The EU Low Carbon Hydrogen Delegated Act

Introduction

The EU plans to finalize its definition of low-carbon hydrogen via a Delegated Act in November 2024. InfluenceMap research shows heavy engagement from parts of the energy and heavy industry sectors that are pushing for a weak definition for low-carbon hydrogen. Without intervention from positive actors, it is possible that these interests will be successful in this agenda, which might jeopardize the Act's effectiveness as well as the EU’s ability to meet its own climate goals, as outlined in the European Green Deal. The Commission is currently in its agreed four-week consultation period, in which stakeholders can provide feedback. This consultation is currently available on the "Have Your Say" website. 

Background on the Low Carbon Hydrogen Delegated Act

In December 2021, the European Commission introduced the Hydrogen and Decarbonised Gas Market Package (Gas Package), a review of the EU’s policy framework for regulating the gas market. The Commission’s Inception Impact Assessment communicated the need to progressively phase out unabated fossil gas via electrification and facilitate the uptake of renewable and low-carbon gases. Among other measures, the review included rules for defining low-carbon hydrogen (produced using fossil gas with carbon capture and storage or biomass). 

In March 2024, the EU reached an agreement on the Gas Package, which was officially adopted in June, defining what qualifies as low-carbon hydrogen. According to the agreement, low-carbon hydrogen must produce 70% less greenhouse gas (GHG) emissions than traditional hydrogen made from fossil fuels (referred to as the GHG emissions threshold rule). Supplementary legislation in the form of a Delegated Act will be introduced to clarify how this threshold will be met, addressing key issues such as: 

• Inclusion of life-cycle GHG emissions, including indirect emissions (which occur if new fossil gas production is added to meet demand for low-carbon hydrogen, thus increasing overall GHG emissions);

• Hydrogen and methane leakage, which if not accounted for, could undermine GHG emissions savings; and

• Performance of carbon capture and storage, including carbon capture rates, which, if low, would result in high GHG emissions from hydrogen production.

The inclusion of the above measures in the definition, as proposed by the EU Commission, will be critical to ensure that low-carbon hydrogen contributes to the energy transition and that the EU meets its own climate goals, as outlined in the European Green Deal.

Corporate Engagement on the Delegated Act

InfluenceMap has tracked consistent lobbying efforts from entities in the energy, utilities, and heavy industry sectors to weaken the definition of low-carbon hydrogen. This started with advocacy against the Gas Package and has continued with advocacy on the Low Carbon Hydrogen Delegated Act. The most significant trends are detailed below:

• Members of the energy, utilities, and heavy industry sectors have called for greater flexibility in meeting the 70% GHG emissions threshold, while also advocating for delaying the inclusion of leakage detection in the definition. This could increase the risk that "low-carbon" hydrogen production leads to higher overall GHG emissions due to resulting new fossil gas infrastructure, hydrogen and methane leakage, and poor carbon capture rates. 

• This advocacy has come from industry associations such as Gas Infrastructure Europe (GIE), Eurogas, European Steel Association (Eurofer), FuelsEurope, the International Association of Oil and Gas Producers, and Hydrogen Europe, to which a range of companies including Engie, RWE, Fortum, Uniper, Snam, Enagás, Air Liquide, thyssenkrupp and Polish Oil and Gas Company (PGNiG) retain membership. 

• Some entites, including Polish Oil and Gas Company (PGNiG) and the association European Chemical Industry Council (Cefic), appear to reject any GHG emissions threshold at all in the definition of low-carbon hydrogen, instead advocating for a "technology neutral" approach to the production of hydrogen. 

• Companies such as Snam and industry association Eurogas, advocated for an extensive role for fossil gas in producing hydrogen, in contrast to the Commission’s ambition of avoiding locking in demand for fossil gas.

• Conversely, industry association WindEurope, which includes members such as Enel, Iberdrola, and EDF, has supported a robust definition that takes into account full lifecycle emissions, excludes carbon offsets, and introduces leakage monitoring.

Other relevant corporate engagement:

• In June 2023, the Renewable Hydrogen Delegated Act was passed as part of the EU’s Renewable Energy Directive. In the consultation period for this delegated act, entities engaging negatively with the legislation included Enagás, RWE, Engie, and associations Eurogas, Hydrogen Europe, EUROFER, Cefic, and FuelsEurope.

• In contrast, electric utilities and renewable energy entities were supportive of the Renewable Hydrogen Delegated Act, including Enel, Iberdrola, EDP, and association SolarPower Europe. 

• InfluenceMap also detected similarities between EU and US corporate advocacy on hydrogen policy with entities stating that the proposed requirements in the US Clean Hydrogen Tax Credit are too stringent and costly.  Companies that engaged from the heavy industry and energy sectors, include Air Liquide, LyondellBasell, BP, TC Energy, Shell, and National Grid.