Hydrogen Certification

The certification of hydrogen is an important topic for the hydrogen ramp-up, raising numerous questions. Due to regulatory requirements and the demand for renewable and low-carbon hydrogen, certification is becoming more important. Thus, trustworthy certification schemes need to be established. The following article outlines the structure of a certification scheme and potential trade models with examples from the hydrogen industry. Additionally, it explains current regulatory developments related to the implementation of the Renewable Energy Directive (RED III) [1] in Germany and discusses hydrogen certification in an international context.

Why is hydrogen certification necessary?

Hydrogen and its derivatives are central components of a decarbonized energy system. In this context, hydrogen with the lowest possible carbon footprint is particularly needed. This includes, for example, green hydrogen from electrolysis powered by renewable energy or blue hydrogen from steam reforming of natural gas, where the resulting CO₂ is captured and stored. However, when hydrogen is produced and traded, it is not possible to determine from the product itself how it was manufactured and what climate impact is associated with it.

Certification, in general, serves to confirm compliance with specific criteria in the production of products. For this, a functioning certification scheme is required. In the context of hydrogen, there are currently various developments necessitating the establishment of certification schemes. On the one hand, many countries are currently creating regulatory frameworks for renewable and low-carbon hydrogen, often accompanied by specific requirements for promotion [2]. Thus, it is necessary for hydrogen manufacturers to demonstrate compliance with regulatory criteria to gain access to markets and benefit from incentives. In addition to these aspects, there is also a demand from customers for sustainably certified products. Due to current developments in sustainability reporting and sustainable finance, the requirements for companies regarding the sustainability aspects of products and their traceability are increasing. These aspects cover the entire supply chain. Therefore, the need to make hydrogen from renewable and low-carbon production demonstrable extends not only nationally but also internationally. Functioning certification schemes that can be integrated with other systems can provide such proof.

How does a certification scheme work?

A certification scheme establishes the rules and processes by which certificates are issued. The goal is to ensure the trustworthiness and reliability of the properties confirmed by a certificate. The following outlines possible roles and their responsibilities in a certification scheme, schematically based on [3], and explains them using examples of potential actors.

In general, two types of certifications are distinguished. On the one hand, there are certifications that result from regulatory requirements, where the legal framework defines the criteria. Additionally, there are voluntary certifications, typically operated and awarded by a private organization, with no legally binding influence. These organizations set their own criteria and aim to provide customers with trustworthy information about the product’s properties. An example in the end-consumer segment is the multitude of organic labels for food, guaranteeing different production conditions.

Depending on the objectives and conditions, the structure and involved actors in a certification scheme can vary. Figure 1 schematically illustrates a certification scheme with potential roles. The need for certification arises from producers and users who want trustworthy proof of compliance with specific requirements, either due to regulatory mandates or voluntarily. Therefore, it initially requires an organization to design and operate the certification scheme. An independent audit organization verifies whether a producer meets the specified requirements. The audit report is then passed on to the organization that ultimately issues the certificates. The certificate trading operates through a registry facilitated by an IT system, providing the infrastructure for certification.

The role of the Certification Scheme Owner includes responsibility for the construction, design, and operation of the certification scheme. In the context of voluntary certification, an example of an actor could be CertifHy, which, as an entity, takes on the role of both the certification issuing organization and operates an electronic registry for its certification scheme. For a regulatory certification scheme, the Environmental Agency (Umweltbundsamt – UBA), for instance, could assume this role.

To ensure the trustworthiness of certification, it requires actors who take on the role of a Certification Body. These independent 3^rd party organizations conduct the examination of the specified requirements for hydrogen production, often in the form of audits, and document them. An audit report confirms the examination and conformity with the established criteria. To ensure that the audit organization is suitable and authorized for the examination, accreditation may be necessary. This is a process that can be carried out, for example, by the certification scheme owner. Depending on the structure of the certification scheme, this role can also be assumed by the same entity that issues the certificates. Established audit organizations in this context include German TÜV organizations or Bureau Veritas, which are listed as auditing organizations for CertifHy certificates, for example.

After successful verification, an organization is needed to issue and circulate the certificates (Issuing Body). To facilitate the trade of certified hydrogen or certificates (depending on the trading model), a registry is required. In this registry, certificates are generated and invalidated after use. Especially in this context, there are new solutions enabled by digitization with applications in the hydrogen sector, such as those offered by CertifHy, Point Twelve, or systems like CertaLink and Green Token.

In the case of hydrogen certificates, registered producers are the hydrogen manufacturers. For green hydrogen, these are operators of electrolyzers, examples of which can be found in the living labs of the energy transition. Corresponding certificates are created for their hydrogen production. Certificates are purchased by users of renewable and low-carbon hydrogen. These users can be direct hydrogen consumers, such as industrial companies, or entities involved in circulating hydrogen, including energy providers or future operators of hydrogen networks or stations. Depending on the trading model, certificates may be directly tied to the volume of hydrogen sold or traded independently, as will be explained in more detail below.

Which trading models exist for hydrogen certificates?

There are two different trading models for certified green hydrogen. In the following, the “Book & Claim” model and mass balancing are explained, summarized in Figure 2.

On the one hand, there is the possibility that certificates for low-carbon or renewable hydrogen can be traded completely independent of hydrogen as a physical commodity. In this case, it is referred to as a pure certificate trade (Book & Claim). Such a trading model is implemented, for example, in electricity through Proofs of Origin. For renewable hydrogen, it can work as follows: Operators of electrolyzers producing hydrogen according to defined criteria receive a certificate after successful verification. They can sell this certificate of the renewable attribute on the market. The certificate serves as proof to the end consumer of the specified properties of the hydrogen. The trade in physical hydrogen operates separately from the certificate trade under this model. In this case, it is possible for a trader to buy certificates from hydrogen producers that are geographically distant, making the transport of hydrogen to the consumer location too costly. With the help of certificates, however, hydrogen from fossil sources produced closer to the consumer, can be certified as renewable. This can lead to issues of double marketing of green properties if physical hydrogen continues to be sold as “green,” as has occurred with Proofs of Origin for electricity.

This issue does not arise in mass balancing, as certificates can only be traded in conjunction with hydrogen as a physical commodity. Thus, renewable hydrogen and certificates can only change ownership together. While it is possible that hydrogen with different origin and sustainability characteristics may be mixed during transport — for example, when green and grey hydrogen are conveyed through the same pipeline or transported in the same container — the seller is only allowed to sell as much renewable hydrogen as was produced by the renewable generation facility. This excludes the possibility of labeling hydrogen as renewable even if there is no (economic) transport route to a green hydrogen generation facility.

The emerging registry of origin certificates for hydrogen in Germany

To comply with the legal obligations arising from the Renewable Energy Directive (EU) 2018/2001 (“RED II”) [5], the German government has presented draft regulations for an ordinance on proof of origin for gaseous energy carriers, heat, and cooling (HkNRV) [6], as well as for an ordinance to revise the 37th Regulation for the Implementation of the Federal Immission Control Act (37. BImSchV) [7]. In these draft regulations, the German Environment Agency (Umweltbundesamt, UBA) is designated as the competent authority responsible for implementing these ordinances and establishing electronic databases, which will include the registration of certificates for hydrogen from renewable sources. Thus, the UBA assumes the role of the operator of the certification scheme, with the structure and other roles of the HkNRV yet to be defined. The Research Center for Energy Economics (FfE) is involved in the project as a project partner commissioned by the UBA. The project, “Foundations for Proof of Origin (HKN) Systems for Renewable Gases and Renewable Heat and Cooling, and Unavoidable Waste Heat,” aims to provide the foundations for the practical implementation of proof of origin systems for gases as well as heat and cooling.

What about hydrogen certification on an international level?

Many markets are currently working on regulations for hydrogen, such as the national implementations of the Renewable Energy Directive (RED III) in the EU and the “Inflation Reduction Act” (IRA) in the United States. At the same time, voluntary hydrogen certifications have existed for a long time, such as those from TÜV SÜD or CertifHy. The confirmed properties in these certifications can vary significantly. Variations may exist, for example, in the requirements for the production pathway, the raw materials and energy sources used, or working conditions. The carbon footprint of hydrogen is a widespread criterion in both regulatory and voluntary certifications. However, the threshholds and methodology for calculating the carbon footprint can vary depending on the certification. This can have a significant impact on the carbon footprint of hydrogen, as these results show.

For hydrogen in the EU, the regulatory requirements of RED II for renewable hydrogen have been decisive so far. These were recently adopted for RED III and include criteria for both the electricity supply and the carbon footprint [5]. The U.S. IRA links the conditions for hydrogen funding to the carbon footprint [8]. However, it is still unclear how the carbon footprint will be calculated and whether or which criteria for electricity supply during electrolysis will accompany it. Depending on how these policy decisions unfold, access to hydrogen funding in the U.S. will become either easier or more challenging.

The lack of standardization is also a challenge for the hydrogen ramp-up, although work is already underway on international hydrogen standards. The methodology for hydrogen emission accounting developed by the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE) is intended to serve as a basis for standards determining the carbon footprint of hydrogen [8].

An overview of emission accounting and limits on the carbon footprint of hydrogen in selected laws and certifications is provided by this article. The IEA also offers a comprehensive list of existing and planned certification schemes for hydrogen, ammonia, and other hydrogen-based fuels [9]. At the international level, there is currently no recognized certification scheme for sustainable hydrogen, even though the “GH2 Green Hydrogen Standard” aims to establish an international sustainability certificate for green hydrogen [10].

However, international certification is particularly relevant for hydrogen trade in between economies. This process is neither straightforward nor quickly achievable, as evidenced by the different legal regulations for hydrogen. It is questionable whether and how a globally recognized certification scheme for sustainable hydrogen will be developed in the near future. To facilitate hydrogen trade, it is desirable for certification schemes in different markets to be interoperable, and participating countries should promote mutual recognition of certifications.

• More Information
  • Series of articles on hydrogen: How is hydrogen transported? – FfE
  • Hurdles for business models and sustainability criteria for hydrogen in the market ramp-up – FfE at the hydrogen dialogue – FfE
  • Emission accounting: When is hydrogen considered “green”?
  • Series of articles Hydrogen Deep Dives: Emissions accounting for hydrogen – FfE

   

Literature

[1] European Parliament, Council of the European Union (2023): DIRECTIVE (EU) 2023/2413 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 18 October 2023 amending Directive (EU) 2018/2001, Regulation (EU) 2018/1999 and Directive 98/70/EC as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652. Ausgefertigt am 2023-10-18 ; Brussels: European Union, 2023

[2] IEA (2023): Global Hydrogen Review 2023, https://www.iea.org/reports/global-hydrogen-review-2023 (retrieved on 10.11.2023)

[3] Hydrogen Council (2023): Hydrogen Certification 101, https://hydrogencouncil.com/en/hydrogen-certification-101/ (retrieved on 10.11.2023)

[4] Forum Nachhaltiges Palmöl (2023): Handelsoptionen von Palmöl, https://www.forumpalmoel.org/zertifizierung/handelsmodelle (retrieved on 10.11.2023)

[5] The European Parliament and the Council (2020): Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (Text with EEA relevance.) (RED). Ausgefertigt am 11-12-20; Brussels, Belgium: The European Parliament and the Council, 11.

[6] BMWK (2022): Entwurf einer Verordnung über Herkunftsnachweisregister für gasförmige Energieträger, Wärme und Kälte (Gas- und Wärme Herkunftsnachweisregisterverordnung – Gas/Wärme-HkNRV). Ausgefertigt am 2023-09-22; Berlin

[7] Verordnung zur Neufassung der siebenunddreißigsten Verordnung zur Durchführung des Bundes-Immissionsschutzgesetzes (2023): Referentenentwurf der Bundesregierung zur Verordnung zur Neufassung der siebenunddreißigsten Verordnung zur Durchführung des Bundes-Immissionsschutzgesetzes, https://www.bmuv.de/gesetz/referentenentwurf-der-bundesregierung-zur-verordnung-zur-neufassung-der-siebenunddreissigsten-verordnung-zur-durchfuehrung-des-bundes-immissionsschutzgesetzes (retrieved on 10.11.2023)

[8] 11th Congress (2021-2022): H.R.5376 – Inflation Reduction Act of 2022, https://www.congress.gov/bill/117th-congress/house-bill/5376/text (retrieved on 10.11.2023)

[9] IEA (2023): Towards hydrogen definitions based on their emissions intensity, https://www.iea.org/reports/towards-hydrogen-definitions-based-on-their-emissions-intensity (retrieved on 10.11.2023)

[10] Green Hydrogen Organisation (2023): Green Hydrogen Standard – The Global Standard for Green Hydrogen and Green Hydrogen Derivatives including Green Ammonia, https://gh2.org/sites/default/files/2023-01/GH2_Standard_A5_JAN%202023_1.pdf (retrieved on 10.11.2023)