European Commission Completes Hydrogen Framework with New Low-Carbon Methodology

July 11, 2025

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by Aida Čučuk (Offshore Energy) The European Commission has adopted a greenhouse gas (GHG) emission methodology for low-carbon hydrogen and fuels, as set out in the Hydrogen and Gas Market Directive, completing the European Union’s (EU’s) regulatory framework for hydrogen.

It is understood that this methodology complements the existing ones on renewable hydrogen and renewable fuels of non-biological origin (RFNBOs).

Low-carbon hydrogen is expected to support efforts to decarbonize sectors where electrification is currently not a viable option, such as aviation, shipping, and certain industrial processes.

To be considered low carbon, hydrogen and related fuels will need to reach a threshold of 70% GHG emission savings compared to the use of unabated fossil fuels, the Commission said, noting that this means that low-carbon hydrogen can be produced in various ways, for instance using natural gas with carbon capture, utilization and storage (CCUS) – a technology that prevents emissions from the process of producing hydrogen -, as well as from low-carbon electricity sources.

Looking ahead, the European Commission revealed it will assess the impact of the introduction of alternative pathways on the energy system and emission savings, and the need to maintain a level playing field with sourcing fully renewable electricity. In 2026, it will reportedly launch a public consultation on a draft methodology on the use of power purchase agreements (PPAs) for nuclear energy, enhancing clarity for the production of low-carbon hydrogen from direct nuclear sources.

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To note, this adoption follows a process of consultation with stakeholders and the Member States. A first draft of the Delegated Act was published for feedback from September 27 to October 25, 2024, and was then discussed with Member States twice, on November 7, 2024, and May 19, 2025. READ MORE

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Excerpt from Offshore Energy: Industry groups, representing the entire energy value chain, from producers to industrial users, clean tech solution providers, and infrastructure operators, have called on the European Commission to acknowledge their concerns with the current draft ‘Delegated Act’ defining the greenhouse gas (GHG) methodology for low-carbon hydrogen and its derivatives, claiming that the legislation threatens the overall feasibility of this energy pathway.

According to the industry, the legislation would make it “overly difficult – if not practically impossible – to produce low carbon hydrogen and fuels,” be it in the European Union (EU) or at a global level, and imported to the EU.

In particular, the groups, including the International Association of Oil & Gas Producers, Ammonia Europe, and Methanol Institute, underlined what they called “the inability to fully showcase better GHG performance – despite being a core tenet of establishing a GHG methodology – combined with high default values.”

As disclosed, other concerns encompass: treatment of hydrogen from methane splitting, the implementation of the provisions linked with the methane regulation, the recognition of carbon capture and storage in third countries, and the inclusion of low-carbon fuels in the Union database.

“Taken together, these elements will hinder the deployment of this essential energy vector, the overall uptake of hydrogen and its infrastructure for the EU. This will further contribute to the widely flagged extra-costs (ACER) and barriers (Industry, Member States) caused by the EU regulatory framework on the deployment of all sources of hydrogen,” the groups said, adding: “This approach puts in jeopardy the Commission’s own vision for low carbon hydrogen, outlined as early as in the European Hydrogen Strategy (2020), further reinforced by the European Steel and Metals Action Plan, in the Clean Industrial Deal (2025) and underlined in the draft Delegated Regulation itself (2025).”

“The Commission must course correct if it wishes to create a favourable environment for investment, especially for first movers (e.g. grandfathering). Indeed, a simpler and more pragmatic approach is needed to kickstart the development of hydrogen in the EU. We urge the European Commission to amend the revised draft to ensure it enables the production and import of all types of low carbon hydrogen and fuels and recognises better environmental performances. This is critical for supporting the scale up of the hydrogen market in Europe, which already faces major challenges that undermine EU’s ability to meet its climate objectives,” the groups stated, calling on the EU to work with industry representatives on amendments.

It is worth noting that earlier in 2025, European associations called on the European Commission to revise the bloc’s hydrogen policy. Specifically, they asked for a hydrogen policy “reality check,” urging the Commission to address matters such as the adoption of a delegated regulation on low-carbon fuels. READ MORE

Excerpt from Offshore Energy: Hydrogen Europe, an association representing the European hydrogen industry, has acknowledged improvements in the final version of the European Commission’s Low Carbon Hydrogen Delegated Act, but noted that the rules still fall short of market needs.

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In response, Hydrogen Europe said: “While the text falls well short of what is needed for a thriving low-carbon hydrogen market, this final version introduces several improvements compared to the last draft and we welcome the efforts made by the European Commission to take into account the results of the consultation.”

Among other things, the association welcomed the Commission’s proposal to introduce country or region-specific default values for upstream emissions in the 2028 impact assessment, as well as the clarification that biomass or biofuels can now be used to lower the GHG intensity of low carbon fuels when used as fuels driving the process rather than feedstock.

Still, Hydrogen Europe noted that the Commission has not allowed for the sourcing of low-carbon electricity through a power purchase agreement (PPA), and the treatment of hydrogen from nuclear sources remains unchanged, claiming: “This will negatively impact a significant number of projects that will have to report the greenhouse gas emissions intensity of their national electricity grid, even if they are sourcing their electricity from low-carbon sources.”

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Parliament and the Council have two months to examine the Act, and possibly oppose it, before it enters into force. At their request, the “scrutiny” period can be extended by two months. However, the Parliament or Council cannot amend the proposals. READ MORE

Excerpt from Energy Monitor: It is aligned with the Clean Industrial Deal, emphasising legal certainty and coherence as key drivers for fostering investments and allowing producers to scale up.

The methodology offers flexibility to accommodate the diverse energy mixes of member states, without establishing a specific share of renewable energy for hydrogen produced from electricity.

The EC is also focusing on the practical implementation of the Methane Regulation and is preparing for a future public consultation on a draft methodology for power purchase agreements (PPAs) for nuclear energy, scheduled for 2026.

This will provide clarity to produce low-carbon hydrogen from nuclear sources.

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The delegated act was discussed in the Expert Group on Renewable and Low-Carbon Fuels and is part of the EU’s strategic efforts to strengthen the competitiveness of Europe’s industry through the Hydrogen Mechanism launched earlier this month, under the new EU Energy and Raw Materials Platform.

The EC had also earmarked €992m ($1.1bn) in May to accelerate renewable hydrogen production in the European Economic Area, funding 15 projects expected to produce 2.2 million tonnes (mt) of renewable hydrogen over ten years and prevent more than 15mt of CO₂ emissions. READ MORE