The Renewable Energy Directives (RED) II and III constitute the European Union’s central regulatory framework for promoting renewable energy. The directives are part of the European Green Deal, which was adopted at the end of 2019, and play a key role in the transformation of the European energy system. They are therefore of great importance for the development of a hydrogen economy.
Simply put, the REDs define when hydrogen is considered “renewable” or “green.” In doing so, they also determine when it qualifies as a Renewable Fuel of Non-Biological Origin (RFNBO) and is therefore eligible for credit under the GHG emissions trading system.
RED II (2018–2023)
RED II established, for the first time, a binding EU-wide target of 32 percent renewable energy in the electricity mix by 2030. Unlike its predecessor, RED I, which was enacted in 2001, it did not set binding national targets but instead focused on an EU-wide target. Member states were required to set out their contributions in so-called“National Energy and Climate Plans (NECPs)” and transpose the provisions of RED II into national law by June 30, 2021.
Hydrogen-Specific Regulations in RED II
RED II laid out the ground rules for renewable hydrogen. It introduced the concept of “renewable hydrogen” into the EU legal framework, thereby establishing the first sustainability criteria for its production. Since then, a key aspect has been the origin of electricity used in electrolysers. RED II also laid the groundwork for a certification system and defined criteria for counting hydrogen toward the renewable energy targets of countries and companies.
In the transportation sector in particular, RED II laid the groundwork for the crediting of green hydrogen, thereby establishing an important regulatory framework for the emerging hydrogen economy:
- RED II required all fuel producers to demonstrate a 14 percent share of renewable energy by 2030. Hydrogen and its derivatives (methanol, ammonia, etc.) were expected to play an important role in this effort.
- The directive also introduced a multiplier of 2.6 for renewable hydrogen in the transportation sector to create additional incentives for its use.
RED III (2023 – )
The EU Council of Ministers adopted RED III on October 9, 2023. The directive has been in force since the beginning of 2024, with member states having 18 months (i.e., until mid-2025) to transpose it into national law. RED III builds on the foundations of RED II and specifies its requirements in greater detail. The EU’s overall target for the share of renewable energy in the electricity mix has been increased from 32% to 42.5% by 2030. In addition, there is an important new provision for the hydrogen sector:
By 2030, 42 percent of hydrogen used in industry must come from renewable sources. This share is expected to rise to as much as 60 percent by 2035. Given the current EU-wide hydrogen consumption of 9.7 million metric tons —almost exclusively gray hydrogen—this translates to a demand of approximately 4 million metric tons of renewable hydrogen by 2030.
New Requirements for Hydrogen Production
RED III implements new, stricter criteria for the certification of renewable hydrogen:
- Temporal correlation: Starting in 2030, hourly alignment between electricity and hydrogen production must be demonstrated (also known as “hourly matching”).
- Geographic correlation: Electricity must be generated in the same or a neighboring price zone.
- Principle of Additionality: Proof that new renewable energy facilities were built specifically for hydrogen production.
