The European Commission’s proposed methodology for defining low-carbon hydrogen has sparked controversy, with the International Association of Oil & Gas Producers (IOGP) Europe warning that it could derail crucial hydrogen projects across the continent. The draft Delegated Act, intended to stimulate investment in clean hydrogen, is instead seen as a potential roadblock by industry stakeholders.
At the heart of the issue are several contentious aspects of the Commission’s methodology. One major sticking point is the inflated emissions estimates for hydrogen produced via methane reforming with Carbon Capture and Storage (CCS). The current proposals mandate the use of conservative default values for CO2 emissions, rather than allowing producers to use actual, verified data. This approach, critics argue, fails to recognise the real-world efficiencies and advancements in CCS technologies.
Moreover, the draft Act imposes stringent requirements on methane pyrolysis co-products, limits the use of biomethane, and creates an uneven competitive landscape between different reforming technologies, such as Steam Methane Reforming (SMR) and Auto-Thermal Reforming (ATR). These restrictions could hinder the scalability and affordability of hydrogen supplies, which are crucial for energy-intensive industries.
François-Régis Mouton, Managing Director of IOGP Europe, expressed his concerns, stating, “This Delegated Act is meant to encourage project developers to take Final Investment Decisions. The current draft will achieve the opposite by stopping projects in their tracks.” He called for a clear, pragmatic, and technology-neutral approach to foster the growth of the hydrogen economy in Europe.
IOGP Europe has put forward several recommendations to address these issues. They advocate for the use of certified supplier-specific emissions data, greater flexibility in electricity sourcing through Power Purchase Agreements (PPAs), and grandfathering rules for projects that have already taken Final Investment Decisions. Additionally, they urge a pragmatic approach to hydrogen imports and more flexible provisions for CO2 storage in third countries.
The organisation also highlights the risks associated with tying the Delegated Act to future regulations that are not yet finalised, such as a methane intensity methodology. This uncertainty, they argue, could deter investment and slow down the development of the hydrogen sector.
The debate surrounding the Commission’s proposed methodology underscores the complexities of transitioning to a low-carbon economy. As Europe strives to meet its ambitious climate goals, it must navigate the delicate balance between regulatory stringency and industry pragmatism. The outcome of this debate could significantly shape the future of the hydrogen sector, influencing everything from investment decisions to technological innovation.
Stakeholders are watching closely, as the finalisation of the Delegated Act could either propel Europe to the forefront of the global hydrogen economy or leave it lagging behind. The next few months will be crucial in determining the trajectory of Europe’s hydrogen future. The industry is calling for a pragmatic approach that recognises the realities of technology and market dynamics. Whether the Commission will heed these calls remains to be seen, but the stakes are high, and the potential impacts are far-reaching.