In a significant move towards combating climate change and reducing greenhouse gas emissions, the European Union (EU) has unveiled the Renewables Energy Directive as part of the ‘Fit for 55’ package. This directive aims to boost the share of renewable energy in the EU’s energy consumption to 42.5% by 2030, with the potential to reach 45%. This ambitious plan is part of the EU’s broader goal to cut emissions by at least 55% by 2030. But how does this directive impact the development of green hydrogen, green ammonia, and green methanol industries? Let’s take a closer look at the influence and implications of this groundbreaking policy.
What is the EU’s Renewable Energy Directive?
The Renewable Energy Directive, also known as Directive 2009/28/EC, provides the legal framework for advancing clean energy across all sectors of the EU economy. It fosters collaboration among EU countries in reaching their renewable energy targets. Since its inception, the share of renewable energy sources in EU energy consumption has risen from 12.5% in 2010 to 21.8% in 2021, with leading countries like Sweden, Finland, and Latvia setting the pace with the highest renewable energy consumption.
The directive enshrines an overarching European renewable energy target of 32% by 2030. It includes a comprehensive set of rules designed to promote the integration of renewables into the transport sector and heating and cooling systems. Additionally, the directive establishes common principles and regulations governing support schemes for renewable energy, sustainability criteria for biomass, and the right to generate, consume, and create renewable energy communities.
Green Hydrogen: A Pillar for Decarbonization
Green hydrogen, produced through renewable energy sources, plays a central role in the EU’s decarbonization efforts. Here’s how the Renewable Energy Directive supports its development:
Sector-Specific Targets:
- In the realm of transport, a binding target has been set to achieve a 14.5% reduction in greenhouse gas intensity from renewables by 2030, with a sub-target of 5.5% for advanced biofuels and renewable non-biological fuels, including hydrogen.
- For industry, the directive mandates an annual increase of 1.6% in the use of renewable energy. Furthermore, it stipulates that 42% of hydrogen used in industry should be derived from renewable fuels of non-biological origin (RFNBOs) by 2030, increasing to 60% by 2035.
Advancing Green Energy
- The directive streamlines permit procedures for renewable energy projects, ensuring a swift deployment of renewable energies, including hydrogen production facilities.
- The EU is actively working on a strategy for both imported and domestically produced hydrogen to promote the European hydrogen market and domestic production. This strategy aims to ensure energy security and strategic autonomy.
- In addition to hydrogen, green ammonia, and methanol offer promise as green fuel alternatives. The directive supports their development through:
- The directive strengthens sustainability criteria for biomass energy, which is vital for producing green ammonia and methanol. This ensures that production is not only viable but environmentally sustainable.
- Member states have the flexibility to design their policies for decarbonizing transport, opening the door to incorporating green ammonia and methanol as alternative fuels.
- The directive encourages the integration of renewables in sectors that have been slower to adopt them, providing opportunities for green ammonia and methanol in industries such as transport and construction.
Policy Implications:
Creating a New Industry and Decarbonization to fully harness the potential of green hydrogen, ammonia, and methanol, the following policy implications should be considered:
- Investment in Research and Development:
Encouraging investments in research and development to drive innovation and optimize the production processes of green energy carriers.
- Financial Incentives:
Implementing financial incentives, such as subsidies or tax benefits, expedites the adoption of green hydrogen, ammonia, and methanol in various industries.
- Infrastructure Development:
Developing infrastructure for the production, storage, and transportation of green energy carriers is crucial to ensure their availability and viability.
- Global Collaboration:
Engaging in international collaborations and partnerships to facilitate knowledge and technology transfer, enhancing the development and deployment of green energy carriers.
- Public Awareness and Education:
Raising public awareness and providing education on the benefits and applications of green hydrogen, ammonia, and methanol can stimulate demand and acceptance of these green alternatives.
The directive also places a strong focus on industry, mandating an annual increase of 1.6% in the use of renewable energy. To further boost the green transition, member states have collectively agreed that 42% of the hydrogen used in the industry should be sourced from renewable fuels of non-biological origin (RFNBOs) by 2030, with an even more ambitious goal of 60% by 2035.
Additionally, member states have the flexibility to discount the contribution of RFNBOs in industrial use by 20% under specific conditions. These conditions include meeting their expected contribution to the binding overall EU target and ensuring that the share of hydrogen from fossil fuels consumed in the member state remains below 23% in 2030 and 20% in 2035.
The new rules outline an indicative target of achieving a renewable energy share of at least 49% in buildings by 2030. Furthermore, renewable targets for heating and cooling will gradually increase, with a binding annual increase of 0.8% at the national level until 2026, followed by a more substantial increase of 1.1% from 2026 to 2030. These targets are complemented by additional indicative increases tailored to each member state, ensuring a fair and balanced transition.