Emission accounting: When is hydrogen considered “green”?
Hydrogen will contribute to decarbonization in the future. Important political decisions are currently being made to promote the hydrogen economy: the EU’s Delegated Act (DA) specifies how hydrogen emissions are to be accounted for, as well as the amount below which it is considered low-carbon, or “green”. The proposed methodology for hydrogen accounting in the DA differs from the established life cycle assessment (LCA) methodology. The choice of emission accounting methodology results in a different assessment of the climatic impact of hydrogen in the case of electrolysis. This is relevant in practice since the methodology chosen can be decisive for compliance with the threshold prescribed in the regulations, such as the EU taxonomy.
Article 25 of the RED II makes a reference to the DA on gaseous and liquid fuels of non-biogenic origin. The draft of this DA was published in May 2022 and outlines, among other things, a methodology for greenhouse gas emission accounting for hydrogen. In addition to the RED II, the EU taxonomy also refers to the DA. There, a fixed threshold for green hydrogen is specified, but for the methodology of the balancing, among others, one can choose between the methodology according to DA and the holistic LCA approach according to ISO 14040/44 or 14067 (concretization for Carbon Footprint). In the following section, the differences in emissions accounting between the methodology proposed in the draft of the DA and a classical LCA are examined and the implications for practice are derived.
For the comparison, hydrogen from electrolysis produced with different electricity sources is assessed, because in the case of electrolysis the electricity source is the most important factor influencing the climate impact of hydrogen [1]. Figure 1 shows the global warming potential (GWP 100a) expressed in kilograms of CO2 equivalents per kilogram of hydrogen produced. Since the construction and disposal of plants are not accounted for in the DA, the climate impact calculated is lower compared to the LCA methodology. It is apparent that so-called “yellow” hydrogen produced using the German electricity mix in 2018 significantly exceeds the threshold from the EU taxonomy. For the LCA, the emission factor of the electricity mix including upstream chains (538 g CO2/kWh) from [2] is used, while the DA provides emission factors (446 g CO2/kWh) in the annex [3].
The differences between the two accounting methods for hydrogen are evident, especially in the case of renewables. In the DA, electricity from renewable sources has no climate impact since the plants are not included in the calculations. Therefore, the climate impact of hydrogen is almost zero. However, in a full LCA, plant construction and end-of-life are also accounted for. The resource intensity, especially of PV plants, therefore leads to a much higher CO2 footprint in the case of a holistic LCA. It is significant that, in addition to the selected methodology, the choice of the data basis also plays a decisive role. For PV plants in Germany, current data from [4] show a clear advantage over generic data from the widely used LCA database ecoinvent 3.8 [5]. The specified threshold for green hydrogen is exceeded due to the data provided in the LCA database. Thus, even hydrogen produced with pure solar electricity may no longer be considered sustainable.
Global warming potential of hydrogen produced by electrolysis with different electricity sources and accounting methods (LCA: Life Cycle Assessment; DA: Delegated Act) and using different data sources for upstream chain emissions of solar electricity (ecoinvent 3.8 [5]; UBA: Umweltbundesamt 2021 [4]).
The choice of emission accounting methodology in the EU taxonomy could simplify hydrogen balancing in practice, but challenges remain. In principle, the DA methodology for hydrogen balancing is a simplified method compared to LCA, as plants do not have to be balanced. However, the consideration of so-called “rigid inputs” according to the current DA draft complicates the accounting. These are input materials whose supply cannot be arbitrarily adjusted to increasing demand. In the underlying analysis, rigid inputs were not considered because their accounting in the draft is still ambiguous. Without further adaptions, the complexity of the methodology is high when rigid inputs are present. Another critical issue is that different emission accounting methodologies can be applied according to the taxonomy. In practice, hydrogen accounting according to the DA will be preferred to LCA, since it leads to a lower carbon footprint. However, since only one threshold is specified, the same hydrogen production process can be accounted as green once and fail the sustainability criterion once, depending on the methodology applied.
Our results show that this is indeed relevant in practice: even if only solar power is used in the electrolysis, the threshold can be exceeded by applying LCA methodology and a common LCA database. If the same process is balanced according to the DA specifications, the global warming potential remains below the threshold. In regulatory terms, the DA method is therefore likely to prevail, however, accounting in accordance with the ISO standards is established in other business relationships. This can lead to companies accounting for the same product using different emission accounting methods, resulting in additional expense.
To conclude, policies that set thresholds and define sustainable and non-sustainable economic activities are central to the transformation process to climate neutrality. However, it is important to note that the methodology of emission accounting must be implementable for practitioners. In addition, it should be ensured that an applied threshold fits the selected methodology of emission accounting, which is not given in the case of the EU taxonomy as several methodologies can be chosen.
This analysis was developed within the framework of the transfer research project Trans4ReaL (FKZ: 003EWT001A), which scientifically accompanies the living labs of the energy transition in the field of hydrogen. The evaluation serves as a first discussion basis for the emission accounting of “green” hydrogen.
Literature
[1] FfE (2021). Ökobilanzen synthetischer Kraftstoffe – Methodikleitfaden
https://www.ffe.de/wp-content/uploads/2018/06/20210906_Methodikleitfaden_BEniVer.pdf.
[2] Umweltbundesamt (2022). Entwicklung der spezifischen Treibhausgas-Emissionen des deutschen Strommix in den Jahren 1990 – 2021 https://www.umweltbundesamt.de/sites/default/files/medien/1410/publikationen/2022-04-13_cc_15-2022_strommix_2022_fin_bf.pdf.
[3] European Commission (2022). Delegated Act supplementing Directive (EU) 2018/2001 of the European Parliament and of the Council by establishing a minimum threshold for greenhouse gas emissions savings of recycled carbon fuels and by specifying a methodology for assessing greenhouse gas emissions savings from renewable liquid and gaseous transport fuels of non-biological origin and from recycled carbon fuels (Draft from May 2022)
https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12713-Renewable-energy-method-for-assessing-greenhouse-gas-emission-savings-for-certain-fuels_en.
[4] Umweltbundesamt (2021). Aktualisierung und Bewertung der Ökobilanzen von Windenergie- und Photovoltaikanlagen unter Berücksichtigung aktueller Technologieentwicklungen https://www.umweltbundesamt.de/sites/default/files/medien/5750/publikationen/2021-05-06_cc_35-2021_oekobilanzen_windenergie_photovoltaik.pdf.
[5] The ecoinvent Database, Version 3.8: www.ecoinvent.org; Zürich: ecoinvent, 2022.
