To ensure that tracking systems meet green hydrogen sector demand and achieve the established green hydrogen and decarbonisation goals, the Coalition for Action proposes a series of key recommendations. By providing transparency and incentivising the use of green hydrogen, tracking systems can positively impact green hydrogen development and lead to a more rapid deployment of the green hydrogen sector. Green hydrogen certification can support the rapid deployment of the sector and help reduce generation costs.
1. Develop a harmonised definition of green hydrogen. A consensual definition of green hydrogen should be developed, based on a transparent methodology in order to avoid fragmentation of the market.
2. Certify the renewable origin of the energy used to produce hydrogen. A reliable justification of the renewable origin of electricity must be ensured. It must be a sine qua non condition to grant the green hydrogen certificate. Renewable electricity used for hydrogen production will be defined by the following vectors: a. Technological correlation: Limitations should be supported by tracking systems that ensure that the electricity comes from renewable sources. b.Geographical correlation: Physical constraints in transporting the electricity must be considered in defining geographical boundaries to ensure that the renewable electricity is physically used in the electrolysis process. c. Temporal correlation: Time constraints criteria should be considered for green hydrogen certificates to ensure that the origin of the electricity used is renewable. d.Additionality: Additionality is necessary to ensure that the development of the sector is not detrimental to the energy transition as a whole. Additionality requirements should be mandatory to ensure that the growth of the green hydrogen market leads to the growth of the renewable energy sector and positively impacts the energy transition. Creating a strong and reliable tracking system based on these requirements is essential for transparently informing the public and private sectors about the origin of the hydrogen. Nevertheless, a degree of flexibility in regard to the geographical, temporal and additionality requirements should be taken into account in the short term to ensure that the nascent green hydrogen market can develop. Any short term transitional measure, however, will need to ensure that the system’s robustness and integrity, as well as its credibility to its consumers is not compromised. PRACTICAL INSIGHTS ON GREEN HYDROGEN 19
3. Ensure that certificates contain sufficient information for consumers and policy makers. To ensure consumer uptake, certain information must be readily available in the certificates. Consumers are primarily concerned with the origin of the units of hydrogen being purchased – that is, where they come from and how they were produced – as well as the quantification of the GHG emissions of the production process. Certificates can also enable governments to measure progress towards targets and policy objectives
4. Simplify the green hydrogen tracking system to avoid administrative burdens. Certificates generate a market that can accelerate the deployment and uptake of green hydrogen. By avoiding administrative burdens and barriers that could stop or delay project development are averted, these certificates’ positive impact on the green hydrogen market will be greater.
5. Implement a cost-effective tracking system. To create a market for green hydrogen, cost-effective tracking systems for hydrogen based on internationally cohesive green hydrogen standards and certification principles must be established. A credible hydrogen tracking system could generate some costs; hence, where possible, innovative approaches and the use of cost-effective technologies should be leveraged to bring down certification costs for clients. This is crucial for promoting green hydrogen uptake given that it is presently not cost competitive with grey or blue hydrogen.
6. Put in place appropriate control systems to avoid misuse or lack of transparency. Identify and devise mitigation strategies as well as appropriate systems, controls and procedures to avoid operational risks associated with the issue, transfer and cancellation of certificates.
7. Consider interactions with existing tracking systems. Key interactions between existing and newly established tracking systems will happen when one energy carrier that qualifies for a certificate is then converted into another energy carrier that also qualifies for a certificate under a different scheme. The coexistence and interaction of different schemes could threaten the credibility and accuracy of all existing schemes. To create a well-functioning green hydrogen tracking certificate system, it is crucial to evaluate and identify the conditions under which wanted interactions can occur as well as to develop mitigation strategies to avoid unwanted interactions between the different existing schemes.
8. Avoid double counting. If two systems coexist, for example in different countries, mechanisms must be put in place to ensure that multiple certificates are not issued for the same unit of green hydrogen.
9. Use taxonomy and green finance criteria to encourage compliance with green hydrogen certification requirements. Green hydrogen projects are cost-intensive, meaning financial support and access to capital are needed for project development. Hence, the design could consider green finance principles to open up access to global funds that are reserved solely for green projects that fulfil green hydrogen tracking system requirements.
10. Promote international co-operation to establish globally accepted rules and requirements. The green hydrogen export industry is promising and without a scheme in place might be delayed, reducing its value. Using internationally recognised rules will make it easier for export markets to understand how GHG emissions for the traded green hydrogen are calculated, facilitating their placement in the market. In summary, both renewable electricity and green hydrogen tracking systems need to follow the principles of transparency, reliability, simplicity and flexibility, while being backed by industry and managed by non-profit organisations or other official entity.
