EC adopts low-carbon hydrogen rules setting 70% CO2 emissions savings

The European Commission has adopted a delegated act setting out rules for low-carbon hydrogen production, with a CO2 emissions savings threshold of at least 70% compared with hydrogen from unabated fossil fuel production.

The delegated act, adopted July 8, is part of the revised EU hydrogen and gas market legislation that entered into force in summer 2024, and establishes a greenhouse gas emission methodology for low-carbon hydrogen.

The EC said the move brought clarity to the hydrogen sector.

"This is a pivotal step that provides a clear regulatory framework, unlocking investment certainty and accelerating the scale-up of clean hydrogen production across Europe," the EC said in a statement late July 8.

The methodology complements the existing delegated act for renewable fuels of non-biological origin -- renewable hydrogen and derivatives such as ammonia.

The low-carbon hydrogen methodology covers hydrogen produced via steam methane reforming with carbon capture, utilization and storage, as well as from low-carbon electricity that does not meet the strict RFNBO rules.

CO2 can either be permanently stored in geological underground formations or chemically bound into long-lasting products.

"The methodology in the Delegated Act applies a lifecycle approach that takes into account all emissions related to its production and use, including emissions from the extraction of raw materials, manufacturing, transport and use of the fuel," the EC said. It also "takes into account methane emissions and actual carbon capture rates."

Nuclear methodology

The EC also said it would launch a public consultation on draft methodology on the use of nuclear power purchase agreements in 2026 to enhance clarity on hydrogen production from such sources.

The Commission said it would consider the impact of introducing nuclear power for hydrogen production by July 1, 2028, "based on appropriate criteria and approaches considering the greenhouse gas emission intensity of electricity based on averages."

The rules of low-carbon hydrogen and fuels will apply to both domestic production and imports.

The EC also set out default lifecycle GHG emissions of various energy inputs, including with natural gas at 4.90 g/MJ of CO2 emissions, resulting in total GHG emissions of 10.3 gCO2e/MJ, taking into account methane and nitrous oxide.

Higher default GHG emissions apply to LNG, from the additional emissions from liquefaction, shipping and regasification.

The Act will now be sent to the European Parliament and Council for two months' scrutiny. The Parliament and Council can then either accept or reject the proposals. If it passes, it will enter into force and apply 20 days after publication in the Official Journal of the EU.

The Parliament and Council can extend the scrutiny period by two months on request.

Industry gives cautious welcome

The European hydrogen industry gave the news a cautious welcome, but said the delegated act fell short of what the sector needed.

Industry association Hydrogen Europe said the delegated act would provide legal certainty to project developers. However, "the text falls well short of what is needed for a thriving low-carbon hydrogen market," it said in a statement on July 9.

The group welcomed the lower default values for upstream CO2 emissions from natural gas, which were lowered from 8.4 gCO2/MJ, and the inclusion of biomass and biofuels as fuels in the production process to lower GHG intensity.

But Hydrogen Europe said the exclusion of a specific methodology on nuclear-powered electrolysis was a setback.

"This 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," it said.

"The current delegated act imposes disproportionate reporting obligations and bureaucratic hurdles that many hydrogen pioneers will struggle to manage," Hydrogen Europe CEO Jorgo Chatzimarkakis said.

"While the Commission has now backed away from its previously prohibitive value and slightly reduced the standard emissions values, it is still insisting on very complex and not fully defined procedures," CEO of German sector association Die Gas und Wasserstoffwirtschaft, Timm Kehler said in a statement July 9.

Blue hydrogen hesitancy

Blue hydrogen, while cheaper to produce than green hydrogen via renewables-powered electrolysis, has not received as much policy support in the EU, with its primary focus on renewable hydrogen to decarbonize hard-to-abate sectors.

Platts, part of Commodity Insights, assessed the cost of producing hydrogen via renewable PPA-based alkaline electrolysis in Europe at Eur8.32/kg ($9.74/kg) on July 8 (Netherlands, including capex). Blue hydrogen production by steam methane reforming (including carbon, CCS and capex) was Eur2.56/kg.

Last September, Shell and Equinor both scrapped blue hydrogen projects in Norway that were targeting exports to the EU via a proposed pipeline, citing lack of demand and policy support.