RED II Draft Delegated Acts - The missing pieces of the EU’s hydrogen puzzle
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Next level of discussions regarding clean hydrogen in the EU and how it compares to the emerging regime in the UK.
The Renewable Energy Directive 2018/2001/EU (RED II) came into force in December 2018 as part of the “Clean energy for all Europeans” package, establishing ambitious collective targets for the production and use of renewable energy in the EU.1
RED II led Member States to search for alternative and effective solutions to achieve such ambitious goals, with renewable liquid and gaseous transport fuels of non-biological origin (RTFNBOs) taking on a pivotal role. Under RED II, RTFNBOs are fuels made from renewable sources (other than biomass and nuclear) which, with current technology, generally translates to hydrogen-based fuels.
But RTFNBO’s are of wider relevance than their name may suggest. Under the amendments to RED II proposed as part of the Fit for 55 package, RTFNBO’s will become RFNBOs, dropping the “transport” label and being of wider relevance to even more ambitious decarbonisation targets for the use of renewable energy in the industrial and buildings sectors.
Attention on the role of RTFNBOs (or RFNBOs) in the future European energy mix has become even more acute in the context of the European energy crisis triggered by Russia’s military invasion of Ukraine. The European Commission’s commitment under the RepowerEU Communication to reduce its dependency on fossil fuel imports will almost certainly accelerate the development of clean hydrogen and hydrogen-based fuels for European markets. Furthermore, the race for RTFNBOs is even more relevant given the current grains crisis caused by the conflict in Ukraine and the suspension of exports by India due to an alarming heatwave – events that will undoubtedly have an impact on the production of biodiesel.
RED II delegated the establishment of the methodology, through delegated acts, for determining: (i) the criteria that the renewable electricity used in the production of RTFNBOs needs to meet so that these fuels can be counted as fully renewable; and (ii) how the greenhouse gas (GHG) emissions associated with such fuels are calculated so as to determine whether such fuels would give rise to the 70% GHG emissions savings required under the terms of RED II.
After much delay and speculation, on 23 May 2022, the European Commission finally published drafts of the long awaited RED II delegated acts:
- the draft RED II Art 27(3) delegated act establishing the criteria for RTFNBOs classification (the Green Hydrogen Rules); and
- the draft RED II Art 25(2) and 28(5) delegated act setting a minimum threshold for GHG emissions savings of recycled carbon fuels and the methodology by which to assess the GHG emissions savings from RTFNBOs and recycled carbon fuels (the Greenhouse Gas Emissions Rules).
The draft delegated acts are open for public consultation until 17 June 2022 on the European Commission website. After the consultations are concluded, the European Commission will propose a final text to the European Parliament and the Council, who will exercise a two-month scrutiny period over the documents; if no objections are raised, the two delegated acts can enter into force.