EU Proposal Explores Low-Carbon Fuel Alternatives to Fossil Oil and Gas
Key Ideas
  • The European Commission is considering the use of atomic power and natural gas to produce low-carbon fuels like biomethane and hydrogen to replace fossil oil and gas.
  • The proposal requires low-carbon fuels to have a carbon footprint at least 70% smaller than their fossil fuel equivalents, with considerations for nuclear power and carbon capture and storage.
  • NGOs advocate for stringent criteria for low-carbon fuel certification to ensure a genuine reduction in emissions, while trade associations push for European production and demand stimulation for green hydrogen.
  • The EU Commission is also offering financing for renewable hydrogen production and restricting electrolyser capacity sourcing to bolster European supply chains.
The European Commission has put forth a proposal exploring the use of atomic power and natural gas to create low-carbon fuels as substitutes for fossil oil and gas. The draft technical criteria, part of the revised market rules adopted by the EU in April, expand the regulation of the gas market to incorporate greener options such as biomethane and hydrogen. To be classified as a low-carbon fuel, the hydrocarbon must exhibit a carbon footprint at least 70% smaller than that of the fossil fuel it replaces. The proposal encompasses a range of applications, from kerosene for aviation and methane for heating to hydrogen for industrial processes. The initiative allows for the utilization of nuclear power for fuel production and outlines guidelines for the potential use of carbon capture and storage (CCS) to achieve the necessary emission reductions. However, the deployment of CCS must consider various factors, including the capture rate of CO2, emissions from operational activities, and transport to storage sites. Notably, the proposal acknowledges the energy-intensive nature of capturing CO2 and the inefficiencies in subsequent purification and storage processes. Advocates believe that low-carbon fuels can significantly mitigate the climate impact of transport, heating, and industry. Conversely, critics fear that these fuels might bolster demand for fossil fuels or nuclear power instead of accelerating the adoption of renewable energy sources like wind and solar. The European Commission faces pressure from environmental organizations to establish stringent certification standards for low-carbon fuels and to prioritize green hydrogen over other options. In tandem with the proposal, the Commission has announced a second round of financing for renewable hydrogen production from the European Hydrogen Bank, with a focus on promoting European production and limiting capacity sourcing from certain regions. Trade associations view this as a positive step towards building a robust European supply chain and are urging the EU to further support the adoption of green hydrogen in energy-intensive sectors like steel and chemicals production.
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