Checklist for establishing international supply chains for hydrogen and hydrogen derivatives
Producing hydrogen derivatives requires careful planning across each phase of the value chain to ensure project success and market integration. This checklist is designed to guide producers in German partner countries through the key challenges and necessary framework conditions associated with four critical phases: Hydrogen electrolysis, hydrogen derivative production, export infrastructure, and international transport. By addressing essential questions for each stage – such as technical requirements, regulatory frameworks, certification, and logistics - producers can identify potential obstacles and establish the conditions needed for efficient, reliable, and sustainable operations. This structured approach supports the development of robust hydrogen derivative projects that meet both local and international standards.
Key topics in international hydrogen policy and collaboration
Governance
How can the model of Germany’s Hydrogen Coordination Office be adapted to support the development of hydrogen economies in other countries?
EU regulatory framework
Which EU regulation is relevant for importing hydrogen & derivatives to count as fully renewable?
As part of the EU's "Fit for 55" package aimed at achieving a 55% reduction in greenhouse gas emissions by 2030, the Renewable Energy Directive (RED) was updated. In 2018 RED II set systematic criteria for electricity sourcing in the production of renewable hydrogen and its derivatives, termed Renewable Fuels of Non-Biological Origin (RFNBOs). The certification as RFNBO is essential when aiming to export green hydrogen and derivatives to the EU. Meeting EU requirements will be key for renewable hydrogen to become a tradable good in the European Union. This implies legislative and regulatory alignment. In 2023, RED III introduced stricter sustainability and greenhouse gas (GHG) reduction requirements that align with more ambitious RFNBO integration goals. RED II provides a foundational framework for the production of RFNBOs. The European Commission has further specified these basic rules through two key Delegated Acts adopted in 2023. Regulation (EU) 2023/1184 defines electricity sourcing criteria for RFNBO production. Regulation (EU) 2023/1185 outlines greenhouse gas (GHG) accounting rules for RFNBOs. These regulations apply equally to hydrogen produced within the EU and to imported hydrogen, ensuring consistency in how RFNBOs are regulated across borders.
Linked Resources: Factsheet – The EU’s Regulatory Framework for Realising Hydrogen Imports
Does the Carbon Border Adjustment Mechanism (CBAM) apply to hydrogen and derivative export to the EU?
Hydrogen exports to the EU, including to Germany, must comply with the Carbon Border Adjustment Mechanism (CBAM), which places a carbon price on imports of carbon-intensive goods to prevent carbon leakage. CBAM covers hydrogen and its derivatives, with only direct emissions counted for hydrogen itself and both direct and indirect emissions for derivatives like ammonia. It applies to all carbon-intensive production pathways, including those using fossil-based electricity. Exporters must calculate and report emissions using recognized methods and provide accurate, verifiable data to EU importers, who are responsible for quarterly reports. From January 2026, financial charges based on EU ETS carbon prices will apply through CBAM certificates.
How to design efficient permitting processes?
Under the EU Hydrogen Strategy and REPowerEU, some countries are creating “one-stop-shops” or streamlined permitting processes for renewable hydrogen projects. National hydrogen agencies or ministries of energy/environment may coordinate permitting in strategic projects. Timelines for permit approvals should be well-defined and allow for parallel processing of environmental, safety, and construction assessments. Early stakeholder engagement and transparent communication are critical to gaining public trust and identifying potential issues early in the process. Leveraging digital tools, such as centralized platforms and GIS-based site analysis, can significantly reduce delays and improve coordination across agencies. Finally, processes should remain adaptive, incorporating lessons from pilot projects and continuously improving based on feedback and performance metrics.
Which EU regulation is relevant for low carbon hydrogen & derivatives?
Low-carbon fuels (LCFs), including blue hydrogen, are not governed by RED II/III but instead fall under the EU Gas Market Regulation 2024/1788, particularly Article 9 §5. While less developed than the RFNBO framework, detailed rules exist and will be clarified further by an upcoming Delegated Act, especially on GHG accounting. Exporters must also comply with the EU Methane Regulation (EU) 2024/1787, which targets methane emissions throughout the gas supply chain. The EU applies the "mirroring principle," requiring foreign producers to meet the same methane monitoring, reporting, and reduction standards as EU-based ones. If actual emissions data isn’t provided, standard methane values from Annex B of the LCF Delegated Act apply, increased by 40%. These rules phase in gradually, with mandatory reporting starting upon adoption of the LCF DA and becoming stricter through 2028. To reduce compliance costs and emissions, exporters are advised to track actual methane emissions.
What requirements must be met in order for the exported hydrogen or hydrogen derivatives to be labelled as “renewable” according to EU definitions?
To be defined as Renewable Fuel of Non-Biological Origine (RFNBO), hydrogen and its derivatives must be produced exclusively from renewable energy sources without relying on fossil or biological feedstocks. Thus, green hydrogen is aligning with the RFNBO definition because it is produced through electrolysis of water powered entirely by renewable energy sources like wind and solar. To maintain RFNBO classification, green hydrogen produced outside the EU must adhere to stringent infrastructure requirements. Hydrogen classified as RFNBO cannot, at any point, be blended with other types of hydrogen or gases, even outside the EU. This means RFNBOs cannot be fed into public gas grids or mixed with fossil-derived hydrogen. The entire supply chain, from production to import, must use a dedicated and separate infrastructure to preserve the integrity of the hydrogen as an RFNBO. Furthermore, there are specific electricity sourcing and greenhouse gas accounting threshold requirements under RED II.
Linked Resources: Factsheet – The EU’s Regulatory Framework for Realising Hydrogen Imports
What are the exact electricity sourcing requirements for renewable hydrogen and derivatives?
Electricity sourcing (Regulation 2023/1184) is a pivotal aspect of RFNBO production. Hydrogen must be produced using electricity that meets the EU’s renewable energy criteria. Options for electricity sourcing that can be combined:
Direct Connection with Renewable Energy Facilities: The renewable energy source must operate without grid reliance for hydrogen production. A smart metering system ensures no grid electricity is used.
Grid Electricity in Zones with High Renewable Energy Share: Electrolyzers can utilize grid electricity if the bidding zone has a renewable energy share of over 90% in its electricity mix. The 90% renewable energy share must have been achieved in at least one of the last five calendar years. Electrolyzers are limited in their operational hours to prevent overloading the grid during non-renewable electricity supply periods.
Power Purchase Agreements (PPAs) with Renewable Energy Providers: Electrolyzers may source electricity via PPAs, enabling access to renewable electricity delivered through the grid. The renewable energy installation must be located in the same or an adjacent bidding zone. Offshore installations qualify if they are connected to the electrolyzer’s zone. Until 2029, the electricity used for RFNBO production must match production on a monthly basis. Starting in 2030, stricter hourly matching will apply, ensuring that hydrogen production closely aligns with renewable electricity generation. Grid electricity must have an emissions intensity below 18 gCO2eq/MJ.
Electricity Consumption to Prevent Curtailment of Renewable Energy: Electrolyzers can use electricity that would otherwise be curtailed due to grid imbalances, ensuring maximum utilization of renewable energy. The hydrogen producer must demonstrate that their operations directly reduced renewable energy curtailment during redispatch events. Detailed energy audits and reporting mechanisms are required to validate claims of curtailment prevention. This method significantly reduces wasted renewable energy and optimizes grid stability. It is particularly useful in regions where renewable energy generation frequently exceeds grid demand or capacity.
There are further particularities, namely the Additionality Requirement which includes that electricity used for RFNBO production must come from newly built renewable energy plants (e.g., wind or solar farms) that were commissioned after January 2028. This is to ensure that the demand for renewable energy is met without displacing existing renewable energy capacity. Moreover, the Grandfathering Clause applies to renewable energy facilities that were operational before 2028, to which the additionality requirement does not fully apply (as per Article 11 of Delegated Regulation 2023/1184). They can be used for 10 more years, until the end of 2037. This provision allows older renewable installations to contribute to RFNBO production under certain conditions and supports, as the name grandfathering implies, the protection of existing operators.
What are the requirements concerning Greenhouse Gas Accounting and Savings Threshold for renewable hydrogen & derivatives?
A central requirement for RFNBO classification is compliance with GHG accounting rules, as specified in Delegated Act 2023/1185. These rules mandate that the lifecycle emissions of RFNBOs must achieve a minimum of 70% savings compared to the fossil fuel comparator (Regulation 2023/1185). The fossil comparator value for RFNBOs is 94 gCO2/MJ. The formula to calculate the entire value chain (excluding the production of machines and equipment) is
E = ei + ep + etd + eu – eccs
- E: Total emissions from the use of the fuel
- ei: Emissions from the provision of inputs
- ei,elastic: Emissions from elastic input materials, i.e. input materials that increase with rising demand.
- ei,rigid: Emissions from fixed input materials, i.e. input materials that remain constant in terms of quantity despite increasing demand.
- ei,ex-use: eex-use is the emissions from the previous use or whereabouts of the input materials.
- ep: Emissions from processing.
- etd: Emissions from transportation and provision.
- eu: Emissions from the combustion of the fuel in its end use.
- eCCS: Emissions savings through carbon capture and geological storage
Lifecycle Assessment (LCA): GHG emissions are measured across the entire value chain, from energy production to final delivery. This includes upstream emissions (e.g., energy source) as well as emissions from transportation.
Transport Emissions: For both domestically produced and imported RFNBOs, emissions from transporting hydrogen or its derivatives are factored into the lifecycle assessment, emphasizing the importance of low-emission logistics solutions.
While the same rules apply to hydrogen imports from outside the EU, there are significant challenges for compliance. Many non-EU countries do not have "bidding zones" comparable to those defined in the EU electricity market. This makes verifying temporal and geographic correlation more complex.
What are the key production rules for hydrogen & derivatives labelled as “low carbon”?
Similar to RFNBOs, LCFs must meet a 70% greenhouse gas (GHG) savings threshold compared to the fossil fuel comparator. This requirement ensures that LCFs contribute significantly to emissions reductions, even though they are derived from fossil sources. The certification of LCFs follows procedures analogous to those for RFNBOs, as there are cross-references to RED II for key processes such as emissions accounting and verification. While the general framework for LCFs is outlined, the Delegated Act (DA) defining detailed rules for GHG lifecycle accounting for LCFs has not yet been finalized. The draft indicates that GHG emissions accounting for LCFs will be comparable to RFNBOs, including consideration of emissions across the entire value chain (e.g., production, transportation, and end-use).
Certification process
What kind of certification systems for hydrogen & derivatives are there?
The EU mandates the use of a mass balance system as the primary method to ensure that hydrogen and its derivatives meet the mandated sustainability requirements and to track produced, transported and traded quantities across the supply chain.
Mass Balance: Mandates that Proofs of Sustainability (PoS), which certify that a produced batch of hydrogen meets the sustainability requirements, must be linked to the physically traded hydrogen (as opposed to Book & Claim systems).
Proof of Sustainability (PoS): A PoS is a declaration made by a certified hydrogen producer that a specific quantity of hydrogen (also known as a “batch”) is in compliance with the sustainability and GHG-reduction requirements for RFNBO (or LCF).
Book & Claim: Alternative systems like Book & Claim which allow the trade of Guarantees of Origin (GoO) independently from the physical product may be introduced by Member States on a voluntary basis, but these operate parallel to the core mass balance requirement and can not replace it.
Who is responsible for the certification process?
While many different actors are part of the hydrogen certification governance, the main contact points for hydrogen producers are the voluntary schemes and certification bodies. Voluntary schemes are private organizations that ensure that companies such as hydrogen producers registered with them (known as economic operators) comply with the sustainability requirements outlined above. To this end, they specify rules and procedures that economic operators must abide by based on relevant legislative requirements. Voluntary schemes must be recognized by the European Commission. In late 2024, the Commission recognized three voluntary schemes for RFNBO: ISCC, REDcert and CertifHy. In order to be certified, hydrogen producers must register with a voluntary scheme and undergo an audit by a certification body. Certification bodies are private organizations such as TÜVSüd or DEKRA which carry out audits to verify whether economic operators actually comply with the requirements of the voluntary scheme. In Germany, certification bodies must be recognized by the Federal Environmental Agency. Voluntary schemes and certification bodies can operate globally.
Once operational, all Proofs of Sustainability for RFNBO and LCF batches must be recorded in the Union Database to ensure effective, efficient, transparent and harmonised tracking of hydrogen quantities across the EU. In addition, Member States will operate national databases which must exchange data with the Union Database to ensure alignment and avoid double counting. Should member states introduce a Guarantee of Origin system, GOs must be also recorded in the Union Database and must be traded alongside the Proofs of Sustainability.
How does the certification process work?
The certification process for hydrogen begins when a producer contacts a recognized voluntary scheme, such as ISCC, CertifHy or REDcert. Depending on the voluntary scheme, producers must contract a certification body before or after registering with the scheme. In order to receive a conformity certificate, hydrogen producers must be successfully audited by a contracted certification body. The audit takes place on-site. This audit includes, inter alia, verifying the emissions calculations, the sustainability of the production process, and the robustness of the traceability mechanisms used to track the hydrogen from production to delivery. Producers should not underestimate the cost and complexity of audits. They should familiarize themselves in detail with the required documentation and verification obligations. They should prepare for the audit as identified deficiencies may lead to additional audits and potentially sanctions by the voluntary scheme. Voluntary schemes and certification bodies may offer pre-certification audits that help to identify potential issues before the actual certification process. Only certified hydrogen producers may issue Proofs of Sustainability (PoS).
A certificate is usually valid for one year, and producers must maintain detailed records to ensure ongoing compliance. Re-certification will be required annually or if there are significant changes to the production process or feedstocks. The timeline for the entire process typically ranges from two to three months, depending on the producer’s preparation, the availability of documentation, and the length of the audit and review process.
Linked ResourcesI: How to become RFNBO-certified (by Netherlands Enterprise Agency)
ISCC: ISCC System – Solutions for sustainable and deforestation free supply chains
CertifHy: CERTIFHY EU RFNBO SCHEME - CERTIFHY
REDcert: REDcert Systeme_EN