Anyone who would like to get an overview of greenhouse gas emissions trading can find one in our 2024 interview with Mr. Pflegler. In that interview, we explored the basics in detail. In this interview, we pick up where we left off, asking what has happened since then and what changes result from the new greenhouse gas emissions trading amendment. 

H₂News: Mr. Pflegler, when we last spoke in May 2024, the 37th Ordinance Implementing the Federal Clean Air Act (BImSchV) had just been adopted and was set to take effect in July. What has happened since then?

David Pflegler: The 37th BImSchV is the national implementation of the EU requirements for RFNBO certification and crediting in the transportation sector. Theoretically, therefore, RFNBO-compliant hydrogen production, RFNBO certification, and quota trading could have begun as early as July 2024. The problem, however, was that at that time, no certification systems had yet been recognized by the European Commission, making certification effectively impossible. It wasn’t until December 2024 that the European Commission recognized three certification systems: ISCC, REDcert, and Certifhy. That was a bitter blow because we had customers who had already been producing RFNBO-compliant hydrogen at that time, but due to the lack of certification and registration with the Federal Environment Agency (UBA), it was not possible to formally count it toward the GHG quota or engage in quota trading. Bottom line: we have to be honest—the first real year of certification is 2025.

H₂News: So in 2024, the lack of recognition for certification systems was the main obstacle. What is the current situation?

Pflegler: We have been guiding clients through the certification process since early 2025. So far, these processes have always gone smoothly. All of the clients we have guided through the process to date have received their RFNBO certificate.

H₂News: How exactly does the certification process work?

Pflegler: The purpose of certification is to demonstrate that the hydrogen placed on the market meets the requirements of the EU Renewable Energy Directive. In particular, this involves examining the source of the electricity and the calculation of the carbon footprint. We have developed our own software for certification: Hydromize. It helps customers carry out the certification process in a structured manner. The software provides all necessary documents, gives the customer a checklist, and grants the certifier separate access so that the certifier can review the documents and process the certification directly through the software. A key component of the certification is the plant-specific calculation of the carbon footprint.

Certification with Hydromize. © GreenTrax

H₂News: How time-consuming is the certification process?

Pflegler: There’s no one-size-fits-all answer. What remains consistent is that initial certification involves an on-site inspection, which typically takes one day. As a rule, all relevant documents must be provided prior to this inspection. Sometimes, the review of the documents takes place afterward. Upon successful approval, the certification body issues the certificate, which is listed in the public database of the respective system. Hydrogen may only be declared as RFNBO as long as this certificate is valid. This also ensures transparency and allows every market participant to verify for themselves whether the relevant supplier or producer has the necessary certification.

H₂News: How long is a certificate valid, and what happens after that?

Pflegler: As a rule, RFNBO certificates are valid for one year. A surveillance audit is scheduled after six months to verify whether the sustainability certifications issued were accurate. This surveillance audit can be combined directly with recertification, so that the cycle switches to an annual basis starting with the surveillance audit. Alternatively, recertification takes place after the full year has elapsed. In that case, a new one-year certificate is issued.

Certify RFNBO hydrogen. © GreenTrax

H₂News: Do you work with all three recognized certification systems, and what are the differences between them?

Pflegler: Yes, our software is compatible with all three systems. There are no significant differences in content between the systems, as they all must comply with the same EU requirements. Looking at the certificates issued so far, we see that Certifhy currently has a strong presence in Germany and France, while ISCC is used more globally. Looking ahead, additional systems will be added as well.

H₂News: Do you focus exclusively on the German market, or do you also have international customers?

Pflegler: The production facilities we have certified so far are currently limited to Germany. However, we also support projects for production facilities outside the EU, most of which are currently in the pre-FID phase. These projects typically involve imports into the EU. The customers themselves are predominantly German companies. In principle, of course, our software works regardless of the country where the hydrogen is produced.

H₂News: Do pre-FID analyses focus on calculating a plant's economic feasibility?

Pflegler: Yes, exactly. The key question is: What prices can be achieved with hydrogen? The GHG quota is a real game-changer for economic feasibility analyses, provided the hydrogen is used in the transportation sector. We’ve also had cases where it was even a factor in the investment decision. This was the case with concepts based on grid power—that is, those planned without a green power purchase agreement (PPA). In those cases, however, the companies were at risk of failing to meet the minimum savings threshold of 70 percent, which is the threshold at which hydrogen is even considered a renewable energy source (RFNBO). In practice, however, it’s now clear that most plants operate on nearly 100 percent green power.

H₂News: About 60 RFNBO certificates have been issued worldwide so far, with just under 20 of them in Germany. What does that tell us about the market?

Pflegler: Sixty certificates is already a considerable number for the first year, and that number will likely skyrocket in the coming years. The key factor will be whether markets for green hydrogen emerge. The fact that one-third of the certificates are in Germany shows that Germany is currently playing a pioneering role. It’s not that the largest volumes are produced here, but many facilities have undergone certification for the first time as pilot projects. In the long run, however, this balance will shift.

H₂News: You criticize Germany's focus on electricity-based RFNBOs. What specifically bothers you about that?

Pflegler: The EU guidelines simply state that renewable energy must be used for hydrogen production. However, in its regulation, Germany has explicitly chosen to limit itself to electricity-based fuels. This excludes other promising production processes. These include, for example, photocatalytic water splitting, in which hydrogen is produced directly via photons without electricity. This process bypasses the electricity market and thus all its problems, such as grid bottlenecks, the need for grid expansion, and high electricity prices. We have received an inquiry from a university spin-off that uses precisely this method of hydrogen production. Unfortunately, however, we must currently acknowledge that neither the certification systems nor German legislation account for this approach. In practical terms, this is more of a “ten-years-plus” issue, but the regulatory framework should already be designed with this in mind and remain technology-neutral so as not to hinder research.

H₂News: The Bundestag has voted on the Second Act on the Further Development of the GHG Quota. What are the most important changes for the hydrogen sector?

Pflegler: The law sends several important signals to RFNBOs: First, it sets a target for increasing the GHG reduction rate through 2040—which provides certainty. Second, there is a mandated sub-quota of 0.1 percent for RFNBOs for 2026. This requires every distributor to cover 0.1 percent of the energy content of the fuels they sell with RFNBOs. This creates guaranteed demand for the first time, particularly through the gradual increase of the sub-quota to 10% by 2040. Third, the triple counting for RFNBOs remains in place for now but will be gradually reduced starting in 2037, so that by 2040 only a factor of 1 will apply.

Amendment to the Greenhouse Gas Quota Act of 2026. © GreenTrax

H₂News: You mention the planned sub-quota of 0.1 percent as a second factor. Do you think that's enough?

Pflegler: The absolute level is secondary at this stage. What’s important is the signal that this requirement now exists and will be raised further in the future. But especially in this early phase, when production capacities are still limited, an entry quota that is too high would be counterproductive. Otherwise, there is a risk that companies subject to the quota (QVUs) will be unable to meet the requirement at all due to a lack of available quantities. However, our internal calculations show that a quota of 0.1% starting in 2026 is very achievable even with Germany’s existing capacities. And we haven’t even factored in existingchlor-alkali electrolysers, which also produce hydrogen as a byproduct. This quota should then be raised as the market ramps up.

H₂News: And what do you think about the triple crediting for hydrogen?

Pflegler: I also believe that the triple crediting for RFNBO hydrogen is the right approach to kickstart the market. The fact that this is to be gradually reduced to a factor of 1 starting in 2037 is also a positive development for the future, because the multiple-crediting factor does not save a single additional gram of CO₂—it is purely a political lever. Once the market is up and running, this policy should then be scaled back accordingly.

H₂News: Let's talk about ratings marketing. How does the process actually work?

Pflegler: The first step is to find a buyer—that is, a company subject to quota requirements that markets diesel and gasoline fuels. Thanks to our long-standing network of reliable buyers, we support our customers—primarily hydrogen refueling station operators—in establishing quota agreements, including negotiations on volume, price, and flexibility. We either generate the sustainability certificates, known as Proof of Sustainability (POS), using our software —provided that the refueling station operator’s producer or supplier also uses our software—or we receive the POS from the refueling station operator, verify them for completeness and accuracy, reconcile them with the actual volumes dispensed and delivered, and then submit them to the responsible biofuel quota office at the main customs office in a timely and proper manner, along with all necessary supporting documents and contracts.  Sometimes it may be necessary to issue partial certificates for the received POS documents in order to adjust them to the quantities placed on the market in the respective year. We also handle these tasks for our clients, ensuring that not a single kilogram of RFNBO is lost toward the quota.

Hydromize PoS Process. © GreenTrax

H₂News: Hydrogen doesn't always go directly from the producer to the refueling station—traders are often involved in the process. Why do they need their own certification if the hydrogen is already certified by the producer?

Pflegler: At first glance, this may seem unnecessary, but there’s a good reason for it: The carbon footprint of hydrogen must account for the entire transport chain all the way to the end consumer. A trader who drives 500 kilometers in a trailer truck to a refueling station generates transport emissions that must be factored into the calculation. The chain of custody—that is, the seamless traceability of the hydrogen—must be guaranteed all the way to the fueling station. Specifically, this means that a trader must be able to demonstrate at any time, based on a mass balance, how much RFNBO hydrogen they purchased, where they purchased it, and how much they sold, and where they sold it. Negative balances for sustainable fuels are not permitted as of the balance sheet date. The reporting period is currently one quarter.

H₂News: How easy is it to find customers subject to quota requirements?

Pflegler: We’ve been active in quota trading for 7 years and have built up a reliable network of partners who are also willing to work with pilot customers. Even before the 37th BImSchV was enacted, quota trading was already possible for charging current. Some companies subject to quotas are still somewhat hesitant, which is understandable; since there was no mandatory RFNBO sub-quota for 2025, quota-subject companies could afford to wait and see. However, that is changing with the new draft bill, which retroactively introduces an RFNBO sub-quota for this year.

H₂News: What is the current cost per kilogram of hydrogen, and what can we expect by 2026?

Pflegler: For 2025, we’re looking at between 3.50 and 5 euros per kilogram. Starting in 2026, we expect a significant increase due to the quota shortfall and higher quota prices for that year: We will likely be able to achieve about 15 euros per kilogram. Depending on how the RFNBO penalty is factored into pricing, we could even reach close to 20 euros per kilogram—assuming quota prices remain high, of course.

H₂News: How can this sharp price increase be explained?

Pflegler: Two factors are at play here: First, the sub-quota creates a legally mandated obligation to purchase. Second, RFNBOs are subject to a separate penalty of 120 euros per gigajoule—in addition to the general penalty of 600 euros per metric ton of CO₂. Since there are virtually no alternative compliance options, the market value of RFNBO hydrogen is rising significantly. Furthermore, RFNBOs are already eligible for credit under the so-called “no-cap” quota—that is, without an upper limit.

H₂News: The GHG quota is set to rise gradually to 59 percent by 2040. What does that mean strategically for GreenTrax?

Pflegler: This is a clear commitment to emissions trading as a tool for reducing greenhouse gas emissions in the transportation sector. It is important that the reduction targets remain ambitious so that we can achieve our climate goals. For us as a company, this means planning certainty. The market will continue to grow, and we can expand our services related to certification and emissions trading accordingly.

H₂News: The EU has also set a target of 42 percent RFNBO hydrogen in the industrial sector by 2030. Is that still realistic?

Pflegler: No, I don't think that's realistic. So far, there’s been no regulatory lever for the industrial sector that would be comparable in effectiveness to the GHG quota in the transportation sector. Even with an equivalent demand mandate in that sector—whether through quotas, carbon contracts for difference (CCfDs), or similar instruments—the 42 percent target by 2030 is hardly achievable.

H₂News: You said back then that greenhouse gas emissions trading could solve the chicken-and-egg problem for the hydrogen ramp-up. Do you still hold that view today?

Pflegler: Yes, but with one important caveat. In addition to government subsidies, the GHG quota is driving the ramp-up of hydrogen. In the future, this will also include the refinery route—that is, the use of green hydrogen to decarbonize diesel and gasoline products. Where hydrogen makes sense in transportation, the GHG quota enables competitive prices. However, the major markets lie in the industrial sector. GHG quota trading alone will not drive this ramp-up, then. We need similar instruments for other markets, first and foremost for the industrial sector.

H₂News: Thank you very much for agreeing to this interview again, Mr. Pflegler!