Guest article by Michael Kalis, IKEM
The expectations associated with a green hydrogen economy are at least as high as the current obstacles – there is a lack of production capacity, competitiveness, green electricity and legal frameworks.
An example of the latter is the creativity with which colours are assigned to the innately colourless gas. Blue, green, turquoise or brown hydrogen – there are now a variety of colours that even experts find hard to understand. The different colours give hydrogen’s various sources and production processes a type of certification that is, however, unregulated. The majority of hydrogen produced currently comes from fossil fuels, and this unregulated labelling also helps to cast a more positive light on less eco-friendly processes.
In order for hydrogen to become an eco-friendly alternative, a binding colour scheme is required that allows the product and its CO2 footprint to be clearly classified. A greenhouse gas reduction quota in the respective sectors would facilitate this. It could take account of the various colours and thus production processes. Assigning different (standard) emission factors to production processes and taking account of CCU and CCS would clearly contribute to decarbonisation.
As well as a clear colour scheme, a certification system for hydrogen from renewable energies is also required, which does not incentivise the production of electricity from fossil fuels. The certified use of renewable power should be crucial for this. Based on mains electricity procurement, this certification proves to be problematic under current legislation, however. Certificates of origin only guarantee the production of a certain amount of renewable electricity within any one year. However, the energy used for electrolysis remains grey. Even with a certificate of origin, electricity production from fossil fuels may be incentivised if electrolysis occurs when green energy cannot be supplied or produced and fossil fuel power plants have to step in. Therefore, certificates of origin in this form primarily serve marketing purposes and cannot be used as a certification tool. What is needed is a system that does not result in any electricity shift that requires physical supply as well as synchronised production and consumption. That is the only way to ensure that the electricity consumed is green.
This would be possible with regulatory adjustments to certificates of origin, the introduction of regulation to pass on green properties via single-origin balance groups or, based on EU Law, by introducing a statutory presumption that makes renewable electricity procurement sufficiently probable, even in the case of mains electricity procurement.
Legislators have taken the initial steps towards making green hydrogen more competitive by reducing and/or removing the Renewable Energy Act levy for the production of green hydrogen. In order for the market launch of hydrogen to really get underway, a hydrogen colour scheme and a uniform certification system for passing the green properties of renewable electricity onto hydrogen must also be quickly established.
About the author:
Michael Kalis is a Senior Research Assistant at IKEM, with a focus on energy law. He studied law, specialising in international and European law, at the European University Viadrina and the University of Luxembourg. At IKEM, Mr Kalis’ main role is to promote innovation in the energy transition transformation process. Mr Kalis also studies the legal framework for Power-to-X applications, with a particular focus on synthetic fuels and renewable gases. His hydrogen research covers the entire value chain: from the production process, through transport, to use in final consumption. At IKEM Forschungsakademie, Mr Kalis handles issues relating to the (regulatory) principles of sector coupling, in particular.