In a press release, the France Hydrogène association announces that the European Commission unveiled on July 14 a set of proposals aimed at adapting the Union’s policies on climate, energy, land use, transport and taxation so as to reduce its net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.
The main measures concerning hydrogen concern four texts, among around fifteen, and concern transport (CO emissions2 light vehicles, infrastructure for alternative fuels, air and maritime transport), the reform and extension of the carbon market, directives on renewable energies and energy taxation.
Extension of the carbon market
The Commission proposes to further lower the overall emissions ceiling and increase its annual reduction rate: gradual and total abolition in 2027 of free emissions quotas for aviation, alignment with the global compensation regime and Carbon Reduction for International Aviation (CORSIA) and integration for the first time of maritime transport emissions between 2023 and 2025. To address the lack of emissions reduction in road transport and buildings, a new, separate emissions trading system is put in place for the distribution of fuel for road transport and buildings for 2026. Member States will have to spend 100% of their revenues from trading of emissions to projects linked to climate and energy. Thus, all traffic within the European Economic Area will be well covered, but traffic to and from third countries will only be 50% covered. The production of renewable and low-carbon hydrogen (including by electrolysis) falls within the scope of the EU-ETS, but is allocated free quotas, which producers can resell. The EU-ETS, however, poses social challenges, with a risk of increasing the price of fuel at the pump.
Directive Red III
The Renewable Energy Directive raises the production target so that the share of energy produced from renewable sources reaches 40% by 2030, compared to 32% initially. The proposal would be complemented by national contributions to achieve the collective objective. While the current directive sets a target of at least 14% renewable energy in transport, the proposal replaces this volume target with a target for reducing carbon intensity in the sector. The obligation falls on fuel suppliers: they will have to ensure that the amount of renewable fuels and renewable electricity supplied in transport will achieve a 13% reduction in carbon intensity in the sector by to 2030, with European certification of “renewable” fuels (including hydrogen). A text closely linked to the FuelEU Maritime, RefuelEU Aviation regulations and the alternative fuels infrastructure directive.
2035: end of gasoline and diesel
The Commission’s new project predicts that average CO emissions2 of an automaker’s new vehicle fleet declines by 55% by 2030 for cars and 50% for light commercial vehicles. They will have to decrease by 100% in 2035 for these two types of vehicles, which de facto corresponds to the end of traditional gasoline and diesel vehicles. A proposal which is therefore favorable to the deployment of electric or fuel cell vehicles. The Commission refused to exclude the sale of new hybrid and plug-in hybrid vehicles (private and utility vehicles), contrary to recent requests from the Presidency of the French Republic following the automobile industry meeting on July 12, as well as the extension of the deadline to 2040. To allow motorists to have access to a reliable network across Europe to recharge or refuel their vehicles, the revised regulation on the deployment of infrastructure for alternative fuels will require Member States to increase their charging capacity in line with sales of zero-emission vehicles. By 2030, it will therefore be necessary to install charging and refueling points at regular intervals on major roads: every 60 kilometers for electric recharging and every 150 kilometers for hydrogen refueling. The regulation also takes into consideration the specificities of heavy vehicles, for example refueling stations with a dispenser of at least 700 bars.
Air transport
The ReFuelEU Aviation directive aims to develop sustainable aviation fuels (SAF) in air transport, with deployment objectives. The definition of SAF is referred to the definitions and sustainability criteria provided in the Renewable Energy Directive, also revised. From 2025, air transport fuels supplied at EU airports must contain 2% sustainable fuels. This share will increase in stages every five years and sub-objectives are planned for synthetic fuels:
• at least 5% SAF, including 0.7% synthetic fuels in 2030;
• at least 20% SAF, including at least 5% synthetic fuels in 2035;
• at least 32% SAF, including at least 8% synthetic fuels in 2040,
• at least 38% SAF, including at least 11% synthetic fuels in 2045;
• at least 63% SAF, including at least 28% synthetic fuels in 2050.
The directive targets airports with more than one million annual passengers or more than 100,000 tonnes of freight. Airports in the outermost regions are exempt. To prevent companies from refueling with kerosene outside the EU, they will be obliged to buy at least 90% of their fuel at EU airports. If an airline has difficulty refueling, it can refer the matter to the European Aviation Safety Agency (EASA). Very specific reporting obligations to the EASA will also be imposed annually on companies concerning their fuel consumption, including on the nature and origin of the raw materials used for their production and the emissions produced throughout the cycle. life. Fuel suppliers will have to report fuels supplied to European airports in a fuel traceability database. States will finally be able to impose financial sanctions on companies, airports and fuel suppliers in the event of non-compliance with their obligations.
Energy tax
The directive, which dates from 2003, sets minimum rates for the taxation of energy products and electricity. However, these no longer have any effect, because, due to lack of indexation to inflation, their real value has eroded over time. Thus, the revision of the energy taxation directive proposes to remove certain exemptions, for example in the aviation and maritime transport sectors, and other incentives for the use of fossil fuels, while promoting the adoption of clean fuels (see the ReFuelEU Aviation and FuelEU Maritime initiatives). From 2023, hydrogen becomes an “energy product” falling within the scope of the directive if it is used as fuel (transport) or fuel (heating). Minimum fuel tax rates are no longer set by volume, but based on the energy content of fuels (tax rate expressed in euros per gigajoule). Minimum rates are reduced for 10 years for several fuels and energies that can contribute to decarbonization (notably “low-carbon” hydrogen), and are set at €0.15 per gigajoule.
Carbon border adjustment
Finally, a new Carbon Border Adjustment Mechanism (CBAM) will set a carbon price for imports of certain products to prevent ambitious climate action in Europe from causing “carbon leakage”.
The importers concerned are the producers of electricity, iron and steel, aluminum, cement and fertilizers, because they are large emitters, subject to the EU-ETS for European companies and very exposed to international trade (and therefore to these leaks ). Prices will be correlated to those set on the carbon market. These prices (and therefore CBAM revenues) will be very low as long as the European producers concerned continue to receive free quotas on the EU-ETS (until 2036). The revenues generated – estimated at 10 billion euros in 2030, according to the Commission – will mainly go to the European budget (and will cover the operating costs of the CBAM). An opportunity for the low-carbon reconversion of the industries concerned, such as for steel, opening the way to a zero-carbon production sector for primary steel using green hydrogen, for example. Hydrogen production is currently not affected by the mechanism, but the Commission could study its inclusion from 2026.
