What is ‘additionality’ and why does the hydrogen industry need it?

You may be forgiven for not having been gripped by the latest bureaucratic wrangling in the EU over green hydrogen regulation but recent debates over “additionality” and the Delegated Act have important implications for European hydrogen investment.

Until Sept. 14, a key piece of EU legislation, the Renewable Energy Directive II (REDII) included a requirement that all green hydrogen projects had to source their electricity from dedicated renewable energy projects and could only use electricity from the grid when they could be offset with a dedicated supply within the hour.

The idea behind the Delegated Act was a good one: avoid a scenario whereby renewable energy was being cannibalised by the green hydrogen industry at the expense of providing clean power to the grid.

However, such was the expected burden of hourly requirements that green hydrogen investment was predicted to flee to the U.S. where, under the Inflation Reduction Act, subsidies of as much as $3/kg are on offer for certain projects.

On Sept. 14 an amendment was passed by the European Parliament allowing green hydrogen producers to source electricity from the grid so long as they can verify that it has come from a renewable source via a power purchase agreement. Verification will take place every quarter until 2030, giving hydrogen producers time to put PPAs in place if they’re not already covered.

Until Sept. 14, a key piece of EU legislation, the Renewable Energy Directive II (REDII) included a requirement that all green hydrogen projects had to source their electricity from dedicated renewable energy projects and could only use electricity from the grid when they could be offset with a dedicated supply within the hour.

But while hydrogen producers represented by lobbyist Hydrogen Europe were thrilled with the changes, others, such as trade body SolarPower Europe were not so happy, saying green hydrogen production could now cannibalise European renewable energy.

Is there a middle way? Hydrogen Europe CEO Jorgo Chatzimarkakis thinks so. Additionality is not the issue, but the complexity with how it was being implemented in RED II.

“We want additionality because we believe that additionality is the key and the catalyst for an uptake of renewable hydrogen,” he told delegates at the H2Expo in Hamburg last week. “But we have to distinguish between additionality as a principle and very complex rules to prove that.”

The challenge is that the EU is a slow and bureaucratic organisation and it could take up to 2 years to replace the Delegated Act with a replacement.

“That’s too long,” said Chatzimarkakis. “We need a delegated act. We invite the Commission to come up with a pragmatic, realistic proposal, making clear there is additionality, but you don’t need to prove it every 15 minutes. You can prove it every month.”

On Sept. 14 an amendment was passed by the European Parliament allowing green hydrogen producers to source electricity from the grid so long as they can verify that it has come from a renewable source via a power purchase agreement. Verification will take place every quarter until 2030, giving hydrogen producers time to put PPAs in place if they’re not already covered.

As for the UK, the additionality is not a mandatory requirement under the Low Carbon Hydrogen Standard. Instead, additionality is weighted at 5% of a project’s overall score when applying for government support.

The reasoning for such a low weighting is to avoid the kind of difficulties being experienced on the continent. The UK’s approach is not perfect but it does give it the regulatory certainty that green hydrogen investors are looking for.

Green hydrogen, produced by splitting water with electrolysers powered by renewable energy, is needed to decarbonise industries from steel production to transport, construction to power generation. It produces no greenhouse gases when burned or consumed in fuel cells making it the cleanest fuel on earth.

With the right regulatory framework it is an even more attractive investment.

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