EU to revamp market laws for hydrogen
The European Commission is expected to propose major reforms to its 2009 third energy package to boost uptake of hydrogen in the bloc.
Central to the legal proposals, which are expected to be presented on 14 December, are a plan to establish a European Network of Network Operators for Hydrogen (ENNOH) — along the lines of the existing organisations for gas and electricity, Entsog and Entsoe — by 2025, and the introduction of a hydrogen quality monitoring report by May 2026.
ENNOH would be tasked with adopting a non-binding EU-wide 10-year network development plan for hydrogen, drawing up legally binding technical network codes as well as establishing a central, web-based platform with data on the physical status and functioning of the hydrogen system.
Many of the 260 pages of legal text systematically update the 2009 natural gas regulation and directive so as to take account of hydrogen and other gases, for instance by adding the word hydrogen to rules for non-discriminatory access to natural gas systems. The texts also explicitly define low-carbon hydrogen as derived from non-renewable sources under a greenhouse gas emissions reduction threshold specified by the commission, albeit still in brackets, of 70pc.
The texts, if approved as proposed by EU member states and the European Parliament, envisage the unbundling of hydrogen network operators three years after coming into force. Member states could still allow an alternative unbundling model of an integrated hydrogen network operator until 2030 or allow vertically integrated owners of hydrogen networks to retain ownership if they ensure non-discriminatory operation after 2030. And the commission foresees the possibility of closed hydrogen systems, whereby a network transports hydrogen solely within a geographically confined industrial site.
The detailed provisions would, from 31 December 2030, require relevant hydrogen network operators to negotiate a system of financial compensation for cross-border hydrogen infrastructure. And natural gas transport system operators (TSOs) would be obliged to accept cross-border flows of gases with a hydrogen content of up to 5pc by volume. The leaked draft suggests imposing this requirement from 1 October 2025. Member states would also be prevented from using hydrogen blending as an excuse to restrict cross-border gas flows.
Additional provisions task Entsog with issuing a gas quality monitoring report by 15 May 2024 at the latest and then every two years afterwards. This would also report on the level and volume of hydrogen blended into the gas system, provide forecasts of hydrogen blending volume and the impact of such blending on cross-border flows, as well as dispute settlement procedures over gas quality and blending.
Importantly, the commission adds a new underlying reasoning to the whole market rules, which must enable "decarbonisation of the natural gas and hydrogen systems", also by integration of renewable gas and providing incentives for energy efficiency. Market rules also have to deliver "appropriate" incentives for long-term investment in a decarbonised and sustainable gas system, energy storage, energy efficiency and demand response measures.
Hydrogen network operators would have to offer their services on a non-discriminatory basis to all network users. From 31 December 2030, hydrogen networks would have to be organised as entry-exit systems, allowing users to book capacity rights independently at entry and exit points, with no tariffs charged for access to hydrogen networks at interconnection points between member states.
Related news posts
New technologies aim to boost SAF production
New technologies aim to boost SAF production
London, 26 April (Argus) — A likely rise in global demand for sustainable aviation fuel (SAF), underpinned by mandates for its use, is encouraging development of new production pathways. While hydrotreated esters and fatty acids synthesised paraffinic kerosine (HEFA-SPK) remains the most common type of SAF available today, much more production will be needed. The International Air Transport Association (Iata) estimated SAF output at around 500,000t in 2023, and expects this to rise to 1.5mn t this year, but that only meets around 0.5pc of global jet fuel demand. An EU-wide SAF mandate will come into effect in 2025 that will set a minimum target of 2pc, with a sub-target for synthetic SAF starting from 2030. This week the UK published its domestic SAF mandate , also targeting a 2pc SAF share in 2025 and introducing a power-to-liquid (PtL) obligation from 2028. New pathways involve different technology to unlock use of a wider feedstock base. US engineering company Honeywell said this week its hydrocracking technology, Fischer-Tropsch (FT) Unicracking, can be used to produce SAF from biomass such as crop residue or wood and food waste. Renewable fuels producer DG Fuels will use the technology for its SAF facility in Louisiana, US. The plant will be able to produce 13,000 b/d of SAF starting from 2028, Honeywell said. The company said its SAF technologies — which include ethanol-to-jet , which converts cellulosic ethanol into SAF — have been adopted at more than 50 sites worldwide including Brazil and China. Honeywell is part of the Google and Boeing-backed United Airlines Ventures Sustainable Flight Fund , which is aimed at scaling up SAF production. German alternative fuels company Ineratec said this week it will use South African integrated energy firm Sasol's FT catalysts for SAF production. The catalysts will be used in Ineratec's plants, including a PtL facility it is building in Frankfurt, Germany. The plant will be able to produce e-fuels from green hydrogen and CO2, with a capacity of 2,500 t/yr of e-fuels beginning in 2024. The e-fuels will then be processed into synthetic SAF. Earlier this month , ethanol-to-jet producer LanzaJet said it has received funding from technology giant Microsoft's Climate Innovation Fund, "to continue building its capability and capacity to deploy its sustainable fuels process technology globally". The producer recently signed a licence and engineering agreement with sustainable fuels company Jet Zero Australia to progress development of an SAF plant in north Queensland, Australia. The plant will have capacity of 102mn l/yr of SAF. Polish oil firm Orlen formed a partnership with Japanese electrical engineering company Yakogawa to develop SAF technology . They aim to develop a technological process to synthesise CO2 and hydrogen to form PtL SAF. The SAF will be produced from renewable hydrogen as defined by the recast EU Renewable Energy Directive (RED II) and bio-CO2 from biomass boilers, Orlen told Argus . By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK publishes SAF mandate, targets 22pc by 2040
UK publishes SAF mandate, targets 22pc by 2040
London, 25 April (Argus) — The UK will mandate the supply of sustainable aviation fuel (SAF) from next year, targeting a 2pc share in 2025, which equates to around 230,000t of SAF according to the government, and increasing the obligation annually to 10pc in 2030, 15pc in 2035 and 22pc in 2040. The obligation, which falls on the jet fuel supplier, will remain at 22pc from 2040 until it is reviewed and updated, the UK said. The mandate is subject to parliamentary approval. An EU-wide SAF obligation is also due to come into effect next year, targeting a 2pc SAF share in 2025, increasing to 6pc from 2030, 20pc from 2035, 34pc from 2040, 42pc from 2045 and 70pc in 2050. Under the new UK mandate, hydrotreated esters and fatty acids (HEFA) SAF can be used to meet 100pc of SAF demand in 2025 and 2026, but it will be capped at 71pc in 2030 and 35pc in 2040. HEFA is the most common type of SAF today, and is expected to account for over 70pc of global production by the end of the decade, according to Argus data. An obligation for Power-to-Liquid (PtL) SAF will be introduced from 2028 at 0.2pc of total jet fuel demand, rising to 0.5pc in 2030 and 3.5pc in 2040. The EU is targeting a 1.2pc share of synthetic aviation fuels in 2030, rising to 2pc in 2032, 5pc in 2035 and 35pc in 2050. To be eligible under the mandate, SAFs must achieve minimum greenhouse gas (GHG) reductions of 40pc compared with a fossil fuel jet comparator of 89g CO2e/MJ, and must be made from sustainable wastes or residues, such as used cooking oil or forestry residues. SAF from food, feed or energy crops is currently not eligible for support under the scheme, the government said. PtL SAF will need to be produced from low carbon — renewable or nuclear — electricity. Recycled carbon fuels (RCF) from feedstocks like unrecyclable plastics can also be used to meet the obligation. Hydrogen, whether used as fuel precursor or as final fuel, must be bio-hydrogen from wastes and residues, RCF hydrogen or derived from low carbon energy. The mandate will also introduce tradeable certificates for the supply of SAF, with additional certificates awarded for fuels with higher GHG emissions savings. There will be three types of certificates: PtL, standard and HEFA. Buy-out mechanisms will be set at the equivalent of £4.70/l and £5.00/l for the main and PtL obligations, respectively. Formal reviews of the mandate will be conducted and published at least every five years, with the first to be carried out by 2030, the government said. The mandate will be separate from the country's Renewable Transport Fuel Obligation (RTFO). In tandem with the publication of the SAF mandate, the government launched a consultation on four options for an SAF revenue certainty scheme aimed at guaranteeing revenue from SAF and support production in the country. The UK previously said it aims to introduce the mechanism, which will be industry funded, by the end of 2026 . The consultation includes a preferred option for a "guaranteed strike price" (GSP), which would guarantee a pre-agreed price of SAF supplied into the UK market. By Giulia Squadrin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Norway-German H2 pipeline hinges on demand: Equinor
Norway-German H2 pipeline hinges on demand: Equinor
London, 24 April (Argus) — Norway and Germany have renewed a commitment to the idea of a hydrogen pipeline, but Norwegian state-owned Equinor expects the link will come in a secondary stage of development as it is focused on hydrogen production in mainland Europe as a first step. Equinor plans to take a final investment decision in late 2025 on its 210,000 t/yr Eemshaven low-carbon hydrogen plant in the Netherlands, the company's director of H2 northwest Europe Henrik Solgaard Andersen said at the Hydrogen and Fuel Cells conference in Hanover. Equinor hopes the project will supply German buyers that participate in the country's carbon contracts for difference (CfD) auctions, which are designed to help large industry decarbonise, Andersen said. Equinor has entered the final phase of studies for the plant. The facility would reform natural gas from the Norwegian offshore to hydrogen with carbon capture and storage (CCS). Undertaking this in the Netherlands means existing pipelines can be used to carry the gas from Norway rather than having to build new links. Equinor sees this as its most mature hydrogen project, followed by one near the German port of Rostock , and one near Ghent in Belgium , according to Andersen. These "local European projects" are designed for early market development and "will be the first step," he said. Equinor expects to start large-scale production of hydrogen in Norway with pipeline exports to the continent only when there is a big enough market, he said. "You don't invest in a pipeline €4bn-6bn just for [transporting] a few molecules," he said. "You need to believe in the market." Equinor in early 2023 announced a plan to supply hydrogen from Norway to German utility RWE for use in power plants. But Berlin has shifted its plans for hydrogen power a couple of times since then. It also has ambitions to use hydrogen in sectors like steel, but companies have not yet taken firm investment decisions, meaning there is uncertainty about how much hydrogen demand will materialise and when. A joint government task force working on a Norwegian-German pipeline has identified the first regulatory barriers that need to be addressed, and private infrastructure companies will continue to study the logistics, according to an announcement from Oslo and Berlin. This will build on the positive feasibility study from last year. German gas system operator operator Gascade, which is developing the AquaDuctus North Sea pipeline connection to Germany, and Norwegian state-owned operator Gassco that is developing the Norwegian side, are aiming for a 2030 start date, the companies reaffirmed this week. Gascade has proposed an open access pipeline that would be able to aggregate hydrogen exports from England, Scotland, Norway, Denmark, and North Sea wind farms. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canada furthers investment in GHG reductions
Canada furthers investment in GHG reductions
Houston, 18 April (Argus) — The Canadian government plans to have C$93bn ($67.5bn) in federal incentives up and running by the end of the year to spur developments in clean energy technology, hydrogen production, carbon capture utilization and storage (CCUS) along with a new tax credit for electric vehicle (EV) supply chains. The Canada Department of Finance, in its 2024 budget released on 16 April, said it expects to have the first planned investment tax credits (ITCs), for CCUS and renewable energy investments, in law before 1 June. The ITCs would be available for investments made generally within or before 2023 depending on the credit. The anticipated clean hydrogen ITC is also moving forward. It could provide 15-40pc of related eligible costs, with projects that produce the cleanest hydrogen set to receive the higher levels of support, along with other credits for equipment purchases and power-purchase agreements. The government is pursuing a new ITC for EV supply chains, meant to bolster in-country manufacturing and consumer adoption of EVs with a 10pc return on the cost of buildings used in vehicle assembly, battery production and related materials. The credit would build on the clean technology manufacturing ITC, which allows businesses to claim 30pc of the cost of new machinery and equipment. To bolster reductions in transportation-related greenhouse gas (GHG) emissions, the government will also direct up to C$500mn ($363mn) in funding from the country's low-carbon fuel standard to support domestic biofuel production . Transportation is the second largest source of GHG emissions for the country, at 28pc, or 188mn metric tonnes of CO2 equivalent, in 2021. But the province of Alberta expressed disappointment at the pace of development of ITC support that could help companies affected by the country's move away from fossil fuels. "There was nothing around ammonia or hydrogen, and no updates on the CCUS ITCs that would actually spur on investment," Alberta finance minister Nate Horner said. The incentives are intended to help Canada achieve a 40-45pc reduction in GHG emissions by 2030, relative to 2005 levels. This would require a reduction in GHG emissions to about 439mn t/yr, while Canada's emissions totaled 670mn in 2021, according to the government's most recent inventory. The budget also details additional plans for the Canada Growth Fund's carbon contracts for a difference, which help decarbonize hard-to-abate industries. The government plans to add off-the-shelf contracts to its current offering of bespoke one-off contracts tailored to a specific enterprise to broaden the reach and GHG reductions of the program. These contracts incentivize businesses to invest in emissions reducing program or technology, such as CCUS, through the government providing a financial backstop to a project developer. The government and developer establish a "strike price" that carbon allowances would need to reach for a return on the investment, with the government paying the difference if the market price fails to increase. CGF signed its first contract under this program last year , with Calgary-based carbon capture and sequestration company Entropy and has around $6bn remaining to issue agreements. To stretch this funding further, the Canadian government intends for Environment and Climate Change Canada to work with provincial and territorial carbon markets to improve performance and potentially send stronger price signals to spur decarbonization. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more