EUROPEAN

COMMISSION

Brussels, XXX
[…](2020) XXX draft

COMMISSION DELEGATED REGULATION (EU) …/...

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 EXPLANATORY MEMORANDUM

1. CONTEXT OF THE DELEGATED ACT

Renewable liquid and gaseous transport fuels of non-biological origin are important to
increase the share of renewable energy in sectors that are expected to rely on liquid fuels in
the long term. The recast Renewable Energy Directive1 (“the “Directive”) introduces new
provisions for promoting the use of renewable liquid and gaseous transport fuels of non-
biological origin. The Commission is requested to develop a reliable Union methodology
ensuring that the electricity used for the production of renewable liquid and gaseous transport
fuels of non-biological origin is of renewable origin including rules for the temporal and
geographical correlation between the electricity production unit and the fuel production and
rules ensuring that the fuel producer is adding to the renewable deployment or to the financing
of renewable energy.

2. CONSULTATIONS PRIOR TO THE ADOPTION OF THE ACT

Being of technical nature, this proposal did not need to be supported by an impact assessment
nor an open public consultation which are usually required only for major initiatives.

The proposal draws on the results of several consultation exercises undertaken by the
Commission in the context of the implementation of Article 27(3) of the Directive, including
inter alia, [xx] meetings of the expert group on renewable fuels and [xx] stakeholder
workshops.

The draft proposal was published for public feedback on the Better Regulation Portal from
[…] to […] 2020 [wording on feedback and any follow-up to be included subsequently].

3. LEGAL ELEMENTS OF THE DELEGATED ACT

The proposal is made pursuant to the 7th subparagraph of Article 27(3) of the Directive, which
empowers the Commission to adopt a delegated act establishing a Union methodology setting
out detailed rules by which economic operators are to comply with the requirements laid
down in the fifth and sixth subparagraphs of Article 27(3) of the Directive.

1 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.

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 COMMISSION DELEGATED REGULATION (EU) …/...

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on […]

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,
Having regard to 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 2, and in
particular Article 27(3) thereof,
Whereas:
(1) Renewable liquid and gaseous transport fuels of non-biological origin, such as
renewable hydrogen, are important to increase the share of renewable energy in sectors
that are expected to rely on gaseous and liquid fuels in the long term such as maritime
and aviation. Directive (EU) 2018/2001 requires the Commission to adopt a delegated
act to establish a Union methodology setting out detailed rules on electricity used
when liquid and gaseous transport fuels of non-biological origin can be considered
fully renewable. As a principle, liquid and gaseous fuels of non-biological origin are
considered renewable when produced in an electrolyser that uses renewable electricity.
This renewable electricity may be supplied by an installation that is directly connected
to installation producing renewable liquid and gaseous transport fuels of non-
biological origin, or may come from the grid;
(2) The energy content of renewable liquid and gaseous transport fuels of non-biological
origin are based on renewable hydrogen produced via electrolysis. Therefore, the
methodology focuses on rules for the production of renewable hydrogen;
(3) Renewable hydrogen will contribute towards reducing greenhouse gas emissions in the
Union only if it is produced from additional renewable electricity as otherwise
incentives for the production of more fossil electricity are provided, which would lead
to an increased level of emissions. In order to account hydrogen as fully renewable,
the production of renewable hydrogen should therefore incentivise the deployment of
new renewable electricity generation capacity (principle of additionality). For this, the
installation producing renewable electricity should come into operation at the same
time or after the installation producing the renewable hydrogen. Due to the significant
time needed to plan and construct renewable energy installations, the inherent risk of
delays during the implementation of renewable energy projects and the need to avoid
stranded investments, installations generating renewable electricity should be
considered as coming into operation at the same time than the electrolyser if they
come into operation within no more of 12 months of difference;
(4) If the installation producing hydrogen not only is directly connected to a renewable
electricity installation but it is also connected to the grid, evidence should be provided
that the electricity used to produce hydrogen was supplied through the direct
connection. The installation supplying electricity for hydrogen production through a

2 OJ L 328, 21.12.2018, p. 82.

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 direct connection should always supply renewable electricity. If it supplies non-
renewable electricity, for instance obtained from the grid, the resulting hydrogen will
not be considered renewable.
(5) Regarding renewable hydrogen produced from electricity sourced from the grid, its
production should incentivise the deployment of new renewable electricity generation
capacity that does not receive financial support since the renewable hydrogen is
already being supported by being eligible to count towards the obligation on fuel
suppliers set out in Article 25 of Directive (EU) 2018/2001. To ensure that the
renewable hydrogen is produced from renewable electricity, the production of
renewable electricity should take place at the same time as the consumption of
electricity for the production of renewable hydrogen and there should be no electricity
grid congestion between the electrolyser producing renewable hydrogen and the
installation generating renewable electricity;
(6) To demonstrate that the production of renewable electricity takes place at the same
time as the consumption of electricity, hydrogen producers should show that
production of renewable hydrogen takes place in the same quarter of the hour as the
production of the renewable electricity, or that more renewable electricity is being
produced in the bidding zone than on average;
(7) To ensure that there is no electricity grid congestion between the electrolyser
producing renewable hydrogen and the installation generating renewable electricity,
the installation should be located in the same bidding zone or, in case there is no
systematic nor actual electricity grid congestion, in a neighbouring bidding zone;
(8) By requiring that renewable energy should be considered only once for the purposes of
calculating the share of gross final consumption of energy from renewable sources and
that the same unit of energy from renewable sources is taken into account only once,
Articles 7 and 19 of the Directive provide sufficient assurances that the renewable
properties of electricity used for the production of renewable hydrogen are claimed
only once and only in one end-use sector. Article 7 ensures that, when calculating the
overall share of renewables in gross final energy consumption, renewable liquid and
gaseous transport fuels of non-biological origin are not accounted because the
renewable electricity used to produce them has already been accounted. The Article 19
should avoid that both the producer of the renewable electricity and the producer of
the renewable liquid and gaseous transport fuels of non-biological origin produced
from that electricity can receive guarantees of origin by ensuring that the guarantees of
origin issued to the producer of renewable electricity are cancelled.

HAS ADOPTED THIS REGULATION:

Article 1
Subject
This Regulation establishes a Union methodology setting out detailed rules by which
economic operators are to comply with the requirements laid down in the fifth and sixth
subparagraphs of Article 27(3) of Directive (EU) 2018/2001 in order to account electricity for
producing hydrogen and the resulting hydrogen as fully renewable.

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 Article 2
Definitions
For the purposes of this Regulation, the following definitions apply:
(1) ‘bidding zone’ means bidding zone as defined in point (65) of Article 2 of Regulation
(EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the
internal market for electricity3 for Member States, or an equivalent concept for third
countries;
(2) ‘direct line’ means direct line as defined in point (41) of Article 2 of Directive 2019/944
of the European Parliament and of the Council of 5 June 2019 on common rules for the
internal market for electricity and amending Directive 2012/27/EU4;
(3) ‘installation generating renewable electricity’ means one or several units producing
renewable electricity from the same source or several units producing renewable
electricity from different sources that are joint together into a virtual power plant,
excluding units producing electricity from biomass and storage units;
(4) ‘renewable hydrogen’ means hydrogen derived from renewable energy sources other than
biomass;
(5) ‘hydrogen producer’ means economic operators that produce hydrogen in an
electrolyser;
(6) ‘coming into operation’ means starting production of renewable energy for the first time,
or after substantial refurbishment;
(7) ‘substantial refurbishment’ means a full or partial replacement or repair of installations or
operation systems and equipment that is required to allow a continued operation of the
installation and requires investments exceeding 30% of the investment needed to build a
new installation;
(8) ‘smart metering system’ means smart metering system as defined in Article 2(23) of
Directive 2019/944.

Article 3
Rules for counting electricity sourced from directly connected installations as fully renewable
1. For the purpose of demonstrating compliance with the criteria set out in the fifth
subparagraph of Article 27(3) of Directive (EU) 2018/2001 for counting electricity
obtained from direct connection to an installation generating renewable electricity as fully
renewable, the hydrogen producer shall provide evidence on the following:

(a) the installations generating renewable electricity are connected to the electrolyser
via a direct line.
(b) the installations generating renewable electricity came into operation in the same
year as the electrolyser or later.
(c) the electrolyser is neither directly, nor indirectly via the installation generating
renewable electricity, connected to the grid, or the installation producing the
hydrogen is connected to the grid and it is shown with a smart metering system
that measures all electricity flows from the grid that no electricity is taken from the
grid for the production of renewable hydrogen;

3 OJ L 158, 14.6.2019, p. 54
4 OJ L 158, 14.6.2019, p. 125

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 Article 4
Rules for counting electricity taken from the grid as fully renewable
1. For the purpose of counting electricity taken from the grid as fully renewable as set out in
the sixth subparagraph of Article 27(3) of Directive (EU) 2018/2001, the hydrogen
producers shall demonstrate the following:
(a) the producer has concluded a renewables power purchase agreement with a
producer of renewable electricity for an amount that is equivalent to the amount of
electricity that is claimed as fully renewable;
(b) the installation generating that renewable electricity covered by the power
purchase agreement came into operation in the same 12 months as the installation
producing the renewable hydrogen, or later;
(c) the generation of the renewable electricity that is supplied under the renewables
power purchase agreement has not received and does not receive support in form
of operating aid or investment aid;
(d) the electricity that is used for the production of renewable hydrogen is consumed
in the same quarter of an hour as the renewable electricity supplied under the
renewables power purchase agreement, or it can be demonstrated based on data
reported by the national transmission system operator that the share of renewable
electricity in the same quarter of the hour in the bidding zone where the
electrolyser is located is higher than the average share of electricity from
renewable sources in the country where the electrolyser is located, as measured
two years before the year of producing of the renewable liquid and gaseous
transport fuels of non-biological origin;
(e) the installation generating renewable electricity is located at the time it came into
operation in the same bidding zone as the electrolyser, or the installation
generating renewable electricity is located in a neighbouring bidding zone and the
competent national authorities have determined that there is no systematic
electricity grid congestion between the bidding zones and electricity prices in the
two bidding zones in the relevant time period are equal;

Article 5
Common rules
1. The hydrogen producer shall thoroughly document the following information for each
quarter of hour:
(a) The methods applied to determine the share of renewable energy used for the
production of hydrogen.
(b) The amount of electricity used for the production of hydrogen. This information shall
be further detailed according to the following criteria:
a. The amount of electricity sourced from the grid that does not count as fully
renewable.
b. The amount of electricity sourced from the grid that does count as fully
renewable.

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 c. The amount of electricity that does count as fully renewable because it is
obtained from a direct connection to an installation generating renewable
electricity in accordance with Article 3.
(c) The amount of renewable electricity generated by the installations generating
renewable electricity, regardless of whether they are directly connected to an
electrolyser and regardless whether the renewable electricity is used for the production
of the renewable hydrogen or for other purposes.
(d) The share of renewable electricity in the grid mix as reported by the national
transmission system operator.
(e) The amount of produced renewable hydrogen and non-renewable hydrogen.

Article 6
Entry into force
This Regulation shall enter into force on the 20th day following that of its publication in the
Official Journal of the European Union.
Article 1, Article 2, Article 3, Article 4, Article 5(1)(a), Article 5(1)(d), Article 5(1) (e) and
Article 5(2)-(4) shall apply from its entry into force. Article 5(1)(b) and Article 5(1)(c) shall
apply from 1 January 2025.

This Regulation shall be binding in its entirety and directly applicable in all Member States. .
Done at Brussels,

For the Commission

The President
[…]

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