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Hydrogen Technology: Regulations and Incentives
Both Europe and Japan have developed ambitious plans in reaching a clean energy solution with hydrogen. While Europe has numerous legislative acts in place that directly or indirectly affect the handling, production, transportation, supply, and storage of hydrogen along with the deployment of hydrogen-based technologies, the EU has not drawn out any incentives to support the same. Japan has formulated a new Strategic Roadmap for hydrogen-based technologies such as fuel cells consisting of three phases. The country is currently working on the first phase that focuses primarily on Fuel Cell Vehicles (FCVs). While Japan has not developed any regulations specific to hydrogen technologies in the areas of electricity or production of natural gas, there are financial incentives for the development of hydrogen-based projects. 

EUROPE
Government Regulations

• According to the report published by Hydrogen Law, there are numerous legislative acts passed by the EU legislation that are relevant to the development and deployment of hydrogen technologies in Europe. Most of the acts are found to indirectly impact the development of hydrogen technology in terms of transport, labor, environment, and health and safety issues. It is also found that the extent of the regulations’ impact concerning hydrogen technologies differs across European countries.

Production and storage of hydrogen:

• At the EU level, the production of hydrogen is regulated specifically by the SEVESO Directive act, the ATEX Directive act, and the Directive 2010/75/EU act. These three legislative acts apply vital obligations on manufacturers of equipment along with operators and developers that are involved in hydrogen production.
• Additionally, the Environmental Impact Assessment (EIA) and Strategic Environment Assessment (SEA) Directives impact the production of hydrogen indirectly by defining a “strategic environmental impact assessment procedure”. These directives are subject to change based on national rules.
• The Classification, Labeling, and Packaging (CLP) regulation was drafted by the United Nations and established rules for the harmonized labeling and classification of hydrogen.

Transport and distribution:

• Hydrogen fuel’s transport and distribution in Europe are subject to the same regulations that are in place for the transport of hazardous goods by rail, road, or inland waterways between or within the EU Member States.
• At the EU level, the Directive 2008/68/EC on the inland transport of dangerous goods and the Directive 2010/35/EU on the transport of pressure equipment are found to be the most relevant acts which impact hydrogen transport.

Hydrogen as a fuel:

• The Alternative Fuels Infrastructure Directive (AFID) is currently the most relevant legislative act passed on the EU level for the use of hydrogen fuel. This directive states particular measures to reduce oil dependence, to mitigate the fuel’s impact on the environment, and lists the requirements for building alternative fuels infrastructure that includes refueling stations for hydrogen.
•  Directive 2009/28/EC relates to the use of energy from a renewable source such as hydrogen and is found to have a strong, although indirect, impact on hydrogen fuel being used for energy as it places “national targets for the overall share of energy from renewable sources”.
•  Directive 2015/652 was passed to establish the fuel cell’s GHG intensity of compressed hydrogen and the legal binding efficiency factor of hydrogen fuel cells developed by different methods in Europe.

Electricity grid for electrolyzers:

•  Directive 2009/72/EC and the Commission Regulation passed in 2016 establish common laws and obligations for the generation, transmission, distribution, of electricity. These regulations impact the use of hydrogen technologies for electric systems.
•  Directive 2012/27/EU and the Commission Regulation passed in 2017 provides detailed guidelines on the balancing of electricity, energy efficiency, and removes barriers in the use and supply of energy produced by various means, including hydrogen.

Gas grid:

• The EU legislative acts that impact hydrogen technologies on the Gas Grid are Directive 2009/73/EU, Regulation 715/2009, Commission Regulation 2015/703, Commission Regulation 2017/460, Directive 2009/28/EC, ATEX Directive 2014/34/EU, Directive 2010/75/EU, and Regulation 2016/426.
• The Directive 2009/73/EU lays down obligations and provisions for the transmission, distribution, storage, and supply of natural gas which extends to hydrogen gas as well.
•  Regulation 715/2009 establishes principles and rules for tariffs for the transmission and storage of natural gas including hydrogen.
•  Commission Regulation 2015/703 provides a network code that issues rules concerning data exchange and technical procedures utilized by EU operators within the Energy Community.
•  Commission Regulation 2017/460 issues rules to enhance gas tariff transparency and provides a tariff structure for hydrogen systems.
• Directive 2009/28/EC provides a “framework for the promotion of energy from renewable sources” including hydrogen. According to this directive, the EU Member States would have to ensure a guarantee of origin is provided from renewable energy producers.
•  ATEX Directive 2014/34/EU is concerned with safety and health requirements.
•  Directive 2010/75/EU provides a framework towards control and prevention of electrical plants, including those that utilize hydrogen technologies.
•  Regulation 2016/426 lays down rules for manufacturers, distributors, and importers of equipment that use gaseous fuels including hydrogen.

Hydrogen fuel cells:

•  Regulation 2016/426 is found to be the most significant legislative act that impacts stationary power such as fuel cells. This act is applicable in all Member States and lists the requirements and obligations concerning equipment that utilizes gaseous fuels like hydrogen.
•  Directives 2009/72/EC and 2009/73/EC are found to affect hydrogen technologies indirectly as they issue general rules for the storage, transmission, distribution, and supply of electricity and natural gas.

Government Incentives

• According to a study titled “Potential for hydrogen and Power-to-Liquid in a low-carbon EU energy system using cost optimization”, the implementation and execution of hydrogen technologies in the areas of energy and electricity is expected to reach breakthrough results. While EU policies provide a systematic and strong framework for hydrogen technologies, there is no strong support for the same. At present, policies target production, distribution, supply, and storage of hydrogen, but does not provide many EU-wide incentives for the development of hydrogen-specific technologies.
• A report published by EurActiv states that the European Commission has yet to form incentives for hydrogen technologies and is planning on placing it on the agenda for the 2020 Gas Package.
• In terms of funding, the European Commission’s EU Emissions Trading System (EU ETS) has put in place long-term incentives for the development and deployment of low-carbon innovative technologies. The EU ETS provides the “Innovation Fund” with a sum that can reach up to €10 billion based on the carbon price.

JAPAN
Government Regulations

• In 2013, the Council for a Strategy for Hydrogen and Fuel Cells was set up by the Ministry of Economy, Trade, and Industry (METI) with the aim of studying the future utilization of hydrogen as a renewable fuel. In 2014, the Council developed the Strategic Roadmap for Hydrogen and Fuel Cells which consists of three distinct phases. Currently, Japan is under the first phase of the Roadmap which targets the following;
• The number of residential fuel cell units are targeted to reach 1.4 million by 2020 and 5.3 million by 2030.
• Extensive focus is being laid on FCVs with the goal of increasing the number of refueling stations. The new basic strategy launched by the country’s Prime Minister focuses all its efforts on establishing regulations to accelerate the development of hydrogen fueling stations.
• The second phase (2025-2030) of the roadmap is focused on hydrogen-based power generation, policies for which have not been developed yet.
• The third phase (2040 and beyond) of the roadmap focuses on the full-scale production of hydrogen with zero carbon emissions.
• According to a report by Smart Energy, Japan does not have regulations in place for hydrogen technologies specific to electricity or the production of natural gas. It was noted that Prime Minister Abe has recently issued deregulation of certain policies to push for the use of hydrogen in Fuel Cell Vehicles. Japan regulates hydrogen as an industrial gas with codes and standards designed specifically for large-scale chemical plants.
• Currently, regulations are under review to remove various barriers for the use of hydrogen as a fuel and the infrastructure for the accompanying technologies. Changes are being made to the policies that were once strict with respect to the distribution and storage of hydrogen.
• According to the International Energy Agency (IEA), Japan needs to establish key policies to improve the momentum of hydrogen technologies in major value chains across industries. The IEA states that “five smart policy actions”, among other regulations, are required to enable Japan to achieve its target with its “Hydrogen Society” initiative. 

Government Incentives 

• According to the report published by the European Commission, to push forward Japan’s Hydrogen Society, the country’s METI and New Energy and Industrial Technology Development Organization (NEDO) along with other national and private energy bodies have listed various financial incentives and subsidies for the implementation of Japan’s “Hydrogen Society”.
•  Research and development loans and grants are provided for various hydrogen technology-related products. Under the CREST initiative, Japan Science and Technology Agency (JST) offers funding options for strategic research for renewable energy systems that include hydrogen technologies.
• According to the 6th International Workshop report on “Hydrogen Infrastructure and Transportation”, the budget placed by NEDO for hydrogen fueling stations is 5.6 billion JPY and the budget for stationary fuel cells subsidy is 7.7 billion JPY.
• The Cross-Ministerial Strategic Innovation Promotion Program funds studies related to liquid hydrogen, ammonia, and methylcyclohexane to develop carbon-free hydrogen value chain. The program currently funds ten hydrogen production projects with a total budget of EUR 130 million.
• The central government provides purchase subsidies for FCVs and stationary fuel cells that ranges across both residential and industrial sectors. It was found that certain local governments such as Tokyo offer additional funds to speed-up the uptake.
• Subsidies are provided specifically for hydrogen fuel with the aim of reducing the price of the fuel to EUR 10 for every kilogram.

Hydrogen Technologies: Overview

• Hydrogen technologies have gained prominence in the contemporary world as nations push to decarbonize important sectors such as transport and high-grade heat industries. In the US, Japan, Europe, and Australia, hydrogen technology is providing a new way of tackling climate change and air pollution through clean electricity generation. Hydrogen technology provides a sustainable solution to critical energy challenges in these countries, especially the need to reduce emissions.

#1: United States

Hydrogen Fuel Cell

• Electric cars powered by hydrogen fuel cells are increasingly gaining acceptance in the United States. The hydrogen fuel cells transform compressed hydrogen in the fuel tanks into electricity that powers the vehicles’ motor. The cars have a similar range to customary vehicles powered by gasoline.
• Hydrogen powered vehicles are advantageous because they can cover long distances. Their refueling time is also shorter.
• Hyundai is commercially producing its Tucson FCEV while companies such as Honda, Mercedes-Benz, and Toyota have now entered the market. In 2018, 32 fuel cell electric buses were operating in the United States.
• Adoption of hydrogen fuel powered vehicles is lagging, especially because of the stiff competition from battery-powered electric technology. However, looking into the future, the inevitable phasing out of the internal combustion engine and push to control climate change could provide an opportunity for growth. The US government’s move to advance fuel cell market will also spur the growth. 

Electricity

• United States is increasingly adopting hydrogen technology to produce green electricity as guided by the global initiatives to reduce carbon emissions. Currently, various projects aimed at producing hydrogen power are under way.
• This year, Mitsubishi Hitachi Power System (MHPS) and Magnum Development announced the launch of Advanced Clean Energy Storage Project (ACES) in Utah. The pioneer project is expected to generate 1000 MW of pure clean energy. The MHPS technology aims to use hydrogen to produce energy with zero emissions.
• In 2017, Toyota started building the world’s first Megawatt-scale hydrogen power generation plant at US Port of Long Beach. Once complete in 2020, the plant is expected to produce 2.35 MW and 1.2 tons of hydrogen daily. Such massive quantities are enough to power 2,350 homes and meet the daily driving needs of 1,500 vehicles.
• Technological improvements and reduced cost of technology in the future will increase the use of hydrogen technology in electricity adoption. Initiatives to control carbon emissions and climate change control will also increase the use. 

#2:Japan

Hydrogen Fuel Cell

• Toyota is leading Japan’s efforts to commercialize the use of hydrogen-powered fuel cell cars. The Japanese government feels that the nation is suited to hydrogen-powered vehicles because of the dense urban centers.
• In 2020 Olympics, Japan plans to launch 100 fuel cell buses to coincide with the Olympics. In the next six years, Japan plans to produce 40,000 hydrogen fuel cell vehicles. Toyota has unveiled a hydrogen-powered car called Mirai.
• The Japanese government is simulating the impetus to own hydrogen powered cars by offering investment subsidies to companies like Toyota to start hydrogen-fueling stations. The target is to start 900 stations in Japan by 2030.
• A reduction in the cost of hydrogen fuel cell production will lead to increased production of fuel cell cars in the future. 

Electricity 

• Kawasaki Heavy Industries and Obayashi Corporation have undertaken massive projects in Japan aimed at producing electricity using hydrogen. Electricity is produced using a gas turbine wholly fueled by hydrogen.
• Kawasaki links hydrogen production sites with consumers, especially in Kobe region.
• The future of hydrogen use in electricity in Japan is bright, especially given the government’s move to embrace it as the energy source for the future.

#3:Europe
Hydrogen Fuel Cell

• Fuel cell and hydrogen technology provide the best channel of decarbonizing the energy and transport sectors in Europe. Projections show that hydrogen has the potential to create a low carbon economy by 2050 in Europe.
• Hydrogen-powered cars are yet to gain significant acceptance in Europe. Denmark is among the leading countries in hydrogen-powered cars adoption.
• The European Union has launched a launched aimed at accelerating the cars’ commercialization. The Zero Emission Fleet vehicles For European Rollout (ZEFER) project introduced 180 FCEVs in the cities of Paris, Brussels, and London. ZEFER pilot project will also provide vital data for future commercialization of FCEVs.
• Project 3EMOTION in Belgium is another drive to popularize FCEVs. The project seeks to convince financial institutions and policymakers to invest in fuel cell buses in order to reduce local carbon emissions.
•  Hydrogen Mobility Europe project seeks to improve access to hydrogen refueling stations for FCEVs drivers in Europe.
• The European Union supports the adoption of hydrogen-powered vehicles in Europe, a move that will fast track acceptance in future.

Electricity 

• Hydrogen technology for electricity production is gaining momentum in Europe. The international sustainability agenda has set the tone for hydrogen adoption in Europe
• The European Union has invested over 100 million Euros in 30 projects focusing on hydrogen electricity production. H2FUTURE is the flagship project currently under construction in Linz.
• ProJect BIG HIT in Orkney, Scotland is the other pilot project in Europe. The project has a budget of 7.2 million pounds.
• The massive investments in hydrogen as a source of electricity by the European Union set the region ready for widespread acceptance of hydrogen power. 

#4:Australia 

Hydrogen Fuel Cell

• Australia is making baby steps towards hydrogen fuel cell cars acceptance. However, selling the cars in Australia is difficult because of the low acceptance rates. In 2018, only 1.15 million hydrogen FCEVs were sold in Australia compared to 17 million cars in US.
• Only two refueling station are available in Australia both located in Sydney and Melbourne.
• Toyota has introduced 13 hydrogen fuel cell cars to persuade the Australian government to adopt the technology
• ARENA and Toyota have collaborated to start a Hydrogen center in Altona worth $7.4 million. The project seeks to demonstrate how hydrogen technology works to improve acceptance. It will also erect a commercial-grade hydrogen refueling station. With such initiatives, hydrogen technology use will increase going into the future. 

Electricity

• Hydrogen is in abundance in Australia. The country plans to start exporting the commodity as global demand rises. The cost of hydrogen electricity is declining as technology costs in the country plummet.
• Australian through Australian renewable Energy Agency (ARENA) has invested $20 million to propel research and development into hydrogen use in power generation.
• Australia has also invested heavily in projects such as Neoen Australia Hydrogen Super hub-Crystal Brook energy part and Australia Gas Infrastructure Group (AGIG)-Hydrogen Part SA. The projects produce hydrogen from renewable energy, which is then injected into the country’s power grid.

Obtaining much of the information on hydrogen technology current use and projects was quite easy, especially in the United States. However, information on actual cost invested was not readily available. We relied on news articles and government press releases to assign costs to specific projects. One of the source quoted is dated 2017, but we feel its credibility and reliability are commendable because it is a government news release article.