The European Commission introduces a harmonized methodology to certify low-carbon hydrogen and fuels, offering regulatory clarity and driving ESG compliance across decarbonization-intensive sectors. ESG BROADCAST shares key takeaways.
The European Commission has formally adopted a delegated act under the Hydrogen and Gas Market Directive, establishing a common EU-wide methodology to define and verify the greenhouse gas (GHG) savings of low-carbon hydrogen and fuels. This long-anticipated measure complements existing rules on renewable hydrogen and renewable fuels of non-biological origin (RFNBOs), forming a unified certification framework for hydrogen within the EU’s evolving green energy taxonomy.
To qualify as low-carbon, hydrogen and related fuels must demonstrate at least 70% GHG emission savings compared to unabated fossil fuel use. The new methodology accommodates diverse production pathways—including natural gas-based hydrogen integrated with carbon capture, utilization, and storage (CCUS), as well as hydrogen derived from nuclear and other low-carbon electricity sources. This policy is crucial for sectors that face electrification barriers, such as steel, chemicals, maritime shipping, and aviation.
The delegated act, adopted on 10 July 2025, also aligns with Article 9 of the Hydrogen and Gas Market Directive, which required the Commission to finalize a uniform emissions calculation methodology by 5 August 2025. Following multiple expert consultations and a public feedback process held in Q4 2024, the Commission developed a framework grounded in transparency, investment certainty, and cross-border comparability.
By explicitly recognizing national energy mix variations, the EU’s approach offers pragmatic flexibility while preserving climate ambition. The methodology itself does not define renewable electricity shares—this remains under the Renewable Energy Directive, which applies an annual averaging mechanism. However, the Commission signaled readiness to address harmonization issues during future reviews.
In a forward-looking provision, the Commission will assess the impacts of integrating alternative pathways, such as the use of Power Purchase Agreements (PPAs) from nuclear sources, with a draft methodology expected for consultation in 2026. This aligns with broader efforts under the Clean Industrial Deal to maintain a level playing field across clean hydrogen producers.
The delegated act now proceeds to the European Parliament and Council, which will have two months (extendable to four) to either accept or reject the act without amendments.
This policy development arrives alongside the Commission’s Hydrogen Mechanism, launched under the EU Energy and Raw Materials Platform to boost industrial competitiveness, diversify energy sources, and strengthen energy security.
Strategic significance lies in the enhanced predictability for green finance frameworks and regulatory assurance for investors and producers navigating the EU’s hydrogen economy. It enables corporations to align more effectively with climate risk disclosure mandates and carbon-neutral transition strategies.
ESG BROADCAST will continue monitoring the updates related to this topic. Stay tuned to be updated on the related policy and pivotal regulatory shift.
