In 1874, a French writer, forerunner of science-fiction literature, named Jules Verne (1828-1905) wrote in his famous novel The Mysterious Island about a world where “water will one day be used as a fuel, that hydrogen and oxygen, which constitute it, used alone or simultaneously will provide an inexhaustible source of heat and light of an intensity that coal cannot have.” More than 110 years after his death, hydrogen is a hot topic in the global energy industry.
Hydrogen is the most widespread chemical element in the universe, making up approximately 73% of the mass of the universe. On Earth, it is rarely found in its pure state, putting humanity in a position to produce it in order to benefit from its properties. Depending on the producing technology (and its greenhouse gas emissions as well as its competitiveness), hydrogen is called green, blue, pink, turquoise, or grey.
In Europe, hydrogen is a key priority to achieve the European Green Deal and Europe’s clean energy transition, considering that it can have various uses such as fuel, feedstock, energy carrier, and storage, as well as many possible applications across the industry, transportation, power, and building sectors. In simple terms, hydrogen can store and deliver a tremendous amount of energy, it can be used to generate electricity, can replace fossil fuels in sectors that prove to be difficult to electrify (such as aviation, shipping, steel), and can even be mixed with natural gas and transported through gas pipelines directly into our homes.
Although green hydrogen, made from renewable electricity sources, will be crucial in meeting the EU’s climate neutrality goal, it does not seem sufficient to meet all future hydrogen demand. Therefore, blue hydrogen, made from natural gas with subsequent carbon capture and storage, is also currently promoted at a European level.
Energy transition implies a gradual regulation. To this end, we mention the following steps: first – July 2020, the publication of the EU Hydrogen Strategy; second – June 2021, the enactment of the EU Climate Law, proposing a legally binding target by 2030 of reducing greenhouse gas emissions by at least 55% compared to levels in 1990, and net-zero greenhouse gas emissions by 2050; third – July 2021, the Fit for 55 package for revising European legislation including, inter alia, the creation of a hydrogen cross-border infrastructure and the revision of connected legislation on matters such as greenhouse gas emission allowance trading, alternative fuel infrastructure, and renewable energy; and fourth – end of 2021, the envisaged amendment of the Gas Directive 2009/73/EC and Gas Regulation 715/2019 in such a way as to regulate for a new hydrogen and gas markets decarbonization package.
Furthermore, there is significant EU legislation incidentally applicable to hydrogen, such as the SEVESO Directive, ATEX Directive, SEA and EIA Directives, or Industrial Emissions Directive. Considering that such legislation was not enacted having in mind the new envisaged hydrogen projects nor the importance thereof to the energy market, we expect for the legislation to be amended and for the EU to have proper hydrogen legislation.
At a national level, the National Recovery and Resilience Plan mentions that a functional hydrogen strategy will be ready by the end of next year and proposes the development of two new combined natural gas, renewable energy sources, and hydrogen energy projects.
In terms of legislation, the Romanian energy law has been adapted in the summer of 2020, in order to accommodate energy projects, although the respective amendments are not perfect. By way of example, we mention that the issuance by the Ministry of Energy of authorization for new hydrogen production projects is required simultaneously with the issuance of the National Energy Regulator of a set-up permit as well as a license for the operation of hydrogen production installations.
Although the performance of hydrogen projects in Romania on the basis of the existing legislation is not excluded, new legislation enabling hydrogen projects and implementing EU law is necessary. Such regulation of hydrogen may either be addressed by a revision of the existing normative acts or by new legal instruments, or both.
Will Earth become a mysterious climate-neutral island? Yes, it surely will. Chapeau bas, Jules Verne! For us, professionals in the legal energy practice, it is an exciting time.
By Anca Mihailescu, Partner, and Adrian Manolache, Associate, Ijdelea Mihailescu