The new EU climate law hides pitfalls called e-fuels

The Commission has proposed targets that will require increasing the production of RFNBO, i.e. renewable fuels of non-biological origin, as well as hydrogen and green fuels, while setting targets for their use in the transport sector. For example, to decarbonise the aviation sector, the Commission proposed to impose the use of e-kerosene to airlines and whether the latter qualifies as RFNBOproducers would be sure to sell their product.

The Renewable Energy Directive is reasonably clear that hydrogen or e-fuels qualify as RFNBO only if produced with additional renewable sources; in other words, fuel producers cannot rely on existing renewables, but must implement or finance new wind and solar capacity (for example by entering into an energy purchase contract).

Although it is a positive decision, things get very complicated when renewable electricity comes from the grid, where coal and gas, in addition to nuclear power, also contribute to producing it: in this regard the European Commission has proposed a set of rules to ensure that RFNBOs are only produced when wind or solar is actually generating electricity, but the hydrogen and e-fuels industry has managed to undermine the way in which the delegated act applies this principle of additionality; following a last minute rethinking, the Commission decided to exempt all hydrogen and e-fuel production starting before 2027 from having to contribute more renewables to the grid, and this exemption will last as long as these units continue to operate. In addition, the Commission doubled the 2030 target for hydrogen and e-fuels, following the Russian invasion of Ukraine, but the ten million tons of green hydrogen to be produced in the EU will require more than all the onshore and offshore wind energy that the European Union currently generates, among other things at an extremely delicate moment, with the price of electricity skyrocketing and families and businesses are struggling to pay their bills.

Diverting much of the existing wind and solar energy away from their most efficient use, targeting it for the production of hydrogen and e-fuels, according to some analysts, is not a forward-looking move, especially considering that in order to address the shortage that renewable energies will not be able to meet, it will be necessary to a large extent to resort to mostly gas-fired power plants.

In this context, the Transport Environment (T&E)European Federation for Transport and the Environment, asking for some flexibility during the initial phase of the hydrogen industry, but in doing so the early movers, that is, the fastest companies in sniffing out earning opportunities, they would find themselves having large subsidies and high sales margins being able only to supply “greenwashed” instead of “green” hydrogen and e-fuelsbecause they would have no obligation to invest in the development of renewables.