Brussels, Belgium – Hydrogen Europe, the leading industry association, has called for the implementation of robust and financially significant penalties to ensure compliance with the European Union’s Renewable Energy Directive III (RED III) targets for green hydrogen and other Renewable Fuels of Non-Biological Origin (RFNBOs) in the transport sector. The association argues that fines must exceed the 'breakeven point' for RFNBO production to genuinely compel fuel suppliers to meet their mandated quotas, thereby accelerating the decarbonization of heavy-duty transport and aviation.

The proposal comes as EU member states grapple with the practicalities of integrating a substantial share of renewable fuels into their energy mix, with RED III setting an ambitious 5.5% target for advanced biofuels and RFNBOs in transport by 2030, with a sub-target of 1% specifically for RFNBOs. Industry stakeholders, including Hydrogen Europe, emphasize that without stringent enforcement, the economic incentive to delay compliance could undermine these critical climate objectives.

Jorgo Chatzimarkakis, CEO of Hydrogen Europe, underscored the urgency of the situation. "We need meaningful penalties that truly bite if we are serious about forcing compliance with green hydrogen transport mandates," Chatzimarkakis stated. "A penalty that is lower than the cost of producing or procuring RFNBOs simply incentivizes non-compliance, turning a crucial climate policy into a mere suggestion. The fines must be set at a level that makes it unequivocally more economical to invest in and utilize green hydrogen than to pay the penalty for failing to meet targets."

Currently, the European green hydrogen market is nascent but rapidly expanding, with significant investment flowing into electrolyzer manufacturing and renewable energy projects. However, scaling up production and establishing the necessary distribution infrastructure for green hydrogen and its derivatives, such as e-methanol or e-kerosene, remains a formidable challenge. The proposed penalties aim to create a strong demand signal, providing certainty for investors and developers by guaranteeing a market for green hydrogen volumes.

Market analysts suggest that a well-designed penalty system could de-risk green hydrogen projects, making them more attractive to private capital. Conversely, a weak enforcement regime could lead to a 'wait-and-see' approach from fuel suppliers, delaying crucial investments in production capacity and infrastructure. The industry's call highlights a broader concern that while the EU has set ambitious targets, the mechanisms for ensuring their achievement often lack the necessary teeth. Effective policy implementation, including robust penalty frameworks, is paramount to translating legislative intent into tangible reductions in carbon emissions across the transport sector.