Part V - End Use of Hydrogen

18 The Regulation of Hydrogen in the Transport Sector Focus on Refuelling Stations

Endrius Cocciolo

18.1 Introduction

The European Union (EU) has undertaken measures to reduce greenhouse gas (GHG) emissions and to become carbon neutral by 2050. It adopted several interconnected strategic frameworks to that end. These frameworks include the Energy System Integration Strategy (ESI),¹ the Hydrogen Strategy (HS),² and the Sustainable and Smart Mobility Strategy (SSM),³ all of which are aligned with the European Green Deal (EGD).⁴ These strategies designate transport as an end-use sector in which the use of hydrogen, particularly renewable hydrogen, should be promoted. This strategic orientation is intended to contribute to the broader effort to decarbonise the economy.

Global emissions from transport increased at an effective annual rate of 1.7 per cent between 1990 and 2022, surpassing emissions in every other end-use sector except industry, as highlighted by the International Energy Agency (IEA).⁵ If net zero emissions are to be achieved by 2050, carbon dioxide emissions from the transport sector must begin decreasing by more than 3 per cent per annum by 2030.⁶ Globally, road transport appears to be the primary source of emissions within that sector (Figure 18.1).⁷

Figure 18.1 Global emissions from transport.

Source: International Energy Agency, ‘Global CO2 emissions from transport by sub-sector in the Net Zero Scenario, 2000–2030’ (2023) <https://iea.org/data-and-statistics/charts/global-co2-emissions-from-transport-by-sub-sector-in-the-net-zero-scenario-2000-2030-2>

GHG emissions in most sectors of the EU economy have been decreasing since 1990; transportation is an exception.⁸ Road transport has emerged as the main cause of this exceptionalism. Carbon dioxide emissions from road transport increased by 21 per cent between 1990 and 2021.⁹ Passenger cars and motorcycles account for 64 per cent of road-transport emissions. Heavy-duty trucks and buses contribute a substantial 27 per cent, while light-duty trucks account for 10 per cent of the total.¹⁰ Analyses have revealed that the emissions patterns of the Member States of the EU are structurally convergent. If the emissions reduction goal is to be attained, EU policies should account for the structural factors that are specific to each country, and coordinated measures should be formulated accordingly.¹¹

In the light of the foregoing, it should come as no surprise that the transportation sector has been identified as a potential ‘new lead market’ for hydrogen, particularly in instances in which electrification is infeasible.¹² For that potential to be harnessed, however, several technologies must first mature, and cost efficiency must improve. Other renewable and low-carbon fuels should also be utilised. The difficulties that attend on the formation of such a market were acknowledged in the 2020 SSM.¹³ That strategy advocates for a gradual integration of fuel-cell vehicles into the mobility sector, and its focus is on the creation of an alternative fuel infrastructure. The SSM contends that the augmented deployment and utilisation of renewable and low-carbon fuels should be accompanied by the establishment of a comprehensive recharging and refuelling infrastructure to facilitate the widespread adoption of low- and zero-emissions vehicles across all modes of transportation. According to the SSM, constructing 500 of the envisaged 1,000 hydrogen stations by 2025 is a realistic target. The ultimate objective is to establish a dense yet widely dispersed infrastructure that will guarantee convenient access to all users and operators of heavy-duty vehicles.¹⁴ However, in Europe, the number of hydrogen refuelling stations (HRSs) has not even approached half of the target. Currently, only 164 HRSs are available, with another 41 under construction at the time of writing. Most of those stations are in Germany, where 87 have been completed and 19 are under construction.¹⁵ Germany aside, the rollout of HRSs at the Member State level is proceeding at an uneven and contradictory pace. Some national or sub-national governments are establishing support frameworks for hydrogen-based transport, while others are withdrawing from this technology; for instance, in September 2023, the Netherlands introduced a subsidy scheme for hydrogen used in transport.¹⁶ Conversely, Denmark is set to shutter all of its hydrogen filling stations by the end of 2024, and it has suspended plans for new ones.¹⁷ In France, a city that pioneered green hydrogen buses now intends to replace them with electric buses.¹⁸

The objectives of these European strategies, the attendant legal uncertainties, and the commitment of the EU to develop hydrogen-based transport markets and services, when taken in their totality, mean that there is a compelling case for regulatory intervention. Such an intervention would be crucial for the dismantlement of the barriers that presently obstruct the deployment of hydrogen technology. Given the adoption of the Fit for 55 Package,¹⁹ several components of the legal framework for hydrogen are now in force. Those components include the revised Renewable Energy Directive (RED III),²⁰ the new Energy Efficiency Directive (EED),²¹ the Taxonomy Delegated Act,²² and the Delegated Acts on Renewable Hydrogen.²³ Given the purpose of this chapter, special mention should be made of the recent Regulation 2023/1804 (Alternative Fuels Infrastructure Regulation – AFIR), which addresses the deployment of the alternative fuels infrastructure.²⁴

The primary focus of this chapter is on the identification of barriers in the hydrogen value chain. Those barriers may impede the use of hydrogen in the decarbonisation of transport. In particular, the analysis that is presented here zooms into the HRS infrastructure that must be developed for a just and sustainable transition to occur. The chapter is structured as follows: Section 18.2 contextualises the European legislation on hydrogen for transport within the theoretical framework of ‘infrastructure as the fabric of society’, and presents the extant regulatory framework. Section 18.3 identifies the regulatory bottlenecks in the hydrogen value chain that pertain to hydrogen-based transport. Those bottlenecks have to do with production, transport, and storage. Section 18.4 concerns HRSs and the legal issues that affect their rollout. Finally, Section 18.5 provides a summary and charts several avenues for future research.

18.2 Theoretical and Regulatory Framework

The SSM strategy asserts unequivocally that sustainable mobility and transport serve as ‘enabler[s] for our economic and social life’.²⁵ They facilitate commutes as well as family and personal trips, they enable the movement of goods and services, they render manufacturing more efficient, and they strengthen territorial cohesion. Beyond its technical utility, infrastructure is valuable because of the services that it provides – ‘infrastructure could be regarded as the fabric of society, on the one hand, because infrastructure provision literally connect[s] everybody, on the other hand, because infrastructure equip[s] every member of society with more or less equal development opportunities’.²⁶

For infrastructure to discharge all of those functions in an age of energy transformation,²⁷ it must become more complex, including through the construction of new refuelling stations. At the same time, that sophisticated infrastructure ought to be designed with the tenets of the just energy transition in mind;²⁸ otherwise, the hydrogen economy might exacerbate inequality in society. The spatial and temporal distribution of the benefits and costs of new technologies must be allocated equitably, and social needs, other than the legitimate demands of economic operators, must be acknowledged. It is also important that bottom-up participation be promoted within the decision-making frameworks that are devised in the course of the transition.²⁹

The hydrogen refuelling infrastructure furnishes several paradigmatic examples of energy integration and of the interdependent infrastructural systems that typify energy-transition processes.³⁰ In the case of HRSs, physical, energy, and digital infrastructures are linked. As will become evident from the discussion that follows, the elements of the corresponding regulatory framework are tightly intertwined.

18.2.1 The Alternative Fuels Infrastructure Regulation (AFIR)

The significance of the AFIR lies in its comprehensiveness. It is a legal instrument that covers all transportation modes and a wide variety of alternative fuels.³¹ The regulatory strategy is intended to contribute to climate neutrality. In addressing the deficiencies of the hydrogen refuelling infrastructure, the AFIR sets minimum mandatory national targets for the number of publicly accessible HRSs; those targets must be met by December 2030.³²

According to Article 6 AFIR, the Member States are legally obliged to form HRS networks. For reasons of interoperability, the Member States must ensure that the stations in question have a minimum cumulative daily capacity of 1 tonne and that they are equipped with at least one 700-bar dispenser, which would allow light- and heavy-duty vehicles to be refuelled. The targets in the AFIR reflect the desire to create a dense network of HRSs along the Trans-European Transport Core Network (TEN-T; see Section 18.2.3 below). No two stations should be separated by more than 200 km. It should also be possible for hydrogen-powered vehicles to access refuelling stations in or near cities. Consequently, the AFIR requires the Member States to provide at least one publicly accessible HRS in all urban nodes, as defined by the TEN-T. The need for multimodal hubs for heavy-duty vehicles and other modes of transport should also be considered in determining the optimal locations of the HRSs. A single HRS in an urban node may fulfil the TEN-T requirements if the capacity targets are met. In addition, given the emergence of technologies such as liquid hydrogen, that infrastructure should be developed flexibly. The measures that will be adopted to advance the alternative fuels market and to complete the refuelling network must be delineated in national policy frameworks (Article 14 AFIR). The Member States are required to facilitate genuine and early public participation in the development of those national frameworks – the comprehensive involvement of members of the public other than industry stakeholders is crucial for preventing injustices. It should also be noted that the AFIR contains several provisions on the collection of data and the provision of digital services.

18.2.2 The Trans-European Network for Energy (TEN-E)

The TEN-E policy focuses on the interconnections between the energy infrastructures of the EU Member States. In this policy, eleven priority corridors and three thematic areas are identified as integral components of the network. In the updated TEN-E framework, these corridors span diverse geographic regions and various sectors, such as electricity, the offshore grid, and the hydrogen infrastructure. The 2022 revision of the TEN-E Regulation³³ aligned it with the climate-neutrality objectives that are outlined in the European Green Deal and the Climate Law. This revision establishes a framework for selecting infrastructure projects of common interest (PCIs)³⁴ in fields such as electricity, gas, hydrogen, and CO₂. Financial support is available from the Connecting Europe Facility (CEF).³⁵ The TEN-E Regulation also contains rules for determining the scope and governance of Ten-Year Network Development Plans (TYNDP). This framework facilitates cross-sectoral planning in gas and electricity, providing investors with a comprehensive overview of the optimal locations of electrolysers, hydrogen transmission and storage infrastructure, and refuelling stations. In addition, it supports the cost-effective integration of energy systems, in accordance with the energy-efficiency-first principle, which will be discussed further later in this chapter (Section 18.2.4). This integration extends to digital and transmission systems, as well as to synergies with the TEN-T, so that it ‘aims to generate additional opportunities for the decarbonisation of transport from the new vision of energy infrastructure planning’.³⁶

18.2.3 The Trans-European Transport Network (TEN-T)

As a policy, the TEN-T targets the development of a cohesive, efficient, multimodal, and high-quality transport infrastructure across the EU. The policy covers railways, inland waterways, short shipping routes, and the roads between urban nodes, ports, airports, and cargo terminals. It is governed by the TEN-T Regulation.³⁷ The TEN-T Regulation has recently been revised by replacing its previous version³⁸ to ensure that it accords with the EGD, the SSM Strategy, and the Zero Pollution Action Plan.³⁹ The 2024 TEN-T Regulation is based on a three-phase approach to the transport network. The TEN-T network will be developed or upgraded gradually in accordance with the new regulation, which sets clear deadlines for completion: the core network by 2030, the extended core network by 2040, and the comprehensive network by 2050. The problems of the 2013 TEN-T included inefficient and unattractive modes of sustainable transport, the inadequate integration of the alternative fuels infrastructure, the use of outdated digital tools for traffic management, insufficient network interoperability, the poor integration of urban nodes into the regulatory framework, and a misalignment between national investment plans and the TEN-T priorities.⁴⁰ The new Regulation is geared towards enhancing synergies between the TEN-T and TEN-E Regulation,⁴¹ as well as ensuring access, particularly for heavy-duty road vehicles, to the hydrogen that is transported via the TEN-E corridors.⁴² The refuelling stations that are required to that end should be positioned along the TEN-T corridors.⁴³ The HS already provides for synergies between the CEF Energy and CEF Transport. Those synergies should enable a dedicated infrastructure for hydrogen to be funded, and should make it easier to finance HRSs.⁴⁴

The new TEN-T Regulation introduces, inter alia, a new provision on PCI, standards for infrastructural development, additional requirements for multimodal freight terminals and urban nodes, and new operational requirements that strengthen the connection between infrastructure planning and transport-service operations.⁴⁵ The charging and refuelling infrastructure for alternative transport fuels must conform to the provisions of the AFIR.⁴⁶ Therefore, the 431 cities that are identified as urban nodes in the TEN-T will be required to formulate Sustainable Urban Mobility Plans (SUMPs) by 2025.⁴⁷ They will also need to comply with the provisions of the AFIR. Accordingly, their plans should provide for the deployment of at least one HRS, which may be integrated into a multimodal hub to serve buses and coaches.⁴⁸

18.2.4 The Energy-Efficiency-First Principle

The European HS casts hydrogen as a promising alternative fuel in transportation, especially when electrification is difficult or infeasible as a matter of practice. This framing of the choice between hydrogen and electricity reflects a preference for the latter – hydrogen is reserved for cases in which electrification would engender extraordinary difficulties. The preference for electrification accords with the notion that cars and vans with directly rechargeable electric batteries are considerably more energy efficient than cars and vans that have fuel cells. That proposition also holds true for the trucks that operate in cities, but not for long-haul heavy-duty trucks. In the latter case, using fuel-cell technology would be more sensible.⁴⁹ In consequence, the preference for transport solutions based on electric vehicles or fuel cells must be justified by reference to the energy-efficiency-first principle.⁵⁰

The SSM strategy posits that ‘energy efficiency shall be a criterion for prioritising future choice of suitable technologies looking at the whole life-cycle’.⁵¹ Since the adoption of the new EED, the energy-efficiency-first principle has become an overarching principle in energy policy.⁵² The HS refers to two focal areas for the utilisation of hydrogen in mobility. First, hydrogen should be adopted early in ‘captive applications’, such as municipal buses and commercial fleets (for example, taxis). In most cases, those applications have to do with public transportation and highly regulated private services. In such instances, regional or local electrolysers can easily supply HRSs. The introduction of such arrangements ought to be made contingent on a comprehensive analysis of demand for fleets and of the distinct requirements of light- and heavy-duty vehicles. Secondly, the SSM strategy promotes the use of hydrogen fuel cells in heavy-duty vehicles, in conjunction with electrification. The term ‘heavy-duty vehicle’ is defined to include coaches, specialised vehicles, and long-haul freight trucks, all of which produce substantial CO₂ emissions. Notably, the 2025 and 2030 targets from the CO₂ Emission Standards Regulation⁵³ are expected to create an advanced market for hydrogen solutions once fuel-cell technology becomes sufficiently cost effective.

Inspired by efficiency reasons, by way of derogation from the targets for HRSs’ deployment, according to Article 6.4 AFIR, HRS implementation is not required in areas with little heavy-duty vehicle traffic on the TEN-T core network. In such cases, Member States have the flexibility to reduce the capacity of publicly accessible HRSs by up to 50 per cent, as long as specified requirements related to the maximum distance between stations and dispenser pressure are met. The Member States must report all Article 6.4 derogations to the Commission and continuously review the circumstances in which they were imposed to ensure that the conditions that are set out in that article are still being met.

18.3 Regulatory Barriers to the Deployment of Hydrogen Refuelling Stations along the Hydrogen Value Chain

The conditions under which hydrogen can be deployed in the transport sector depend on the entire content of the regulatory framework that governs its production, transport, storage, and supply for end uses, as well as on the legislation that defines the objectives of the transition to renewable energy.⁵⁴ Certainly, the ultimate utilisation of hydrogen for transport and mobility services depends on a series of favourable legal preconditions. These include legislation outlining rules for its production, regulations governing its transport from production sites to points of end use, and storage. This proposition cuts both ways: the regulatory challenges are also shaped by the design of infrastructure.⁵⁵ For example, much depends on whether an HRS supplies hydrogen that is produced in a single facility (in situ production) or in external production plants. In the latter case, hydrogen can be carried through dedicated networks of pipelines; through repurposed natural gas pipelines; or in gaseous or liquefied form, in which case it can be transported by road, rail, or sea. In addition, the regulatory burden on HRSs may come to be as heavy as the one that is imposed on infrastructures that are employed for other purposes.

It is also important to note that, at present, the regulations that affect the hydrogen value chain are largely formulated at the national level. Therefore, it is in the Member States that the main barriers to the rollout of end-use hydrogen in the mobility sector are detected and anticipated. European regulation does not prevent particular Member States, such as Germany,⁵⁶ from developing the necessary infrastructure at a more rapid rate. Harmonisation is of fundamental importance, as is the subsequent monitoring of the transposition and application of the relevant EU law. Furthermore, other types of legislation, such as environmental law, also directly affect the rollout of HRSs.⁵⁷ The regulations that govern environmental impact assessments and integrated environmental authorisation supply salient examples. The subsections that follow outline the regulatory barriers that could influence the uptake of hydrogen in transportation.

18.3.1 The Transport Sector and Hydrogen Production

The production of hydrogen, in contrast to the production of gas or electricity, faced a deficiency in a comprehensive regulatory framework until 2023. This lacuna constituted the initial regulatory impediment to the overall advancement of hydrogen and its application within the transportation sector. The revision of the regulatory framework is poised to accelerate the adoption of production technologies. For instance, the revised Industrial Emissions Directive (IED)⁵⁸ will exempt electrolyser-based production facilities with a capacity below 50 megawatts (MW) from protracted permitting procedures.⁵⁹ This modification will advantage HRSs equipped with on-site hydrogen production. Furthermore, the regulations in force until the first half of 2024 did not differentiate between alternative sources or different purposes;⁶⁰ in addition, a regulatory framework concerning safety indirectly shapes hydrogen production by establishing a set of requirements. For this reason, the legislation did not fully account for the possibility of using hydrogen as an energy vector.⁶¹

Urban planning restrictions can also obstruct the rollout of HRSs. Hydrogen production typically entails the production of an inorganic gas – that is, it is a chemical-industrial process. This legal classification has important consequences for urban planning because the plants in question, whatever their size, need to be confined to industrial areas. For instance, in Spain, as well as in several other Member States, hydrogen production plants may not be located in urban areas. The EU has limited competences in the domain of urban planning. Therefore, this barrier must be overcome at the national level. Under the current regime, it is difficult for private fuel-cell vehicles to access HRSs outside of cities. Consequently, fuel-cell technology will largely be restricted to heavy-duty vehicles, which are more likely to transit in industrial areas.

The stricter environmental law requirements for small-scale hydrogen production matter, too. Under the Directive on Environmental Assessment,⁶² public and private projects with potentially significant effects on the environment can only be authorised upon completion of an environmental impact assessment. Annex I circumscribes the set of projects for which such assessments are mandatory across the Union. Annex II lists the types of projects that the Member States may subject to environmental impact assessments if they so choose. Even though neither Annex refers to the production, transport, or storage of hydrogen, those activities are highly likely to be caught by the ‘integrated chemical installations’⁶³ category in Annex I. Therefore, an environmental impact assessment must be completed for all production installations, including HRSs with in situ production. This arrangement increases the regulatory burden for the operators of small-scale projects, which compromises the financial viability of those projects.

The in situ production of hydrogen for HRSs is expected to occur primarily at small power-to-gas installations that rely on water electrolysis. At those installations, hydrogen is derived from substantial amounts of water. Consequently, in most Member States, it will be necessary for those who run such projects to obtain administrative authorisation or, in cases in which the annual volume of water consumption at the installation is expected to be relatively high, water concessions. Authorisation requirements vary widely across the EU. For instance, in Spain, water is designated as a public good. Therefore, green hydrogen production will likely require the grant of concessions. Such grants are conditional on the order of preference that is contained in the hydrological plans of each river basin district, in which industrial uses other than electricity production tend to come fourth.⁶⁴ Hydrogen production through electrolysis falls into that category, and it is not treated as equivalent to the production of electricity.

18.3.2 Mobility, Transport, and Storage of Hydrogen

The EU can only fulfil its commitment to develop an internal market for hydrogen that smooths the decarbonisation of the economy by building an appropriate infrastructure.⁶⁵ Dedicated hydrogen networks and cross-border networks should enable trade between the Member States while also promoting competition. The success of HRSs with no onsite production depends on the availability of such an infrastructure because pipelines are likely to be the most cost-efficient transportation solution. This is the first legal hurdle encountered in efforts to transport and store pure or blended hydrogen through the gas grid until the adoption of the hydrogen and decarbonised gas market package (the Hydrogen Package).⁶⁶ The main objective of the Hydrogen Package is to adapt the rules that currently apply to the natural gas market to the specificities of the infrastructure for the transport, storage, and supply of hydrogen. The new Package includes specific provisions on dedicated hydrogen networks and storage infrastructure. The European experience in energy shows that three key conditions must be met if market competition is to be guaranteed: open and non-discriminatory access to the network for third parties; regulated tariffs; and rules on unbundling.⁶⁷ For an in-depth analysis of the contents of the Hydrogen Package, see Chapter 2, authored by Leigh Hancher and Simina Cuciu.

The absence of a dedicated regulatory framework for the terrestrial transport of hydrogen is also a cause for concern. Only transport through networks falls within the scope of the Hydrogen Package. Hydrogen can also be transported in liquified or condensed form. In that case, trucks, boats, and trains may be used as means of transportation. Whether these operations are energy efficient depends on the context. The transport of hydrogen by road is regulated by the agreements on the transport of dangerous goods, particularly the European Agreement concerning the International Carriage of Dangerous Goods by Road (ADR) and Directive 2008/68/EC on the inland transport of dangerous goods.⁶⁸ Furthermore, depending on the transport vector, the regulations concerning the International Carriage of Dangerous Goods by Rail (RID) and the European Agreement concerning the International Carriage of Dangerous Goods by Inland Waterways (ADN) also apply. These legal instruments give rise to various regulatory barriers for emerging synthetic compounds classified as Liquids Carriers Organic Hydrogen (LCOH). Notable among them are specific conditions governing the transport of hazardous materials via rail, ship, or road, including designated dates and times. Against this backdrop, as explained previously, the new guidelines of the TEN-T Regulation stress the need to align with the TEN-E and the AFIR to deploy alternative fuels refuelling infrastructure.⁶⁹

The final regulatory problem that ought to be considered here has to do with the hefty environmental law burdens that the providers of small-scale hydrogen storage bear. The Directive on Environmental Assessment is applicable to hydrogen storage. Annex I, which contains a list of projects for which an extensive ex ante assessment is required, refers to facilities for the storage of petroleum, petrochemicals, and chemical products, a category that includes hydrogen. The corresponding obligation to complete an extensive assessment applies to facilities with a capacity of at least 200,000 tonnes. A simplified environmental assessment is mandatory for lower-capacity projects.

18.4 Hydrogen Refuelling Stations

The wide availability of HRSs⁷⁰ is a prerequisite for the adoption of hydrogen as an energy carrier.⁷¹ This issue poses several economic and regulatory challenges that tend to resemble the classic chicken-and-egg dilemma. If the sustainable energy transition is taken seriously, then the law should incentivise behavioural transformations among the public. Fuel-cell vehicle advocates argue that these vehicles provide a range and refuelling experience comparable to traditional internal combustion engine vehicles.⁷² This situation is posited to confer a competitive edge to hydrogen-powered vehicles over their electric counterparts. Indeed, according to a survey that the Clean Hydrogen Partnership conducted,

only a quarter of customers consider charging times longer than 30 minutes acceptable. This means that even if fast-charging time could be halved, 75% of customers would not be satisfied. Consumer preferences are vital to take into consideration. For the decarbonisation of transport to succeed, consumers must be willing to purchase and drive the offered vehicles. Only if the range of models meet the requirements of consumers will their adoption increase, triggering a further scale-up and acceleration of investment into new models.⁷³

These conclusions rest on the presumption that drivers will maintain current usage patterns, disregarding intrinsic energy efficiency considerations. This assumption fails to consider the ongoing evolution of electric battery technology and the potential emergence of new modes of private transportation. Moreover, it neglects the imperative to formulate a sustainable energy policy in the transportation sector that addresses broader societal needs, beyond the preferences of affluent individuals who can afford alternative-fuel vehicles. Consequently, it is crucial to advocate for public policies integrating sustainability, justice, and energy efficiency principles, transcending individual preferences and specific industrial interests. Sustainable mobility plans at various territorial levels, as delineated in the SSM, play a significant role in fostering such integration.

The AFIR imposes binding targets on Member States. The aim of those targets is to ensure that a robust and publicly accessible infrastructure for hydrogen-based road vehicles will be established. The targets call for alignment between the TEN-E and TEN-T at the European level. Such a development would accelerate the flow of investment to hydrogen infrastructure. The alignment in question can only be achieved through sound infrastructural planning, which should be informed by the TYNDPs. Furthermore, it remains unclear whether the Member States will meet the targets for hydrogen refuelling infrastructure that are set forth in AFIR by the 31 December 2030 deadline.

Turning to the specific issue of HRSs, it should be noted that the AFIR does not distinguish between refuelling stations that produce hydrogen onsite and stations that only store it. According to Article 2.59 AFIR, a ‘refuelling station’ is a single physical installation that has one or more refuelling outlets. The emergence of differences in national permit procedures that depend on whether hydrogen is generated onsite or offsite would be highly problematic.

Importantly, the binding targets for a minimum number of stations that are included in the AFIR apply only to publicly accessible HRSs. A ‘publicly accessible’ station is defined as ‘an alternative fuels infrastructure which is located at a site or premises that are open to the general public, irrespective of whether the alternative fuels infrastructure is located on public or private property, whether limitations or conditions apply in terms of access to the site or premise and irrespective of the applicable use conditions of the alternative fuels infrastructure’ (Article 2.45 AFIR). It follows that the enabling legal framework of the AFIR does not apply to refuelling outlets that are located on private property if access to them is restricted to a limited and determinate set of individuals. The parking places of an office building, if they are available only to employees or other authorised individuals, provide a salient example. If the construction of HRSs at such non-publicly accessible premises is cost effective, it may be desirable to consider energy communities⁷⁴ or other self-consumption formulas, especially ones that involve industrial participation. Those arrangements could benefit from coverage in the enabling legal frameworks of the RED, the EED, and the Internal Market for Electricity Directive.⁷⁵

The AFIR provides that the national policy frameworks for the deployment of alternative fuels in the transport sector, that the Member States adopt, ought to include measures that eliminate potential impediments to the planning, authorisation, procurement, and operation of alternative fuel infrastructures, be they publicly accessible or not. The responsibility for the effective implementation of measures for the establishment of an adequate hydrogen refuelling infrastructure lies with national legislatures and authorities. Finally, it is important to note that the AFIR establishes an indifference rule for publicly accessible HRSs – the operator or owner of a publicly accessible refuelling station must ensure that the station can serve both light- and heavy-duty vehicles.⁷⁶

18.5 Conclusion

Transport, especially road transport, has witnessed an increase in GHG emissions since 1990. This trend is in stark contrast to those that have been observed in other domains of economic and social activity. For this reason, the decarbonisation of transport would be a stepping stone in the pursuit of the energy and climate targets of the EU. Accordingly, the various European strategies that form part of the regulation of the sustainability transition ascribe a central role to hydrogen, as well as to other alternative fuels.

A complex and coordinated legal framework must be created if the potential of this energy vector is to be exploited fully. That framework remains a work in progress, both as a general matter and in the specific contexts of mobility and transport. This chapter focused on a recent piece of legislation on HRSs, namely the AFIR. It transpires that, as far as infrastructure is concerned, there is a growing regulatory synergy between energy and transport. It is important to underscore that the deployment of end-use hydrogen in the transportation sector will primarily focus on long-haul heavy trucks. In addition, concerning other modes of transportation, such deployment should occur in strict accordance with the notion of a socially just transition and the principle of ‘energy efficiency first’.

HRSs are one element of a large infrastructure. The infrastructure in question must be designed, planned, and implemented to further a broad vision. That vision ought to reflect considerations of, among others, social acceptability, energy efficiency, territorial cohesion, sustainability, and fair access.

The analysis of the regulatory barriers along the hydrogen value chain – that is, the legal problems that may affect the generation, transport, storage, and end use of hydrogen through HRSs – revealed several causes for concern. The AFIR, important though it may be, is not sufficient. Several avenues of research are open at present. First, the understanding of the challenges derived from the new Hydrogen Package. Second, scholars and policymakers must ensure that the content of the Package is coordinated with the content of other relevant instruments, such as the revised TEN-T. Third, a concerted effort should be made to ensure that the transposition, implementation, and planning measures that the Member States will adopt will be consistent with EU law and policy. Finally, the actual rollout of the hydrogen infrastructure should reflect the goals of the just transition, namely social benefits and environmental sustainability.

19 The Regulation of Hydrogen Storage as End Use

Kaisa Huhta and Markus Sairanen

19.1 Introduction

Limiting global warming to 1.5 °C and reaching net zero around the middle of the century, as stipulated by the Paris Agreement, will require a swift and radical decarbonisation of energy production and consumption.¹ Achieving this goal will entail an unprecedented uptake of renewable energy sources. A progressive increase in renewable energy production is already underway, and this trajectory is expected to continue.² However, an increase in the share of intermittent energy sources in the overall energy mix introduces new technological and commercial challenges, which will vary depending on the sector in question.³ While intermittent production on a small scale is not an issue, large-scale penetration of intermittent renewable energy poses technological and economic challenges that urge new types of governance approaches.⁴

In the electricity sector, a radical shift to intermittent renewable energy sources – predominantly wind and solar – means that electricity systems will need to be adjusted to take into account the increasing variability in production to ensure a reliable supply when renewable energy sources are not available.⁵ While there are relatively developed technologies, such as batteries, that can store electricity for short periods of time, medium- and long-term storage continues to be a challenge.⁶

Hydrogen storage has been presented as a potential solution to this obstacle.⁷ The gas can be stored for days, weeks and even months depending on the need, and can therefore provide seasonal storage where batteries cannot.⁸ The storage options are also diverse: it can be stored in pressurised gaseous or liquified forms; in tanks or as part of a chemical structure;⁹ or in salt caverns, water aquifers or depleted natural gas and oil reservoirs.¹⁰ If upscaled sufficiently, hydrogen storage could be a technological solution to remedy the material and temporal shortcomings¹¹ of battery technologies as well as an economic solution to flatten energy price peaks by providing supply-side flexibility.¹² In practice, hydrogen would be produced and stored when renewable electricity generation is abundant and therefore cheap, and used to supply energy when renewable sources are unavailable or scarce and therefore more expensive.¹³ Moreover, producing hydrogen from renewable electricity and storing it in tanks or trailers would allow the transportation of renewable energy to places that are inaccessible by transmission or distribution lines.¹⁴

The promise of hydrogen storage was recognised in research nearly four decades ago,¹⁵ and its potential in balancing the intermittency of renewables-based energy systems has been discussed for quite some time in energy research.¹⁶ Not surprisingly, given the urgency of the low-carbon transition, hydrogen storage has recently gained significant traction in energy research across disciplines. Its potential has been investigated in the context of microgrids,¹⁷ profitability and economic rationale,¹⁸ different jurisdictions,¹⁹ different economic sectors²⁰ and different hydrogen storage technologies,²¹ as well as in comparison to other energy storage technologies.²² This range and depth of interest notwithstanding, a host of technological and commercial questions remain unexplored.

This chapter examines the legal governance of hydrogen storage by evaluating the typical legal challenges and opportunities of using hydrogen storage to balance the intermittency of renewable energy sources in the low-carbon energy transition. To demonstrate how these questions can be governed through a transnational legal framework, the analysis focuses on the European Union’s (EU) legal solutions for electricity and hydrogen. The EU provides an illustrative case, as its approaches to hydrogen have developed dramatically in recent years. The measures taken or proposed will all change the legislative scenery for hydrogen and hydrogen storage.²³ These include the hydrogen-specific strategy published in 2020;²⁴ the Fit for 55 package, proposed by the Commission in 2021; the Hydrogen and Decarbonised Gas Market package (Gas Package) proposed later that year; and the legal responses adopted to the Russian invasion of Ukraine in 2022 and 2023. While the earlier EU legal frameworks for hydrogen storage have been discussed in legal scholarship,²⁵ the literature lacks comprehensive analyses of these more recent legal and policy tools.

The remainder of the chapter is structured as follows. Section 19.2 discusses the legal challenges and opportunities of using hydrogen as energy storage. Here, the analysis takes an end-use-neutral approach; that is, it examines the legal governance of hydrogen storage in the form of power-to-gas irrespective of the purpose for which it is used after storage.²⁶ Section 19.3 focuses on EU law and policy as a case study to ascertain the applicable legal framework for hydrogen storage. Section 19.4 then identifies the approaches taken through the proposed legislative instruments and probes the gaps that still remain in the existing EU legal framework. Section 19.5 concludes with key insights from the analysis.

19.2 Legal Challenges and Opportunities of Using Hydrogen as an Energy Storage Medium

Any emerging technological innovation in the energy sector is likely to invite new types of legal questions; these will vary depending on the type of technology and energy carrier and the jurisdiction in which they are governed. This is particularly true for hydrogen storage, the technologies for which vary,²⁷ some being more emergent than others.²⁸ While a detailed analysis of the variety of legal questions that figure in the case of different hydrogen storage technologies²⁹ is beyond the scope of this chapter, it should be acknowledged that the choice of storage technology naturally influences the legal questions that may arise. For example, for a technology located deep underground the environmental permit processes or the safety requirements are likely to be different compared to those for a hydrogen storage facility sited in a residential area. Similarly, the jurisdiction in which the hydrogen storage is located may well determine the pertinent legal issues to be addressed. A region with an extensive natural gas infrastructure and a commensurately robust legislative framework is likely to encounter legal issues relating to the applicability of the existing legal framework to hydrogen storage whereas a jurisdiction with no natural gas infrastructure and no existing legal framework is likely to deal with very different issues.

Generally speaking, most jurisdictions do not have a legislative framework specific to hydrogen (storage), or such a framework is emergent at best.³⁰ The applicable legal framework for natural gas is often expected to cover key issues of hydrogen storage, and may present a significant opportunity for finding synergies between natural gas and hydrogen laws.³¹ However, in the absence of a gas-specific governance framework applicable to hydrogen, the legislative framework relevant for hydrogen storage is likely to not only draw on legal frameworks for electricity and natural gas but also to tap legal fields beyond energy law, such as environmental law, administrative law or contract law. In what follows, four areas of law are presented which may offer relevant and applicable rules for hydrogen storage yet, at the same time, create challenges: financial incentives, spatial planning, environmental and administrative permitting, ownership and access.

Hydrogen storage requires considerable investments in what are often only nascent technologies and, in most if not all jurisdictions, are not comprehensively governed by legislative frameworks explicitly designed to incentivise investments financially. This being the case, legal and policy frameworks may undermine one another and frustrate efforts to provide a stable and supportive investment environment for hydrogen storage. For example, while a hydrogen policy instrument or a strategy may state that hydrogen storage is a key goal that must be incentivised, the legal framework might in practice disincentivise the pursuit of the very same goal. EU energy policy, for instance, presents hydrogen storage technologies as an important decarbonisation instrument, but under EU energy law hydrogen storage operators are taxed twice: they are taxed when they use electricity to produce hydrogen storage and when they inject power back into the grid.³² This legislative setting, also referred to as double taxing or double charging, has been cited by industry and in previous energy research as a significant barrier, discouraging investment in hydrogen storage.³³ By the same token, creating optimal legal and policy frameworks to ensure sufficient investment in hydrogen storage has been identified as a key legal issue.³⁴

The second challenge is spatial planning. Its effects, again, depend heavily on the particular hydrogen storage technology used and the jurisdiction in which the planning takes place. In any event, land rights must generally be secured to gain access to privately owned land.³⁵ This might take place through voluntary contracts or through statutory acquisition rules depending on the situation and the jurisdiction. Furthermore, the extent to which land ownership rights reach below ground varies between jurisdictions.³⁶

Third, in a consideration inherently connected to spatial planning, environmental and administrative permit processes are likely to influence the attractiveness and feasibility of hydrogen storage projects. These concerns are similar to those affecting any energy technology: its environmental impact, safety and location are subject to legal requirements that may or may not make pursuing the project too costly, too time-consuming, or both.

Finally, ownership and access have been cited as key issues that may create challenges for hydrogen storage.³⁷ It has been rightly pointed out that the ownership of energy storage facilities is a critical question for the development of hydrogen storage projects.³⁸ Specifically, the question of who is allowed to own hydrogen storage arises in connection with unbundling rules, which require the separation of network activities from those of production and supply. Robust and clear rules are needed to establish whether it is network operators, energy producers, or both, that are allowed to own hydrogen storage. The following section analyses how these potential opportunities and challenges have played out in the context of the EU legal framework.

19.3 Regulating Hydrogen Storage in the EU

19.3.1 Applicable Policy and Legal Framework

The EU’s Hydrogen Strategy³⁹ and the Energy System Integration Strategy⁴⁰ view hydrogen energy storage as having several interrelated functions in the European energy system. One is that it stands to increase the flexibility of the energy system. Specifically, it provides an offloading option for renewable energy during times of abundant supply and additional generation capacity during times of scarcity. This in turn accommodates the changing needs of the grid and enables the energy system to manage the variability and uncertainty of demand and supply across all relevant timescales.⁴¹ Furthermore, the two strategies point out that the buffering function of hydrogen has benefits that go beyond mere energy storage. As hydrogen can be stocked and transported, it can be used to transport stored energy across regions. It also makes it possible to connect different energy markets and end-use sectors as well as to reprice energy in specific hydrogen markets.⁴² To realise these aspirations, the strategies point towards numerous regulatory issues, ranging from enforcing the implementation of existing energy market legislation to removing regulatory barriers and drafting a dedicated regulatory framework for hydrogen. Furthermore, the Hydrogen Strategy notes that the deployment of hydrogen storage will require supportive policies and legislation as well as private and public funding for the required investments.⁴³

In the EU electricity legislation, the most important provisions for hydrogen storage are found in the Electricity Directive⁴⁴ and Electricity Regulation.⁴⁵ These legislative acts lay down rules on who can own and operate energy storage and how grid charges are established. The applicability of these substantive provisions hinges on the definition of energy storage. The Electricity Directive provides the following definitions relating to energy storage:

Energy storage means, in the electricity system, deferring the final use of electricity to a moment later than when it was generated, or the conversion of electrical energy into a form of energy which can be stored, the storing of such energy, and the subsequent reconversion of such energy into electrical energy or use as another energy carrier.⁴⁶ …

Energy storage facility means, in the electricity system, a facility where energy storage occurs.⁴⁷

Hydrogen storage fits well within the definition of energy storage when all three phases – conversion of electricity into hydrogen, storing the hydrogen produced and reconverting it into electricity – are carried out within a single facility.⁴⁸ However, as hydrogen can be transported and stored, each of these phases can be carried out independently of each other in separate facilities and even by different operators. It is therefore less clear whether facilities that only take part in one or two of these phases should be considered energy storage facilities.⁴⁹ In this regard, the Directive is clear only to the extent that reconversion is not necessary for an operation or facility to be classified as energy storage. In other words, a facility where electricity is converted into hydrogen can be classified as an energy storage facility even if the hydrogen is not reconverted later.⁵⁰ The Directive provides less guidance for the other possible combinations of these phases. For instance, it is unclear whether a combined hydrogen storage and electricity generation facility would be considered an energy storage facility or a normal electricity generation facility.⁵¹

There are several groups of actors that may be interested in operating hydrogen storage facilities, such as electricity generators, electricity transmission and distribution system operators (network operators), independent energy storage facility operators and electricity customers. In general, the electricity legislation sees energy storage as a competitive market-based activity, meaning that market participants are generally allowed to own and operate energy storage facilities but electricity network operators are usually prohibited from doing so.⁵² Although network operators might be interested in running energy storage facilities to fulfil their tasks under the Directive, the electricity market legislation would prefer that they procure storage services from the competitive market.⁵³ Nevertheless, the Directive provides some exceptions to these prohibitions.⁵⁴

Although the Electricity Regulation lays down the general provisions constituting the framework for establishing grid charges, it does not provide unequivocal guidance as to whether double grid charges should be abolished. What is more, the other relevant legal instruments provide only a few limited clarifications on this issue: the Electricity Directive provides that active customers must not be subject to double charges for stored energy remaining within their premises or when providing flexibility services to the system operator;⁵⁵ and the Renewable Energy Directive (RED) has a similar provision pertaining to renewables self-consumers.⁵⁶ Beyond these, one finds only a general provision in the Electricity Regulation stipulating that network charges should not discriminate positively or negatively against energy storage.⁵⁷ Interestingly, this provision has been interpreted as both justifying the imposition of double charges and abolishing them. Since energy storage operators both consume and produce electricity, potentially using the grid twice, it can be argued that the prohibition of positive discrimination requires charging energy storage operators twice. The opposite view is that the operation of energy storage provides benefits to the grid, and therefore avoiding negative discrimination requires charging the energy storage operator only once.⁵⁸ Some Member States have imposed double grid charges whereas others have not, and some have set up special tariff structures to accommodate energy storage.⁵⁹

19.3.2 Storing Renewable Energy in Hydrogen

One of the main drivers behind deploying hydrogen storage in the EU is to integrate renewable energy into the energy system. The bulk of the legal framework geared to supporting renewable energy in the EU is set out in the RED.⁶⁰ In particular, the Directive provides three main features underpinning the storage of renewable energy with hydrogen technologies: it defines what is considered renewable energy, including renewable hydrogen and renewable electricity; provides basic rules for issuing guarantees of origin; and sets targets for renewable energy consumption.⁶¹ At the time of writing, the Directive is under review, with numerous proposed amendments to its provisions relating to hydrogen and energy storage. The EU’s co-legislators have agreed on the text of the amendments, and while not yet formally adopted,⁶² the revised Directive (RED III) is discussed where appropriate in what follows.

The RED recognises that hydrogen produced from renewable electricity can be considered a form of renewable energy and that its renewable qualities can be certified through guarantees of origin.⁶³ A guarantee of origin is a document that is used to show the final customer that a given share of the energy supplied to it has been produced from renewable sources. Guarantees of origin can be traded independently of the energy to which they pertain, meaning that they essentially serve as evidence of renewable energy.⁶⁴ Indeed, this is the sole function of guarantees of origin, and the system plays no role in calculating the attainment of different renewable energy targets under the RED.⁶⁵

Rather than using guarantees of origin, the attainment of the different renewable energy targets is calculated using the rules provided in the RED. The rules for what are known as ‘renewable fuels of non-biological origin’ have become particularly important in the case of renewable hydrogen, as they set out how renewable electricity for hydrogen production needs to be sourced if the hydrogen produced is to be considered renewable.⁶⁶ The main principles informing these rules are set out in the Directive and further detailed in what is known as the Additionality Regulation.⁶⁷ These rules aim to ensure that the electricity used for the production of hydrogen is renewable and that the production of hydrogen leads to emissions reductions and increased deployment of renewable electricity generation.⁶⁸ Strictly speaking, the rules only apply to calculating whether the renewable energy targets under the Directive are achieved.⁶⁹ However, in practice other instruments, such as state aid guidelines, refer to the calculation rules, widening their actual scope of application.⁷⁰

The RED and the Additionality Regulation provide different calculation rules for different circumstances. The rules frequently use the so-called additionality, temporal correlation and geographical correlation criteria. In brief, additionality criteria require that the electricity for hydrogen production is sourced from new installations.⁷¹ Temporal and geographical correlation criteria stipulate that hydrogen is produced at times and in places where renewable electricity is available.⁷²

When the electrolyser and electricity generation facilities are connected by a direct line, the calculation rules allow for the hydrogen produced to be considered renewable if certain additionality criteria are met.⁷³ Hydrogen produced from grid electricity can be deemed entirely renewable if the electricity is sourced from installations generating renewable energy and the additionality, temporal correlation and geographical correlation criteria are met.⁷⁴ However, in some circumstances it is not necessary to meet the three sets of criteria for the hydrogen produced to be considered renewable. There are two situations where none of the criteria need to be met and one situation where the additionality criteria do not apply. First, hydrogen produced from grid electricity is considered entirely renewable when it is produced during a period of oversupply of electricity and the energy stored enables the use of renewable electricity to a greater extent than would otherwise be possible.⁷⁵ Second, there are specific calculation rules, which are not subject to the three sets of three criteria, for the production of hydrogen from grid electricity in bidding zones where the proportion of renewable energy in the electricity mix exceeds 90 per cent.⁷⁶ Finally, it is not necessary to comply with the additionality criteria if the hydrogen is produced in a bidding zone where the emission intensity of electricity is below a certain threshold. In this case, the hydrogen produced is considered fully renewable if the electricity used is sourced from renewable sources and the geographical and temporal correlation criteria are met.⁷⁷

Although clear rules for converting renewable electricity into renewable hydrogen are in place, the RED does not consider electricity generated from renewable hydrogen as renewable energy. According to the Directive’s definition, electricity is considered renewable when it is generated from renewable sources; yet even though the energy content of renewable hydrogen is derived from renewable sources, hydrogen is considered an energy carrier rather than an energy source.⁷⁸ Consequently, electricity that is produced from renewable hydrogen cannot be considered renewable energy. Furthermore, the provisions on guarantees of origin make no references to energy storage or the option of granting guarantees to electricity produced from renewable hydrogen.⁷⁹ However, there have been attempts to circumvent this obstacle in the context of energy storage.⁸⁰

19.3.3 State Aid for Hydrogen Storage

Member States may want to facilitate and accelerate the deployment of hydrogen storage by granting financial support from public funds. In the EU, such support is usually considered state aid, which the Member States are generally prohibited from providing, although there are extensive exceptions to this rule.⁸¹ In practice, Member States must notify the Commission of their intention to grant state aid, after which the Commission assesses the measure and approves or prohibits it.⁸² Most importantly, the Commission may decide to allow Member States to grant aid that facilitates the development of certain economic activities, including those in the energy sector, provided that the aid does not affect trading conditions in the EU too negatively.⁸³ The notification of a measure to the Commission by a Member State and subsequent assessment by the Commission of the measure take place under the rules provided in the General Block Exemption Regulation (GBER)⁸⁴ and the Commission Guidelines on State Aid for Climate, Environmental Protection and Energy (CEEAG).⁸⁵ The GBER exempts aid measures from notification and assessment if certain general conditions are met – such as not exceeding the maximum thresholds for the amount of aid provided – and if the measure meets the category-specific criteria laid down in the Regulation. Measures that are not exempted from notification are individually assessed by the Commission under the CEEAG.⁸⁶

The GBER exempts several categories of aid from notification and assessment, including investment aid for projects that are considered energy infrastructure. This category includes aid for large underground hydrogen storage facilities that are subject to tariff regulation and third-party access rules, as well as energy storage facilities owned by electricity network operators.⁸⁷ The category also includes aid for hydrogen storage projects that are identified as Projects of Common Interest under the Trans-European Energy Networks Regulation.⁸⁸ Also exempt from notification under the GBER is aid for behind-the-meter electricity and hydrogen storage when these are deployed together with renewable electricity generation or renewable hydrogen production.⁸⁹

The catch-all category under which aid for most types of hydrogen energy storage projects is assessed is section 4.1 CEEAG. The section lays down specific rules for assessing aid for the reduction of greenhouse gas emissions. Most importantly, it applies to support schemes for energy storage when their primary objective is to reduce emissions, for example by facilitating the incorporation of a higher share of renewable energy in the energy system.⁹⁰ In addition, section 4.1 covers hydrogen storage infrastructure that is combined with energy production or use. Finally, it acts as a fall-back category for ‘dedicated infrastructure projects’⁹¹ that are ‘built for one or a small group of ex ante identified users and tailored to their needs’⁹² and do not fall within the definition of energy infrastructure (assessed under section 4.9 CEEAG).⁹³ These could include smaller hydrogen storage installations that have a limited number of users. Aid schemes for hydrogen energy storage may also be assessed under section 4.8 CEEAG when the energy storage is primarily used for ensuring the security of electricity supply.⁹⁴

In response to the coronavirus pandemic after 2019 and the escalation of the Russo-Ukrainian war in 2022, the general state aid framework discussed above has been complemented with temporary crisis measures.⁹⁵ Specifically, the Commission’s state aid guidance now includes the Temporary Crisis and Transformation Framework,⁹⁶ which was adopted in March 2022 and has been amended several times.⁹⁷ The latest version of the Framework includes specific sections on accelerating the rollout of renewable energy, expanding electricity storage and promoting storage of renewable hydrogen. These sections provide assessment criteria for investments and operating aid for electricity that are simpler and less stringent than those under the CEEAG. The Framework is applicable to aid measures granted by the end of 2025 and implemented by the end of 2028.⁹⁸

19.4 Gaps and Future Directions in the EU

As seen above, while the current EU legislative framework addresses numerous regulatory issues that affect hydrogen electricity storage, it still has unclear provisions and gaps and can be described as emergent. Many of the gaps and issues will be addressed by the ongoing legislative projects, which are expected to enter into force in the coming years. Most importantly, the Gas Package will provide a specific regulatory framework for hydrogen infrastructure and mark a complete overhaul of major legislative instruments.⁹⁹ Planning and permitting issues have recently become a key theme in the EU’s energy policy debate and RED III will amend the Renewable Energy Directive to address these concerns.¹⁰⁰ What follows gives a brief overview of how these developments stand to affect hydrogen storage.

The questions of whether, how and to what extent the current EU gas legislation applies to hydrogen storage have been discussed in the literature.¹⁰¹ The main consequence of applying gas legislation to hydrogen storage would be having to decide whether ownership unbundling and third-party access rules apply to facilities storing hydrogen.¹⁰² To summarise this discussion, the scope of application of gas legislation to hydrogen energy storage is unclear, and depends on the specifics of the storage facility and the interpretation of the gas legislation.¹⁰³ The proposed recast Gas Directive¹⁰⁴ and Regulation¹⁰⁵ aim to improve this situation by establishing separate legal frameworks for hydrogen and natural gas, clarifying which rules apply to hydrogen infrastructure and which apply to mainly methane-based natural gas infrastructure.¹⁰⁶

The proposed gas legislation aims to apply third-party access rules to large underground hydrogen storage facilities.¹⁰⁷ This reflects the current situation, in which storage in salt caverns is the only proven technology for large-scale hydrogen storage. Yet only a limited number of appropriate geological formations exist and they are located unevenly among the Member States, resulting in a need to regulate access to the storage sites.¹⁰⁸ The proposed Gas Directive defines a ‘hydrogen storage facility’ as a large facility stocking hydrogen at a high grade of purity. According to the definition, the qualifier ‘large’ refers in particular to large-scale underground storage and excludes smaller, easily replaceable storage installations.¹⁰⁹ Read together with the proposal’s background, the definition encompasses large-scale underground storage and excludes all other types of storage installations. After the Directive enters into force, Member States will be required to ensure that a strict system of regulated third-party access to hydrogen storage facilities is applied.¹¹⁰ This differs from the regulation of natural gas storage facilities, which gives Member States a choice between applying a negotiated or a regulated third-party access regime.¹¹¹ However, the proposed gas legislation also includes several exemptions to third-party access rules.¹¹²

The proposed Gas Directive would also lay down horizontal and vertical unbundling rules for hydrogen storage and network operators. The proposed directive does not consider hydrogen storage facilities to be part of hydrogen networks and therefore sets out separate sets of rules for hydrogen storage operators and hydrogen network operators.¹¹³ The vertical unbundling rules are intended to separate operating hydrogen storage from hydrogen production and network operations. Most importantly, hydrogen storage operators that are part of a vertically integrated undertaking would need to be independent of unrelated activities, including the production of hydrogen. As a result, operators of large-scale hydrogen facilities could not operate hydrogen production facilities.¹¹⁴ In turn, horizontal unbundling rules restrict hydrogen network operators from operating electricity and natural gas networks. However, only account unbundling rules would apply to hydrogen storage facilities; that is, hydrogen and natural gas undertakings would need to keep separate accounts for hydrogen storage and other activities as if these were being carried out by separate undertakings.¹¹⁵

Recent developments have heightened the importance of addressing planning and permitting issues at the EU level. The escalation of the Russo-Ukrainian War in 2022 prompted the EU to quickly reduce its dependence on Russian energy imports and accelerate the energy transition. As a follow-up, the EU institutions adopted several emergency measures to expedite and streamline the permitting of renewable energy projects.¹¹⁶ The Commission then went on to propose amending the RED to include stronger rules on spatial planning and permitting for renewable energy projects. These amendments have been incorporated into RED III. Under the Directive, Member States will have to identify and designate areas well suited for renewable energy projects as ‘renewables acceleration areas’.¹¹⁷ The provisions on such areas also apply to what is known as co-located energy storage, which is defined as ‘an energy storage facility combined with a facility producing renewable energy and connected to the same grid access point’.¹¹⁸ To support and complement renewables acceleration areas, Member States may also designate dedicated infrastructure areas for the development of grid and storage projects that are necessary to integrate renewable energy into the electricity system.¹¹⁹ These areas are selected with environmental considerations in mind to enable a simplified environmental assessment when considering individual projects in them.¹²⁰

RED III will also require Member States to streamline permitting procedures. They will have to establish maximum limits on the duration of the permitting procedures and designate contact points to facilitate the permit-granting process and guide applicants. The rules on streamlining procedures will apply to projects located in the renewables acceleration areas and elsewhere, but the Directive will impose stricter time limits and other requirements for projects within acceleration areas.¹²¹ Finally, RED III includes an article on the principle of overriding public interest. The principle provides that when balancing legal interests in individual cases, renewable energy projects, including storage assets, are presumed to be in the overriding public interest and to serve public health and safety. This presumption enables the projects to benefit from derogations under certain instruments of EU environmental legislation.¹²²

19.5 Conclusions

This chapter has analysed the legal approaches to hydrogen storage with particular reference to electricity and renewable electricity. It has reviewed the legal challenges and opportunities of using hydrogen as an energy storage medium and examined the definition of end use in this context; the focus throughout has been on the legal questions that emerge in using hydrogen as a storage medium to balance the intermittency of renewable energy sources in the low-carbon energy transition. To concretise the analysis with examples from a specific jurisdiction, the chapter explored the EU legal frameworks for electricity and hydrogen storage and demonstrated how the EU legal framework handles financial incentives, spatial planning, environmental and administrative permitting, as well as ownership and access issues.

The analysis has revealed that many of the issues in the existing legislative framework for hydrogen are often definitional: they hinge on whether or not, or to what extent, the existing rules on natural gas, electricity and renewable energy apply to hydrogen storage. It is clear that the EU legal framework still suffers from a number of gaps and challenges posing obstacles to effectively advancing the uptake of hydrogen storage. However, the analysis on the future directions clearly shows that the EU policy instruments widely recognise these shortcomings and that recent or upcoming legal instruments are likely to bridge many of the gaps identified or at least clarify the status quo. Nevertheless, the interpretation of the recent, and especially the proposed, pieces of legislation has not yet been tested in EU courts, whereby it will take years before the interpretation of the new legislative framework can be considered settled.

Overall, it is clear that the increasing ambition of EU climate measures and the proposed Gas Package alone have placed unprecedented pressures on hydrogen storage to serve as a storage medium in a low-carbon energy system. This fundamental change, combined with the legislative changes brought about by the COVID-19 pandemic and the Russo-Ukrainian war, has further increased the pressure to develop the EU legislative framework to adequately govern hydrogen energy storage.

20 The Regulation of Hydrogen in the Heating Markets

Pim Jansen and Leonie Reins

20.1 Introduction

In an era that is increasingly defined by concerns about climate change, the imperative to transition to a low-carbon economy has gained prominence in policy and legal frameworks at both the national and international level.¹ As part of this multifaceted transition, the potentially transformative role of hydrogen is beginning to be recognised in the EU.² Gaseous fuels account for approximately 22 per cent of total EU energy consumption at present. The figures for electricity and heat production are 20 and 39 per cent, respectively.³ Moreover, these fuels account for 64 per cent of the energy that is being used to heat homes, a market in which demand is price inelastic.⁴ This chapter scrutinises the end uses of hydrogen in the heating markets.⁵ Critically, it examines the applicable legal framework as it pertains to the dynamics of the Dutch market.⁶ Intriguingly, for the Netherlands, embracing hydrogen as a source of heating energy is a return to the future – the ‘city gas’ on which many Dutch households relied prior to the emergence of natural gas for lighting, cooking, and heating was largely composed of hydrogen.⁷ In the 1960s, over a number of years, the Netherlands transitioned from heating with town gas and coal to heating with natural gas. This energy transition was prompted by the discovery of natural gas at Slochteren in the north of the Netherlands in 1959, at a depth of over 2.5 kilometres.⁸

The aims of this chapter are to analyse the instruments that regulate the integration of hydrogen into the Dutch heating market and to identify gaps and sources of uncertainty for certain stakeholders. This analysis is important because a sub-optimally designed regulatory structure can obstruct the transition to a low-carbon heating network.⁹ The analysis is anchored in the broader context of EU policy. The key EU initiative that shaped our discussion is the so-called Hydrogen and Decarbonised Gas Markets Package (HDGMP),¹⁰ which was introduced on 15 December 2021. This legislative package is the cornerstone of the EU strategy for reducing fossil-fuel dependency, which entails promoting the use of hydrogen and other renewable gases. By situating the Dutch experience within this broader EU framework, the chapter provides a comprehensive analysis of the manner in which hydrogen is being integrated into the heating markets and the implications of this development for the future of sustainable energy.

20.2 The Case for Hydrogen Regulation in the Heating Market

The heating of buildings and industrial enterprises accounts for more than 50 per cent of final energy consumption globally, as well as for a third of energy-related CO₂ emissions.¹¹ Hydrogen could change the heating sector by providing a clean and sustainable alternative to fossil fuels such as natural gas and coal.¹² The realisation of this possibility may be critical for the attainment of the 2050 climate-neutrality objective that the EU has set for itself. The European Commission is pursuing this opportunity actively by promoting a robust value chain for hydrogen and renewable gases across Europe.¹³ However, there is a conspicuous gap between the ambitions of the Commission and reality – hydrogen presently accounts for less than 2 per cent of European energy consumption, and its use is largely restricted to industrial sectors such as chemical manufacturing and fertiliser production.¹⁴

Understanding the role of hydrogen in the heating markets, therefore, could be crucial for the long-term sustainability goals of the EU.¹⁵ As far as built environments are concerned, hydrogen has numerous alternatives. These include heat pumps, solar thermal collectors, and district heating systems that use waste heat, as well as thermal energy storage and geothermal energy solutions. However, when the deployment of these alternatives is not feasible or when energy must be stored, hydrogen re-emerges as a viable option.¹⁶ In the European Union, Member States are divided on the question of whether hydrogen should be used within the heating sector. Several Member States, such as France and Germany, argue that hydrogen is not a viable alternative for the heating sector and heat pumps are a better alternative.¹⁷ They argue that, inter alia, the ‘most efficient use of energy carriers doctrine’ of the EU should be applied, according to which scarce energy carriers should be used in the most efficient way.¹⁸ Hydrogen is still very scarce and, according to these governments, needs to be prioritised in its usage to decarbonise heavy industry, cement, steel, and so on. The Netherlands is taking a different path, as discussed further below.

Given the essential role of governments in catalysing the energy transition, the importance of a sound legal framework cannot be overstated.¹⁹ The theorem by economist Ronald Coase, which describes the link between property rights and transaction costs, is highly relevant in this context.²⁰ A well-structured legal framework could minimise transaction costs by clearly defining the roles, responsibilities, rights, and obligations of all relevant stakeholders. By reducing inefficiency, such a legal framework could facilitate the expeditious realisation of a wide assortment of policy objectives, thereby contributing to a smoother and more successful transition.²¹ In countries such as the Netherlands, this theoretical conjecture is already being tested empirically, as will be discussed below.

The Dutch government has accumulated considerable technical expertise, and it has established localised hydrogen supply chains.²² For example, the HyWay27 report described the conditions under which a national hydrogen transport network that uses existing gas pipelines could be developed.²³ However, the extant legislation, most notably the Dutch Gas Act (Gaswet), is inadequate for the demands of this project.²⁴ This finding, among many others, emerged from the Progress Policy Agenda Cabinet Vision on Hydrogen of the Dutch government. That document prompted many to call for legal reform as a matter of urgency.²⁵ The Netherlands Authority for Consumers and Markets (Autoriteit Consument & Markt; ACM) formulated a provisional framework as a response to those calls, which it called the ‘Temporary Guidelines for Hydrogen Pilots: Regulatory Forbearance for Network Operator Involvement in Hydrogen Pilot Projects in Built Environments’ (Tijdelijk kader waterstofpilots: Gedoogbeleid voor betrokkenheid van netbeheerders bij pilots met waterstof in de gebouwde omgeving).²⁶ This framework, which is provisional, serves a dual purpose: it enables network operators to participate in hydrogen pilot projects as well as laying an empirical groundwork for the future refinement of the relevant regulatory norms.²⁷

The Netherlands has initiated a series of pilot projects across various municipalities.²⁸ Diverse stakeholders are engaged in those projects, including network operators and energy providers.²⁹ For instance, the Lochem pilot involves twelve residences whose occupants are engaged as co-initiators. It adopted a temporary model whereby tube trailers are used to deliver hydrogen.³⁰ A project in Wagenborgen includes 50–60 residences; the occupants can avail themselves of an individual opt-in mechanism. An electrolyser that is situated on farmland is used to produce hydrogen.³¹ The Hoogeveen pilot, which is a part of the broader Green Deal initiative, connects 100 newbuilds and 100 terraced houses to a hydrogen-based heating system. Hydrogen will initially be supplied via tube trailers, but a shift to electrolyser-based production is planned. The intention is to continue supplying hydrogen via the existing gas network after the trial.³² The Stad aan ‘t Haringvliet pilot is another Green Deal venture. It is designed to supply approximately 600 homes with hydrogen through the gas network. Older homes are its primary target. The objective is to transition permanently to hydrogen, and the launch of the project is scheduled for 2025.³³

In the Netherlands, these initiatives are embedded into an overarching narrative.³⁴ They catalyse dialogue about the rules and regulations that will govern the conditions under which various stakeholders – both public and private – will be allowed to participate in the hydrogen market.³⁵ Those rules and regulations will also delineate the rights and obligations of end users. Numerous questions have emerged from this debate.³⁶ Some of those questions revolve around the conditions that will govern eligibility to engage in activities such as production, electrolysis, transport, underground storage, and the establishment and management of import or export terminals.³⁷ The answers to others might emphasise the need to ensure that access to these services will be both wide and equitable.³⁸

Market regulation is indispensable for the management of a complex and evolving ecosystem with many stakeholders.³⁹ Without a coherent and comprehensive regulatory framework, sector practice would become inconsistent, accountability would be curtailed, and market behaviour may well turn anti-competitive. These points are further emphasised by the critical roles and responsibilities that regulation assigns to the various parties that are involved in hydrogen production, distribution, and consumption. As noted previously, a non-existent or suboptimal regulatory system would obstruct the transition to a low-carbon economy. Instead, sector-specific regulation should ensure the competitiveness and fairness of the market, pave the way for innovation, and safeguard the interests of consumers. Effective regulation would also facilitate the mobilisation of capital by eliminating uncertainty. Since the deployment of hydrogen in the built environment is now at the experimental stage of its development, a flexible yet robust regulatory framework is needed urgently. After having showcased the fact that EU Member States have different opinions and views on hydrogen in the heating markets, it is now time to explore what EU legislation and policy has to say on the issue, before diving into the case study of the Netherlands, which has tentatively and cautiously embraced hydrogen in the heating market.

20.3 The EU Legal Framework

The EU legislator proposed the HDGMP to integrate hydrogen into the energy law acquis.⁴⁰ A central aim of the Package is to incorporate provisions on hydrogen into the Gas Directive,⁴¹ which governs the internal gas market and is set to be recast.⁴²

Many of the policy initiatives that preceded the HDGMP reflected an acute awareness of the importance of hydrogen for the heating market. For instance, the System Integration Strategy identified hydrogen as a means of decarbonising the heating sector when direct heating or electrification are not feasible or efficient as one of the three ‘complementary and mutually reinforcing concepts’.⁴³ The Hydrogen Strategy,⁴⁴ which was published alongside the System Integration Strategy, shifted the conversation towards industrial applications and mobility, rather than heating.⁴⁵ Yet it recognised that local hydrogen clusters, known as ‘Hydrogen Valleys’, which have dedicated hydrogen infrastructures, could provide heat for residential and commercial buildings.⁴⁶ One of the first funded Hydrogen Valleys is actually situated in the north of the Netherlands and consists of thirty-one public and private parties from six European countries.⁴⁷ Furthermore, the impact assessment report⁴⁸ stressed that the current regulatory framework for gas prioritises natural gas over alternatives such as biomethane and other gaseous fuels, including hydrogen.⁴⁹ It concluded that low-carbon hydrogen and low-carbon fuels generally have considerable untapped potential and that potential is poised to drive the evolution of transport infrastructure and influence future end-user behaviour.⁵⁰

The proposal for a recast Directive focuses on hydrogen infrastructure, quality of hydrogen, and hydrogen markets, but it does not directly address end users or heating. The explanatory memorandum accompanying this proposal underscores that developing infrastructure is essential for the successful exploitation of hydrogen’s end-use applications. Should such developments occur, various sectors would be decarbonised, the electricity system would become more flexible, and energy security would be bolstered due to the potential reduction of natural gas imports. It would also become possible to store and produce more electricity.⁵¹ Additionally, the memorandum recognises the link to the Energy Taxation Directive. This directive established a preferential minimum taxation level for renewable and low-carbon hydrogen fuels used for heating at €0.15/gigajoule (GJ), in contrast to €0.6/GJ for natural gas.⁵²

The energy-efficiency-first principle⁵³ is also emphasised in the context of the Energy Performance of Buildings Directive and the Energy Efficiency Directive. While these measures primarily address heating in general and not specifically the application of hydrogen, the explanatory memorandum does mention the benefits of delivering clean and safe hydrogen to end users.⁵⁴ Likewise, the sixth Recital to the Gas Directive, which is in force at present, indicates that the instrument in question is designed to harness the potential of new gases to accelerate the attainment of the climate objectives of the Union. The Directive also purports to create a regulatory framework that reflects the transitional role of fossil gas, the need to avoid lock-in, and the desirability of phasing out fossil gas ‘in all relevant industrial sectors and for heating purposes’.⁵⁵ Hydrogen is only mentioned indirectly.

When looking at the explanatory memorandum of the Proposal for a recast Regulation on gas markets and hydrogen, it also becomes apparent that the heating sector is not the central focus of EU law and policy. One reason for this is that, given the wildly diverging views of Member States on the question of hydrogen in heating markets, EU policy abstained from taking sides on this controversial issue. As with the explanatory memorandum to the recast Directive (with which there is significant overlap), end uses are predominantly discussed in the context of market fragmentation. This fragmentation is anticipated due to the increasing penetration of biomethane, hydrogen, and liquified natural gas (LNG) in the gas infrastructure.⁵⁶ Recital 43 to the Regulation acknowledges this point, which preserves the right of Member States to make decisions about blending while also providing for a Union-wide cap on it.

It can be concluded from the foregoing that EU legislation and policy, while directed at stimulating the end use of hydrogen, are somewhat general, especially in the context of the heating sector. The Member States thus enjoy considerable discretion. That there are no specific regulations on this matter is unsurprising – in most cases, end-use solutions are local in their effects, and their design depends significantly on the energy infrastructure and mix of the Member State in which they are being implemented. We will now turn to discuss how the Netherlands has used this margin of discretion.

20.4 The Interplay between Market Regulation and the Heating Markets

Dutch law regulates electricity, natural gas, and thermal energy, but generally not hydrogen.⁵⁷ Several market consultation exercises focused on the structure of the hydrogen market and on quality standards, but they are yet to yield specific results.⁵⁸ The insufficiency of the regulatory framework is becoming more apparent as pilot projects begin to integrate hydrogen into the built environment for heating purposes. The national energy regulator ACM highlighted this gap, most notably in its Signal 2021 report, in which it observed that the absence of regulation undermines consumer protection and that, at present, the participation of network operators in such projects proceeds in the absence of a legal basis.⁵⁹ The latter problem also affects hydrogen suppliers, appliance manufacturers, property owners, and lessees.

A critical step of the regulatory framework is the definition of ‘gas’ under the Gas Act, which is currently ambiguous regarding hydrogen. To elucidate, the Gas Act defines ‘gas’ in the following manner:

1. 1. Natural gas that, at a temperature of 15° Celsius and at a pressure of 1.01325 bar, exists in a gaseous state and mainly consists of methane or another substance that is equivalent to methane due to its properties, and

2. 2. A substance that

   • – is generated in a production facility that exclusively uses renewable energy sources or

   • – is generated in a hybrid production facility that uses both renewable and fossil energy sources and

   • – at a temperature of 15° Celsius and at a pressure of 1.01325 bar, exists in a gaseous state and mainly consists of methane or another substance that is equivalent to methane in terms of its properties, to the extent that it is possible and safe to transport this substance according to Chapter 2.⁶⁰

Hydrogen does not consist mainly of methane or an equivalent substance. Hydrogen and methane are chemically distinct and exhibit different properties, including energy content, flammability range, and density.⁶¹ Although hydrogen can be produced from renewable sources, say through the electrolysis of water, it is not explicitly mentioned as an equivalent to methane in the statute. Article 1.2 of the Gas Act provides a pathway for the inclusion of substances other than those that are mentioned specifically in Article 1.1, namely the issuance of a general administrative order (algemene maatregel van bestuur) that extends the application of the Act partially or wholly to other gaseous substances. So far this has not been enacted. In this context it is important to take stock of the current technical and safety limitations set by the Dutch government, as reflected in the Ministerial Decree on Gas Quality (Regeling gaskwaliteit), which limits hydrogen content in the natural gas network. This decree stipulates a maximum hydrogen content of 0.5 mol.-%⁶² in certain network areas, indicating a cautious approach towards integrating hydrogen into the natural gas system due to current technical and safety constraints.⁶³

In the context of market regulation, the Gas Act’s implications for hydrogen’s integration into the heating market are significant. One key aspect under the Gas Act is the regulation – or lack thereof – of networks and pipelines dedicated solely to hydrogen. Currently, in the Netherlands, the establishment and management of such hydrogen-specific networks are not regulated activities.⁶⁴ This absence of regulation suggests a potential area for development in the heating market, as entities other than traditional network companies and operators are at liberty to engage in such operations. This flexibility extends to the production and storage of hydrogen, subject to compliance with safety and environmental regulations.⁶⁵

Under the Gas Act, network operators (netbeheerders) are bound to tasks specifically assigned by law (as outlined in Article 10A(a), paragraph 1).⁶⁶ This legislative framework currently precludes them from directly engaging in hydrogen production. However, their role in relation to hydrogen, especially as a potential carrier for heat, raises critical questions in the context of the ongoing debate about potential market liberalisation in the Netherlands. If heat supply were to be subject to market liberalisation, the potential involvement of gas distribution system operators (DSOs) in handling hydrogen, including its use as a heat carrier, must be carefully examined.

This is particularly relevant considering EU regulations on horizontal unbundling, which mandate the separation of energy production and supply from network operations. Allowing gas DSOs to manage hydrogen, especially in the heating sector, could pose challenges to this regulatory principle. Conversely, network companies are allowed to partake in hydrogen-related activities to a limited extent, as provided by Article 10(d)(2)(e) of the Gas Act.⁶⁷ However, the extent of this participation and how it aligns with the broader regulatory framework, especially considering the potential liberalisation of the heating market, remains a complex and evolving issue.

The blending of hydrogen into the natural gas network, another critical aspect of the heating market, is subject to rigorous regulation, especially under the current limitations of the Gas Act regarding the use of pure hydrogen for heating. According to the technical standards set out in the first paragraph of Article 11 of the Gas Act and further detailed in the Ministerial Decree on Gas Quality, gases in the Dutch natural gas networks, including H-gas, G-gas, and L-gas, must meet specific criteria at various stages from intake to delivery in both regional and national networks.⁶⁸ A critical aspect of these regulations is the stipulation of permissible hydrogen content in the gas mixture. As set out above, for reasons of safety and in accordance with current technical capabilities, the regulation restricts the hydrogen content to a maximum of 0.5 mol.% in regional distribution networks and a significantly lower limit of 0.02 mol.% in national transmission networks. This approach indicates a cautious stance towards the integration of hydrogen, considering safety and technical considerations.

The current regulations are thus tailored to a network that is built primarily for fossil fuels, and they limit the possibility of adaptations to emerging alternatives such as hydrogen. However, policymakers have the legal ability to temporarily relax these restrictions to promote sustainable energy.⁶⁹ There are (at least) three avenues that could be taken.

First, the Dutch authorities could amend the rules on hydrogen blending in the natural gas network by updating the Ministerial Regulation on Gas Quality.⁷⁰ The extent of these changes would be limited by the technical parameters of the existing infrastructure, potentially necessitating alterations to accommodate higher hydrogen concentrations. At present, no specific rules require or encourage blending. Instituting such a mandate could stabilise the market for green hydrogen by generating consistent demand, which would benefit both producers and consumers. It is crucial for national policies of this nature to align with those set by other EU/European Economic Area Member States.

Second, Article 1(i) of the Gas Act permits delegated legislation to deviate from the existing regulations, provided that the deviations do not violate EU law. This article allows for experiments that contribute to advancements in decentralised production, transport, and/or supply of gas, particularly when the gas is produced locally using only renewable energy sources.⁷¹ The third paragraph of the article outlines the requirements for the delegated legislation. Such an administrative order must specify the permissible deviations from the Gas Act, identify the potential categories of affected consumers, stipulate the intended duration of the measure, define the success metrics, and clarify whether the duration of the measures can be modified. The fourth paragraph of the article covers accountability and oversight, mandating the responsible Minister to submit a report on the experiment’s efficacy and outcomes to the House of Representatives (Tweede Kamer der Staten-Generaal) no more than three months after its conclusion. This report should also convey the Minister’s stance on the potential continuation of the experiment.

However, a challenge with Article 1(i) of the Gas Act is that it can only be invoked if the experiment involves a substance that qualifies as a ‘gas’ under the Act. As noted in the preceding section, hydrogen does not fall under this classification. The applicability of the Act can be extended to hydrogen through an administrative order.⁷² While it might seem counterintuitive to expand the scope of the Act solely to introduce an exception to it by order, this move could eliminate some of the challenges network operators and network companies encounter when working with green hydrogen. Furthermore, this adaptable legal approach could pave the way for experimental projects, such as those involving the mandatory blending of large hydrogen volumes into natural gas.⁷³

By enabling experimental projects under Article 1(i) Gas Act, especially those focused on integrating hydrogen into the gas infrastructure, the heating sector could witness a significant shift towards sustainable energy sources. Such experiments could serve as catalysts for developing and refining technologies and practices necessary for the widespread use of hydrogen in heating. They would also provide valuable insights into the practicalities and efficiencies of hydrogen as a heating medium, helping to shape future regulations and market structures. Furthermore, successful experiments could pave the way for broader legislative changes, fostering an environment conducive to the adoption of hydrogen in residential and commercial heating systems.

The third avenue for reform involves assigning responsibilities to network operators temporarily by way of administrative order.⁷⁴ According to Article 10(b) of the Gas Act, the competent Minister has the authority to act in this fashion⁷⁵ when the following criteria are met: the temporary roles are related to the existing duties of the operator under the current legislation, they are crucial for the future oversight of the gas transportation network, and market provision is deficient. However, this expansion of roles must be carefully balanced with the principle of unbundling, as mandated by EU regulations. The increased involvement of network operators in hydrogen activities, particularly in areas traditionally handled by market entities, could potentially blur these lines.

None of these avenues has been followed yet, paving the way for the ACM to introduce Temporary Guidelines for Hydrogen Pilots. The ACM, sharing the legislators’ concerns, has also expressed dissatisfaction with the current regulatory framework’s inability to adequately address safety and consumer protection in pilot hydrogen-delivery projects.⁷⁶ At the same time, the ACM has taken the view that it is crucial that these operators gain hands-on experience in the distribution of hydrogen.⁷⁷

Recognising the criticality of these gaps, and the necessity for network operators to gain practical experience in hydrogen distribution, the ACM has taken a proactive stance. To circumvent the constraints posed by the existing Gas Act, the ACM has introduced the Temporary Guidelines for Hydrogen Pilots: Regulatory Forbearance for Network Operator Involvement in Hydrogen Pilot Projects in Built Environments.⁷⁸

This innovative approach represents a significant departure from the traditional enforcement of the Gas Act, as it allows network operators to engage in hydrogen distribution pilots under a provisional framework. In practice, this means that the ACM will not enforce the Gas Act against them as long as the pilot projects meet certain conditions. The Guidelines contain generic, consumer protection, and safety conditions. The generic conditions concern the purpose of the pilot, its scope and duration, and the roles and responsibilities of the entities that are involved in it. Many of these conditions were outlined in the 2021 Signal report, but the Temporary Guidelines also set a maximum timeframe for regulatory forbearance. The aim of a pilot should be to explore the use of hydrogen as a source of heat in built environments.⁷⁹ The role of the network operator must be confined to installing, managing, and maintaining a hydrogen distribution network, and it should not be involved in the production, trade, or delivery of hydrogen.⁸⁰ Each pilot must be designed to fulfil a clearly defined learning objective for the network operator, which must be communicated transparently to the market both during the project and upon its conclusion. Importantly, the scale of the project should be calibrated carefully so that it does not exceed what is necessary for the learning objective in question to be met. This regulatory forbearance is temporary – it is set to last until the role of the network operator is formalised, until the learning objectives of the project are met, or until it becomes evident that they are unfeasible. As for duration, a pilot project can run for up to five years from the date of the publication of the conditions. Those who organise such projects can choose to extend this period if new legislation that supports such extensions is introduced in the interim.⁸¹

The consumer protection rules for hydrogen are designed to mirror the standards that apply to natural gas under the Gas Act.⁸² The specifics are laid out in the Annex to the Guidelines, which covers matters as varied as civil law safeguards, analogies to the Gas Act, and hydrogen-specific provisions. The consumer protection standards that apply to natural gas are largely replicated.⁸³ The Annex also outlines various information-disclosure requirements, most of which originate from the Dutch Civil Code. The clauses from the Gas Act that are relevant to hydrogen include complaint procedures for network operators, the reporting of defects, energy cost estimates and invoices, and stipulations on the information that contracts and bills ought to contain.⁸⁴ There is also an obligation to supply at reasonable rates and under reasonable conditions, as well as to adopt certain policies for disconnection.⁸⁵ The following regulations also apply: the Decision on Invoices, Consumption, and Indicative Cost Overview for Energy (Besluit factuur, verbruiks- en indicatief kostenoverzicht energie), the Regulation on Consumers and Monitoring under the Electricity Act 1998 and the Gas Act (Regeling afnemers en monitoring Elektriciteitswet 1998 en Gaswet), the ACM Policy Rule on Billing Periods for Energy 2021 (ACM Beleidsregel factureringstermijnen energie 2021), and the Regulation on Disconnection Policy for Small Consumers of Electricity and Gas (Regeling afsluitbeleid voor kleinverbruikers van elektriciteit en gas). Finally, the Annex contains specific hydrogen-related obligations that apply universally, regardless of the identity of the parties that are involved in a hydrogen pilot. As far as contractual structure is concerned, the emphasis is on clarity and transparency.⁸⁶

The temporary framework places high importance on the security of hydrogen supply, ensuring it matches the reliability of natural gas. This includes provisions for scenarios such as supplier insolvency or supply interruptions, with measures to maintain sufficient supply even in extreme weather. The framework also addresses indoor installations, mandating that conversion, safety checks, and maintenance fall under the responsibility of the pilot organisers. This benefits consumers by eliminating conversion costs and guarantees a return to pre-pilot conditions at no charge if the pilot ends early. Financial aspects, such as costs and tariffs, are thoroughly regulated. Consumers must be fully informed about their financial obligations and the responsibilities of pilot participants before enrolment, ensuring financial predictability. Notably, the total cost for hydrogen-based heating should not surpass that of the nearest alternative.

Finally, the Ministry of Economic Affairs and Climate also established a temporary policy on hydrogen safety. Compliance with that policy is a prerequisite for the commencement of a pilot.⁸⁷ The State Supervision of Mines (Staatstoezicht op de Mijnen; SodM) is responsible for its enforcement. The safety provisions echo the commitments of the EU and the Netherlands to ensuring that new technologies are held to existing high standards.

The chapter concludes with a brief discussion of the new draft Energy Law, which, in the future, is expected to further address and potentially reshape the regulatory landscape for hydrogen in the Dutch heating market.

On 9 June 2023, a proposal for a law on energy markets and energy systems, the Energy Law, was submitted to the Dutch House of Representatives, where it is still pending.⁸⁸ Although the Energy Law was not declared controversial following the fall of Prime Minister Rutte’s cabinet, it has yet to be passed by the House of Representatives. In Dutch politics, when a cabinet (government) falls or resigns, it is customary for the parliament to determine which pending legislative matters are ‘controversial’. This implies that these matters are significant or contentious enough that they should not be decided by a caretaker government, but rather should wait until a new, fully mandated government is in place. In this specific case, the Energy Law was not labelled as controversial, which means that it could have been processed and potentially passed even by the caretaker government. However, despite not being declared controversial, the law has not yet progressed through the House of Representatives and timing is unclear.

The Dutch Energy Act (Energiewet) stands at a pivotal juncture, indicative of a broader legislative evolution in response to the changing energy landscape, particularly in the context of hydrogen gas. The Act, as it currently stands, represents an initial step in a more comprehensive regulatory overhaul, one that is poised to adapt in response to emerging European Union directives and market realities. As highlighted in the Explanatory Memorandum, the law is expected to undergo further amendments, particularly influenced by ongoing developments within the EU framework – discussed in Section 20.3 above.⁸⁹ The current iteration of the Energiewet adopts a policy-neutral stance towards all gas-related matters, hydrogen included, with the exception of aspects pertaining to consumer protection. This approach effectively places hydrogen under a similar regulatory umbrella as other gases, maintaining a status quo that is likely to be temporary. It underscores a transitional phase in policy, where hydrogen gas regulation is acknowledged but not yet distinctly or comprehensively addressed. Future revisions to the Energiewet are anticipated, contingent on the outcomes of the EU’s negotiations and the HDGMP’s directives. These revisions are expected to introduce a more specific and evolved framework for hydrogen, moving beyond the policy-neutral approach currently in place.

The proposed Energy Law contains several – comparatively insignificant – changes relevant to the regulation of hydrogen in heating markets. Firstly, the connection duty of the (national and regional) network operators for gas has been amended in this draft law compared to the Gas Act.⁹⁰ It has been clarified that the gas connection duty is less extensive than for electricity, and room has been created for further rules for the connection of producers of gas from renewable sources. One of the objectives is to provide more direction on how regional network operators for gas, in particular, weigh the need for expensive investments to accommodate the injection of gas from renewable sources. In addition, the national network operator for gas is, under conditions, obliged to take in and blend hydrogen gas as long as it is reasonably possible.⁹¹ Furthermore, the existing legal framework within which network companies also have room for actions and activities regarding other infrastructure than for electricity and gas has been tightened.⁹² It describes exactly which type of infrastructure it concerns: CO₂, hydrogen gas, gaseous substances from renewable sources other than gas (less than 75 per cent methane), heat, and cold. Network companies are allowed to build and manage such infrastructure, perform transportation, and conduct measurement activities. The reason for providing production and storage facilities for certain energy carriers is that the same as for electricity and gas: owning or making these facilities available without any conditions or restrictions can jeopardise the independence of system operators. Here too, the transitional law will provide a provision for existing activities under this name; for new activities, an Administrative Decree for the allocation of new actions and activities may offer a solution.

20.5 Concluding Remarks

As the world confronts the challenges of climate change and the pressing need for a low-carbon economy, hydrogen has surfaced as a promising alternative to fossil fuels, especially in sectors like heating. The Netherlands has been at the forefront, championing several initiatives and leading numerous discussions on specialised regulatory frameworks. This chapter provided an overview of the regulatory landscape in both the Netherlands and the EU. We highlighted significant gaps, underscored the need for sector-specific regulations, and discussed their implications for market participants.

The 2009 Gas Directive, albeit amended, presents a milestone development. However, its approach to hydrogen lacks depth and specificity. Both the updated European Green Deal and the Clean Energy Package underscore the importance of clean energy, but they do not fully provide for a hydrogen-specific regulatory guide. Positioned within the broader climate ambitions of the EU, the Netherlands has ventured into this nebulous domain. Currently, the Dutch Gas Act regulates the gas market, but it has not evolved to consider the rise of hydrogen. This regulatory void posed challenges and dissuaded network operators from engaging in pilot hydrogen projects.

Stepping into this, the ACM introduced a temporary framework. The current regulatory approach to integrating hydrogen into the Dutch heating market, as led by the ACM, involves Temporary Guidelines that permit network operators to distribute hydrogen with an emphasis on consumer protection. These guidelines are a provisional measure, offering valuable experience in handling hydrogen within the heating sector, yet they are not a comprehensive solution.

The draft Energy Law, still pending approval, has been met with some disappointment due to its limited scope concerning hydrogen-specific regulations, particularly for heating applications. While it proposes to merge the Electricity Act and the Gas Act, simplifying alignment with EU law, its current form does not significantly advance the regulatory framework for hydrogen in the heating market. However, it does lay a foundation that could be built upon in the future.

As for the long term, both the EU and the Netherlands find themselves in a transitional phase in which the absence of a hydrogen-specific regulatory framework necessitates temporary measures and adaptations to existing laws. Energy policy in the Netherlands is thus at a curious juncture – projects are being piloted while futureproof regulation is still being formulated. In summary, while challenges abound in both the Netherlands and the EU, concerted efforts are being made to weave hydrogen into the fabric of the energy systems of the future. That process appears to be guided by the principles of innovation, consumer protection, and safety.

21 Conclusion

Ruven Fleming

21.1 Introduction

Ten years ago, Werner Franz, the fourteen-year-old cabin attendant on the airship Hindenburg,¹ died on 13 August 2014 at the age of ninety-two. According to his widow, he lived a long and ‘very fulfilled’² life after the Second World War. Franz had been traumatized by the events of 1937, but still took pleasure in sharing his knowledge about hydrogen as he guided visitors through a Zeppelin Hall for the airship shipping company after the disaster.³

Just as in the life of Franz, the relationship between hydrogen and mankind intertwines in a complex weave. This is particularly true for the relationship between hydrogen and the law, which transcends mere legal frameworks; it embodies a convergence of technological advancement, environmental stewardship, and socio-economic imperatives. As we delved deeper into this relationship, chapter by chapter, it became evident that the legal landscape plays a pivotal role in shaping the trajectory of hydrogen’s journey towards becoming a cornerstone of our sustainable future.

At its core, the interplay between hydrogen and the law revolves around the regulation, promotion, and integration of hydrogen technologies into existing socio-economic structures. Legislative bodies worldwide seem to have embarked on a journey to formulate first, tentative frameworks that, at best, address the multifaceted dimensions of hydrogen production, transmission, and utilization. From incentivizing research and development to establishing safety standards and fostering international collaboration, legal instruments have served as catalysts for unlocking hydrogen’s transformative potential.

One of the primary drivers behind the surge in hydrogen-related legislation is the imperative to mitigate climate change and reduce greenhouse gas emissions. As nations grapple with the pressing need to transition towards low-carbon energy systems, hydrogen can function as a versatile ally in this quest for sustainability. We will now go on to create an inventory of key findings of this book concerning the relationship between hydrogen and the law.

21.2 Key Findings and Future Directions

The intersection of hydrogen and the law extends beyond domestic jurisdictions, encompassing regional collaborations and future international agreements. Given the global nature of climate change and energy transition, cooperation among nations is imperative to harness the full potential of hydrogen as a clean energy vector. Progress, however, differs from region to region and the question of how best to create a hydrogen economy seems to have split the world. (At least) two different approaches have been identified in this book: either starting with the establishment of a legal framework and then looking for investments or securing investments first, with a legal framework growing thereafter.

The first approach is epitomized, inter alia, by the EU. In Chapter 2, Hancher and Suciu describe how the EU is currently working to establish a comprehensive legal framework on hydrogen and establishing clear rules for EU Member States. However, the focus is different in other parts of the world and an alternative approach is taken there. In Chapter 3, Attanasio and Briggs explain the approach of the United States. Here, the focus is on a massive stimulation effort to bring billions of dollars of private investments to the hydrogen sector, while regulatory uncertainty is still looming large. The approach of first securing investments for hydrogen has also been taken in the Middle East and North Africa (MENA) region, as Olawuyi and Aryanpour report in Chapter 6. However, the focus here lies with the creation of export opportunities, for example, for green ammonia, including huge state investments in export infrastructure specifically.

A similarly dynamic development can be seen in Latin America. Chile, Colombia, and Brazil, aiming to capitalize on their abundant (renewable) resources, have moved to outline ambitious hydrogen strategies and legislation. But Foy argues in Chapter 4 on Latin America that the speed of legislative movements is not sufficient to keep pace with the developers that are continuing to forge ahead, undeterred by the gaps and inadequacies in existing governance. Even amidst a backdrop of regulatory uncertainty, the industry is making strides in turning policy visions into concrete projects. Foy attributes this paradox between incomplete regulation and robust project activity to these countries’ constitutional provisions, which enshrine a principle of freedom of enterprise. Namely, in Chile, Colombia, and Brazil, business activity can proceed freely absent explicit prohibition, requiring no prior authorizations or permits except as provided by law and that, according to Foy, has benefitted the hydrogen sector in its development.

The export of hydrogen is also a key driver of legal developments concerning hydrogen in Oceania. While New Zealand seems to lag behind a bit in its development, Australia recently embraced the opportunities of hydrogen. In Chapter 5, Taylor argues, however, that export requires hydrogen production capacities in the first place. While Australia has plenty of sunshine and wind to produce green electricity for green hydrogen, the legal governance of land use is an issue, according to Taylor. While the complicated system of pastoral leases developed into diversification leases in some parts of Australia, which will permit hydrogen development on pastoral land, the developments and impacts differ from one region to another. Taylor argues that many crucial aspects of the future renewable hydrogen supply chain and licensing systems will be regulated by states and territories. In practical terms, this requires measurable national strategies aligned with state and territory planning systems to design regulatory frameworks. Principles for renewable hydrogen development are crucial to guide and develop consistent and coherent licensing and planning regulatory regimes.

In Chapter 7, surveying the situation in Southeast Asia, Eiamchamroonlarp pays attention to a clear and mutual understanding of what green or renewable hydrogen is to create export and trade opportunities. He points towards a development in Southeast Asia that differs from many other parts of the world, where electrolysis will be used as the method of choice to produce green hydrogen. As opposed to this, in Southeast Asia, a traditionally agricultural region, a different path is being pursued, namely steam reforming from biofuels to produce green hydrogen. Accordingly, the legal frameworks in Southeast Asian countries focus more on the traditional regulation of industrial power plants and factories. Eiamchamroonlarp argues that this approach to regulation also makes sense to produce green hydrogen from steam reforming of biofuels, as there will be a considerable number of hydrogen power plants in that region using this technology in the future. However, ASEAN countries are at the initial stages of hydrogen production.

What green or renewable hydrogen is, also seems to be a key debate in other parts of the world. For the EU, the discussion boils down to the question of sustainability criteria for hydrogen against which imports from other regions are benchmarked. In Chapter 10, Mauger, Villavicencio-Calzadilla, and Fleming explain how just copy-pasting known sustainability criteria that exist for bioenergy might not be an ideal way forward. They do not sufficiently include considerations of water consumption in water-scarce areas and the social impacts.

Social impacts are also a key driver behind the democratization of energy through hydrogen, which can hold the promise of empowering communities and fostering inclusive development. By decentralizing energy production and enabling local energy generation through technologies such as electrolysers and fuel cells, hydrogen can transcend geographical constraints and empower communities to become energy self-sufficient. The role of local authorities in this should not be underestimated, as Chapter 9 by Nieuwenhout aptly demonstrates. If clear political will exists, municipalities and small regions can create a ‘bottom-up’ approach to the introduction of hydrogen in our energy systems in at least three ways. First, they can bring parties together and position the specific region as a hydrogen hotspot. Second, they can create local demand through the public procurement of public transport services and/or maintenance vehicles, also in areas where there is no industrial demand for hydrogen (yet). Third, local and regional authorities can also play a role in system integration.

For this development to succeed, however, the active participation of citizens in hydrogen developments and legal frameworks is required, as Squintani and Schouten argue in Chapter 11. Currently, however, this is not guaranteed in effective ways by the legal framework, as they demonstrate, with EU and Member States as well as local legal frameworks serving as examples. According to Squintani and Schouten, the lack of explicit requirements on public participation in the EU regulatory framework for renewable energy, in general, and energy production and transport is echoed by the lack of a participatory process for the establishment of the National Hydrogen Programme and related National Roadmap. Also at a regional level, the retrieved policies, plans, and programmes for the development of the hydrogen economy do not show the presence of public participation.

However, amidst the myriad opportunities presented by hydrogen, it is essential to navigate the associated challenges judiciously. The creation of hydrogen markets, as Mulder argues in Chapter 8, can be achieved via several routes, but a clear legal framework is crucial to protect and ease transactions. Looking into the entire hydrogen supply chain from production to end use through an economic lens shows, according to Mulder, that certain regulatory strategies that worked in the natural gas and particularly the electricity sector should be used for the regulation of hydrogen markets, while other aspects, like environmental externalities of production, require a different type of regulation.

The fact that certain aspects of the hydrogen supply chain might require different regulation is evident from Andreasson’s Chapter 12 on offshore production and transport of green hydrogen in Denmark and the Netherlands. She identifies the lack of legislation that specifically addresses the permitting procedure for offshore hydrogen production as a key legal barrier and, coming back to the theme identified earlier in these conclusions of what should come first, investments or legal framework, takes a clear stance for the offshore area. She argues that a robust and enabling legal framework is needed to facilitate the development of offshore hydrogen infrastructure. Without such a framework, investments will not be made and new developments, such as offshore electrolysers, will not be deployed.

As opposed to offshore, in Chapter 13, Tissari gives an example of the development of onshore electrolysers. Her scrutiny of the Finnish permitting regime unearths a regime that was initially designed around many individual permits that may, however, be applied for online in most cases. But there are recent efforts to streamline the regime and make it easier for the user via the so-called accelerated permission procedure for green transition projects. Tissari explains that it will significantly shorten the processing time for permit handling to a maximum of twelve months. With this trend, Finland stands as an example for many other countries that are currently investigating permitting regimes for hydrogen production facilities and are eager to create one-stop shops for users, or at least streamline the process.

When it comes to hydrogen production, it can be observed that many permitting regimes are centred around environmental aspects like water, wastewater, and air quality. Campion adds to that list in Chapter 14, but also makes clear that the way in which we look at the regulation of these elements as such might need to be reconsidered in the context of hydrogen. New Zealand is currently wrestling with the question of how to incorporate indigenous perspectives into the consenting regimes. Campion argues for the establishment of a hydrogen-specific permitting framework in New Zealand that takes indigenous perspectives into account better – a point that may also be of interest to other parts of the world when contemplating future legal and regulatory frameworks on hydrogen.

Once the hydrogen production facility – for example, an electrolyser – obtains the necessary permits, the hydrogen produced needs to be transported to the end users. In Chapter 15, Jansen provides a case study on Germany which illustrates that a whole set of permits is required to build and/or operate the transport infrastructure. Jansen compares the erection of new hydrogen pipelines and storage with the required permits for the conversion of existing gas pipelines and storage to hydrogen and concluded that the latter is particularly supported by the German system. Several procedural privileges have been specifically designed to make the reuse of natural gas infrastructure for hydrogen purposes attractive from a legal point of view. This is particularly the case because the German regulator is currently in the process of issuing permission to a so-called hydrogen core grid, which will just fall short of 10,000 kilometres, and the reuse of existing pipeline infrastructure will provide the majority (around 60 per cent) of that core grid. Thus, Jansen concludes that the government’s recent decision to construct a hydrogen core grid, accompanied by an acceleration law, sets the right course.

A similar approach to hydrogen infrastructure regulation has been taken in the Netherlands, as discussed by Broersma, Jäger, and Holwerda in Chapter 17. The country also aims to create a national hydrogen network mainly consisting of reused natural gas pipelines, as studies have shown this to be a more cost-effective alternative to new hydrogen pipelines. This needs to be accommodated for in legal terms, as there might, as a result, be times when a mingled or blended stream will be in the main networks. Given the fact that current regulation in the Netherlands effectively sees hydrogen as an impurity to the natural gas stream and only allows a very small percentage of hydrogen in the pipelines, this will require a fundamental rethinking of legislative perspectives. Luckily, changes to the existing framework are on their way. One of the key challenges that remains, however, is how to regulate the access of others to the hydrogen network. Broersma, Jäger and Holwerda argue that opening access to hydrogen infrastructure components on a regulated third-party access (TPA) basis might be counterproductive to the speed and scale of the rollout of the hydrogen economy.

The general issue of a lack of an existing legal framework for hydrogen transportation may also be encountered in other countries. Zerde argues in Chapter 16 on the French legal regime, however, that this has been identified and tackled by the legislator. The adoption of a specific chapter in the French energy code that also includes provisions on the transport of renewable hydrogen in natural gas pipelines and autonomous transport networks has been a positive move in the right direction. Zerde characterizes the regulatory technique followed in the case of hydrogen legislation in France as moving away from prescriptive technical rules. Instead, it is moving towards the setting of important targets – that is, hydrogen injection with respect to the proper function and security of the grid. This latter approach leaves it to the market participants to determine, based on individual characteristics, how safety can be achieved.

The safe transport of hydrogen is needed for several end-use sectors. One of the early adopters of hydrogen is the heavy-duty transport sector. In Chapter 18, Cocciolo thus focusses particularly on the regulation of hydrogen road refuelling infrastructure, where safety issues also play a vital role. Using the example of European legislation, Cocciolo demonstrates how the deployment of hydrogen refuelling stations requires a careful analysis of the various legal barriers that affect the value chain of hydrogen. In this sense, he calls for a holistic approach to the identification and resolution of legal hurdles. Cocciolo poses that the actual rollout of the hydrogen refuelling infrastructure should reflect other, broader goals and align with them, namely social/societal benefits, and environmental sustainability.

Societal benefits and the furtherance of environmental sustainability also lie at the heart of the idea of using hydrogen in a different sector – for the storage of electricity. In Chapter 19, Huhta and Sairanen analyse the legal questions that emerge in using hydrogen as a storage medium to balance the intermittency of renewable energy sources in the low-carbon energy transition. They find that, much as with the debate about the definition of the different colours of hydrogen, the questions surrounding the existing legislative framework for hydrogen storage are often definitional: they hinge on whether, or to what extent, the existing rules on natural gas, electricity, and renewable energy apply to hydrogen storage.

As opposed to these definitional issues, where the general direction and political will are clear, Jansen and Reins conclude the book with Chapter 20 on the regulation of hydrogen in heating markets. Whether or not hydrogen should be used in heating is already subject to political debate. With the help of a case study, hydrogen heating regulation in the Netherlands, Jansen and Reins make the case for using hydrogen to abate the greenhouse gas (GHG) emissions of the heating sector. However, they bemoan the lack of a coherent and comprehensive legal framework for hydrogen in the heating market in the Netherlands and have little hope concerning the new and upcoming Dutch Energy Act. In the short to medium term a temporary framework, drawn up by the energy regulator in the Netherlands provides some relief to market players, but this cannot be a long-term solution, according to Jansen and Reins.

21.3 Conclusion

What all these fascinating glimpses into the world of hydrogen regulation have taught us is that legal frameworks, which promote transparency, accountability, and stakeholder engagement, are essential in fostering a just transition towards a hydrogen-based economy. Furthermore, the transition to a hydrogen economy necessitates a holistic approach that transcends siloed thinking and embraces interdisciplinary collaboration. Lawyers, policymakers, scientists, engineers, and stakeholders from diverse backgrounds must come together to navigate the complex terrain of hydrogen deployment effectively. Interdisciplinary research and industry implementation can facilitate synergies between legal, technical, and socio-economic perspectives, enabling informed decision-making and policy formulation.

In conclusion, the nexus of hydrogen and the law embodies a convergence of technological innovation, environmental imperatives, and socio-economic dynamics. Legal frameworks serve as enablers, catalysts, and guardians in shaping the trajectory of hydrogen’s journey towards sustainability and resilience. By fostering innovation, ensuring safety, facilitating international cooperation, and promoting inclusive development, the law plays a pivotal role in unlocking the transformative potential of hydrogen as a cornerstone of our sustainable future.

It has become clear from this conclusion that the current regulation of hydrogen around the globe and along the entire hydrogen value chain is not yet sufficiently developed and there are several areas that require attention and improvement. In some respects, this result does not come as a surprise, as the idea of regulating hydrogen is relatively new to lawmakers and lawyers. However, driven by the current rate of investments and high-level policy plans, the dynamics are highly promising and the scale of developments is breathtaking. Ten years ago, it was common to discuss future electrolyser projects at the scale of some kilowatts (kW) and up to 10 megawatts (MW) (with the latter being considered very big).⁴ In 2024, however, we are frequently discussing electrolysers of 320 MW capacity and more.⁵ Legal frameworks will have to keep pace with these rapid developments and much further research into the legal frameworks is required in the coming years to trace developments and identify regulatory and legislative trends. This book has merely created a first, tentative inventory that will soon require substantive updates in many respects.

This is no small enterprise and may even seem daunting at times. It is important for legal scholars and everybody working on hydrogen issues to remember a thought that should comfort us as we navigate the complexities of the hydrogen economy. Ultimately, it is incumbent on all of us to harness the power of the law to steer towards a future where energy is clean, equitable, and abundant for all.