New BEIS consultation on UK certification of low-carbon hydrogen

Hydrogen's potential to support the UK’s journey to net-zero depends in large part on how carbon-intensive the hydrogen we produce is.

One of the challenges this presents is transparency. Much like electrons in a wire look the same (whether generated from coal or from wind), a hydrogen molecule looks the same whether produced by electrolysis powered by renewables or from carbon-intensive steam methane reforming.

This makes claims of "low-carbon" hydrogen production at best hard to verify and at worst at real risk of greenwashing (where a producer claims the source of hydrogen is more green than it really is).

Following on from the government's publication of a low carbon hydrogen standard (LCHS), based on absolute emissions of 20gCO2e/MJLHV (Lower Heating Value) of hydrogen[1], BEIS (just in time for the UK's first Hydrogen Week) recently opened a consultation on how a low-carbon certification scheme for hydrogen might be established and look in operation. A link to the consultation can be found here.

This marks the UK's entrance into hydrogen certification, which has seen a number of small-scale pilot certification schemes established in the EU. 

What does BEIS want from a low-carbon hydrogen certification scheme?

The primary objective is to enable end-users to trace and verify the emissions of low-carbon hydrogen, while the secondary priorities are to grow the market for, incentivise the production of, and facilitate cross border trade in, low-carbon hydrogen. 

That the primary focus is around transparency and traceability is a signal from BEIS that there is already market demand for sources of low-carbon hydrogen, and that the key driver of market expansion is going to be trust and reliability in the certificates issued under the scheme.

This confidence in the underlying market demand underpins BEIS's "minded to" position on the certification scheme being voluntary rather than mandatory.

What does BEIS expect the features of its new certification scheme to be?

The expectation is that certification will be based on the hydrogen meeting the LCHS. 

BEIS want the scheme to be UK wide, and to provide a route to certify both imports and exports of low-carbon hydrogen. The scheme should also be available to both producers and to end users in the hydrogen value chain.

BEIS want enough flexibility in the scheme to allow new production pathways to join the scheme. This recognises the varied and rapidly shifting and improving technologies involved in low-carbon hydrogen production. In the same way that both wind and solar electricity generation can attract REGOs, BEIS expects alkaline and PEM electrolysers, as well as novel technologies not yet well developed should all be capable of attracting certificates under the new scheme.

What will certificates measure and confirm?

BEIS are minded to use energy-based certificates for hydrogen, rated in MWh. This is to keep consistency with conventions for gas pricing, and to align with other equivalent schemes being trialled in Europe. The hope is that this approach will support future international interoperability of the scheme.

The contents and information to be made available on the certificates is a key area where the consultation is seeking stakeholder views. BEIS notes that international schemes have taken very different approaches to the amount of information contained within certificates. Some of the questions that stakeholders can express their views on include:

  • whether the certification is a yes/no statement of compatibility with the LCHS or whether more detail of actual production emissions should be included;
  • whether to include the method of production on the certificates or not;
  • whether any government support received in the production process should be noted on the certificate;
  • what additional traceability information should be included (for example, dates and times of production); and 
  • whether certificates should carry a "tiered" label according to the CO2e content of the hydrogen.

How will the certification scheme give confidence that the hydrogen supplied is actually low-carbon?

The consultation notes that strict traceability is unlikely to be achievable in a hydrogen economy, as it is simply unrealistic to expect that low-carbon hydrogen will remain in segregated storage away from other hydrogen produced using higher-carbon methods.

BEIS favours a "Mass Balance Chain of Custody" approach (where the certificate is stapled to the low-carbon hydrogen until it is taken out by a consumer), over a simpler Book and Claim approach (where there is no physical link between production and consumption) on the basis that the former presents a lower risk of greenwashing.

Of particular interest to hydrogen mobility stakeholders, BEIS notes that its favoured approach can potentially mean the certificates will be compatible with the Renewable Transport Fuels Obligation (RTFO), which is currently extremely restrictive for green hydrogen is used as a fuel. Certification could widen eligibility to more green (and other low-carbon hydrogen) to attract RTFCs, and would have the potential to significantly improve the economic viability of hydrogen refuelling stations. 

Will the new scheme be compatible with other UK hydrogen schemes?

BEIS certainly wants it to be. One of the stated objectives is to achieve compatibility with existing schemes. In particular, current schemes like the Hydrogen Production Business Model and Net Zero Hydrogen Fund would be grandfathered, with the consultation seeking views on how such "legacy" schemes would be treated.

What are the next steps?

BEIS have committed to launching a certification scheme by 2025.

BEIS is seeking views on a wide range of features of its proposed certification scheme from stakeholders across the hydrogen value chain. The consultation closes on 28 April 2023, so there is still plenty of time for everyone with an interest in low-carbon hydrogen to express their views on what promises to be a big milestone for the UK hydrogen market.

 

References

[1] UK Low Carbon Hydrogen Standard: government response (publishing.service.gov.uk)

 

Markets for hydrogen already exist, but because companies can enter them while making ‘uncertified’ claims, concerns about greenwashing can undermine consumers’ and investors’ confidence in them."

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

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