Harmonizing Renewable Hydrogen Incentives Across EU Refineries for Investment Simplicity
Key Ideas
- EU member states are urged to harmonize incentives for refineries to switch to renewable hydrogen to simplify investment decisions and create a level playing field.
- Germany, Belgium, and the Netherlands are working on a scheme called 'the refinery route' to stimulate demand for renewable hydrogen, but there are differences in their approaches.
- Aligning hydrogen policies among these frontrunner countries could set a precedent for others and drive significant progress in the industry.
- Fragmentation and potential divergence in hydrogen policies across EU member states could pose challenges, especially as they work to meet the May 2025 deadline for transposing EU mandates.
At the European Hydrogen Week event in Brussels, industry participants highlighted the need for EU member states to synchronize the incentives offered to refineries transitioning to renewable hydrogen. While countries like Germany, Belgium, and the Netherlands are actively working on schemes like 'the refinery route' to promote the use of renewable hydrogen in fuel production, differences in their approaches have emerged. Germany has proposed more straightforward and lucrative incentives compared to the Netherlands, while Belgium is still finalizing its plans amidst government transitions.
The industry delegates emphasized the importance of harmonizing hydrogen policies among these leading countries given their significant industry and consumption shares. By aligning their strategies, they believe they can create a clear direction for the broader European market. The goal is to simplify the calculation of incentives to drive investments and streamline the transition to renewable hydrogen.
Concerns were raised regarding the divergence in policies, with the Netherlands facing criticism for its proposal to use a correction factor in valuing credits. Industry experts suggested that replicating Germany's approach without such complexities could be more effective in stimulating demand. However, challenges lie in balancing the implementation of incentives with ensuring the direct use of hydrogen and its derivatives in vehicles is not undermined.
While Belgium aims to adopt a system similar to Germany's, France and other EU countries have introduced their own versions of the refinery route, leading to potential fragmentation in hydrogen policies. As EU member states prepare to transpose EU mandates into national laws by 2025, there is a growing concern about increased autonomy leading to further divergence in approaches.
The industry is calling for collaboration and alignment among EU countries to create a cohesive framework for incentivizing renewable hydrogen in refineries and driving the transition towards a more sustainable energy future.