Electricity giants call for carbon tariff on EU hydrogen imports

The logo of the French energy company 'Electricite de France SA' (EDF) hangs on the building of the hydroelectric plant in Fessenheim, France, 12 June 2018 (reissued 17 February 2021). [EPA-EFE/PATRICK SEEGER]

A coalition of European electricity groups including EDF, Enel, Iberdrola, and Ørsted have called on the European Commission to impose a carbon tariff on hydrogen imports coming into Europe.

The proposed carbon tariff would be introduced “in order to avoid fossil-based and highly emitting hydrogen imports” entering the EU market, the coalition wrote in a letter sent to the European Commission last week.

“Such imports would introduce an unfair competition with the nascent EU based clean hydrogen production thus hampering the development of an EU hydrogen industrial value chain,” stated the missive, dated 29 June.

In order to avoid this, “the signatories of this letter call for the inclusion of the hydrogen sector in the upcoming carbon border adjustment mechanism regulation,” it said.

The letter was signed by European electricity groups EDF (France), EDP (Portugal), Enel (Italy), Iberdrola (Spain), McPhy (France), and Ørsted (Denmark). The ESB Energy for Generations Fund and the European Association for the Storage of Energy (EASE) are also signatories.

The European Commission is expected to table its proposal for an EU carbon border tariff next Wednesday (14 July) as part of a broader package of legislation aimed at cutting EU greenhouse gas emissions at least 55% by 2030.

According to a leaked draft, the EU’s upcoming carbon border adjustment mechanism (CBAM) would be applied first to imported steel, iron, cement, fertilisers, aluminium and electricity. The scheme would be phased in as of 2023 and could be extended later on to other sectors after full implementation in 2026.

Germany ranks first among EU countries looking to import hydrogen as a way to meet the demand coming from its hungry process industries. On 14 June, Berlin signed a bilateral alliance with Australia in order to facilitate a renewable energy-based hydrogen supply chain between the two countries.

The Netherlands, Belgium, and Spain have also signalled their intention to champion the import of green hydrogen from countries with the capacity to produce it in large quantities.

Hydrogen trade hopes boosted by Australia-Germany deal

A bilateral agreement aimed at increasing German imports of hydrogen produced from solar power plants in Australia could set a milestone in efforts to establish a global hydrogen market.

But not all EU countries are in favour. At a June meeting of the EU’s Energy Council, the ministers of Estonia, France, Hungary, and Poland all spoke out against hydrogen imports, saying the priority should be to produce hydrogen manufactured in Europe.

The anti-import countries are backed by Europe’s nascent hydrogen industry.

“Since we are currently importing oil, gas and coal as raw materials, why does this pattern need to continue with hydrogen? Well, it doesn’t,” said Luc Grare from French hydrogen producer Lhyfe, who leads one of the industry roundtables at the EU’s Clean Hydrogen Alliance.

“Decarbonising existing hydrogen production and promoting the development of clean hydrogen are strategic objectives of the EU,” adds Jorgo Chatzimarkakis, secretary general of Hydrogen Europe, an industry body.

“If the EU decides to implement clean hydrogen quotas on materials and products, while other countries and regions outside the EU do not, there will be no level playing field,” he told EURACTIV in emailed comments.

“It is necessary to implement a carbon border adjustment tax mechanism for import and maybe also carbon border adjustment premiums for export,” Chatzimarkakis added, saying the system should be based on a globally accepted system to assess the carbon content of fuels and gases.

“We need to develop an international system of guarantees of origin. Our GO system is in need of reform and Europe has the opportunity to be a front runner in the development of a system that is based on 5 principles: traceability, trackability, tradability, transparency and trustworthiness.”

EU countries clash over scale of future hydrogen imports

The EU has historically been a major energy importer, with a majority of its oil and gas coming from Russia or the Middle East. Now, as Europe decarbonises its industry, some countries fear it could increasingly become dependent on imported hydrogen.

Nearly all hydrogen today is produced from fossil fuels such as natural gas.

“In this context, there is a risk that high levels of CO2 emissions are embedded into imported hydrogen which would be at odds with the EU hydrogen strategy and the EU Green Deal,” warned the signatories of the letter.

The proposed system would be based on a certification system to measure the carbon content of fuels manufactured in Europe or imported into the EU market.

WindEurope, a trade association, declined to comment on the EU’s carbon tariff plan until the Commission’s proposal is officially published. SolarPower Europe, another industry association, also declined to comment, referring to its position paper on CBAM, which points to a lack of information about the EU’s future carbon tariff.

[Edited by Zoran Radosavljevic]

> Read the full letter below or download here.

210629_Call for H2 in CBAM

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