EU renewable hydrogen producers will receive free EU carbon credits starting in 2025. This important regulatory move by the EU is a big step for renewable hydrogen producers as it levels the playing field between renewable hydrogen and grey hydrogen and opens up a new revenue stream for renewable hydrogen, thus increasing financial viability.
Under the EU ETS, polluters must procure enough emission allowances (i.e. carbon credits) to completely cover their greenhouse gas emissions on an annual basis. However, some companies have been receiving free allocations of allowances by the EU when they operate in a sector with a high risk of carbon leakage. The recently adopted Commission Delegated Regulation (EU) 2024/873 includes renewable hydrogen as a recipient of free allowances from 2025, prior to this, only producers of grey hydrogen were recipients of free allowances.
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