but it still excludes other low-carbon gases such
as hydrogen from natural gas, according to a 2020 paper on gas
decarbonization by The Oxford Institute for Energy Studies.
The EC in 2020 proposed introducing an EU-wide criteria for the
certification of renewable and low-carbon hydrogen "possibly
building on" parts of the directive. The EU's next revision of the
directive (RED III) could boost support for both green and blue
hydrogen through GOs, according to a paper on European hydrogen
legislation by law firm Baker McKenzie.
High levels of hydrogen investment in Europe are expected to
lead to increased green hydrogen production levels across the
continent, according to IHS Markit Power-to-X data. Today's level of blue
hydrogen production is also low, with just five large-scale
production locations, but this number could grow 20-fold by 2030,
according to an IHS Markit global hydrogen production report.
EU seeks transport fuel solution
EU member states must invest in renewable energy generation and
fuel to comply with RED II. The 2018 revision also enshrines a
bloc-wide renewable generation target of 32% by 2030, and a
renewable fuel target for road and rail transportation of 14%, both
of which are transposed into member state regulations.
To make steeper cuts to the bloc's GHG emissions, reducing them
55% from 1990 levels, the EC plans to revise policies for renewable
energy, energy efficiency, and transport. For example, the EU
target for renewables must be raised to 38.5%, the EC said in its
Climate Target Plan in December.
While the EC plans to grow renewable investment, it is also
seeking to decarbonize hard-to-abate sectors. Hydrogen "will be
crucial" for decarbonizing heavy-duty transportation as well as, in
derivative forms, the aviation and maritime sectors, according to
the EC's plan.
The directive will be expanded through certification schemes and
incentives for both renewable and low-carbon fuels, Commissioner
for Energy Kadri Simson said in a speech in February.
GO certification a test ground
Shell, for example, shares the EC's view that a revision of the
directive should include sector-specific targets to create markets
for blue hydrogen in hard-to-abate sectors, it said in its response
to the EU's consultation on the topic.
It also said that GOs should be extended to cover hydrogen
derived from natural gas, which would be essential for providing
income to producers and "demonstrating the
renewable/low-carbon/decarbonized nature of gases."
European oil refining trade body FuelsEurope, whose members
include Shell, BP, Total, and ExxonMobil, said that the EC's
proposed public-private alliance on low-carbon value chains should
work on policies "to give equal recognition to all renewable and
low-carbon technologies, according to the [EC's] principle of
technology neutrality."
The Oxford Institute for Energy Studies paper noted that if the
EU were to pivot to green hydrogen post-2030, its green hydrogen
sector might not develop fast enough to meet its targets. It
suggested that policymakers ensure a "genuine level playing field
between low carbon gases, and between gas and electricity
networks," it said.
But the EU-backed Environmental Coalition on Standards said in a
recent briefing paper that extending GOs to blue hydrogen increases
the risk of greenwashing and hurting public trust.
Utilities that supply natural gas are also fighting for the
revision to include blue hydrogen, according to a position paper on
the directive's revision from the European Network of Transmission
System Operators for Gas.
Gas networks embracing hydrogen could catch the next wave of EU
subsidy schemes as the natural gas subsidy wave appears to have
peaked. The EU is making policy changes to support its greening
ambition, within the European Investment Bank and Trans-European
Networks for Energy regulation, that could end public support for
natural gas investments, according to a recent paper by Global
Energy Monitor.
Posted 13 April 2021 by Cristina Brooks, Senior Journalist, Climate and Sustainability
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