The EU’s amended Renewable Energy Directive (RED III) targets an increase in the share of renewables from 24.5% in 2023 to 42.5% by 2030, with ambitious sectoral sub-targets for RFNBO use in industry and transport. However, without stringent regulation, RFNBO deployment could cause emissions to flatline rather than decrease.  

The report models different scenarios to assess the impact of hydrogen production on the electricity grid, quantifying ‘induced’ emissions associated with RNFBO production and comparing RFNBO use with alternatives like direct electrification or the displacement of fossil fuel-based electricity in the grid. 

It shows that while producing hydrogen with a low carbon footprint is possible, when induced emissions are counted, the carbon footprint of RFNBOs can be very high.

RFNBO production could generate more emissions than fossil-based hydrogen as it tends to divert renewables from decarbonising the grid.

In a highly interconnected EU grid, these ‘induced’ emissions could be even higher.

Electrifiying sectors such as transport is much more energy-efficient than relying on RFNBOs and should be prioritised where possible.

RFNBOs should be prioritised for industries that already depend on fossil-fuel hydrogen, like ammonia and methanol production.  

Revise RED sub-targets to encourage energy-efficient solutions such as electrification more than hydrogen use.

Better emissions accounting in the RFNBO standard, to account for induced emissions.

Revised RFNBO standard to only make eligible hydrogen produced without induced emissions.