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Renewable Energy Directive
The Renewable Energy Directive (RED) sets the EU's legal basis for renewable energy development. First revised in 2018, it was updated again under the EU Green Deal, resulting in RED (III), effective from November 2023. The directive is also targeted for simplification in the European Commission’s Omnibus simplification framework.
The 2018 revision required Member States to collectively ensure that at least 32% of the EU’s energy comes from renewable sources by 2030, with national contributions outlined in their Integrated National Energy and Climate Plans (NECPs). After the latest revision, the 2030 target increased to 42.5%, with an additional indicative 2.5% top-up. Beyond the overall goal, the RED also sets sector-specific measures for transport, industry, and buildings where renewable adoption has lagged.
Transport
The 2018 RED required fuel suppliers to ensure at least 14% of energy for road and rail comes from renewables. The revised RED III offers Member States two options for 2030: a binding target of 14.5% greenhouse gas emissions reduction in transport using renewables, or a binding minimum of 29% renewables in the sector's final energy consumption.
In relation to hydrogen, demand is to be increased through the directive via a binding combined sub-target of 5.5% for advanced biofuels and renewable fuels of non-biological origins (RFNBOs) by 2030. This sub-target is strengthened by an additional sub-sub-target of 1% of RFNBOs in the share of energy supplied to the transport sector in 2030. To facilitate compliance with these targets for Member States, the methodology for calculation of RFNBOs establishes multipliers where the energy content of RFNBOs supplied is counted several times their actual energy content. For the aviation and maritime sectors, the multiplier is of 1.5 times their energy content, while for the other transport sectors, it is twice the energy content.
Industry
Under the revised RED, the industrial sectors of the Member States will have to increase their use of renewable energy by 1.6% annually. Specifically, for hydrogen, 42% of the hydrogen used in industry from 2030 onwards must be in the form of RFNBOs. This target is further raised to 60% of hydrogen consumed in industry by 2035. Some degree of flexibility is allowed to Member States, where the latter two targets can be reduced by 20%, if the following two conditions are met:
- if the Member States’ national contribution to the binding overall EU target meets their expected contribution, and if;
- the share of hydrogen from fossil fuels consumed in the Member State is not more than 23% in 2030 and 20% in 2035.
Buildings, heating, and cooling
Under the 2018 RED, EU Member States had to annually boost their share of renewable energy in heating and cooling by 1.3%, with TSOs and DSOs also required to publish tariffs for connecting renewable gases. The updated Directive now sets a goal for buildings to use 49% renewable energy by 2030. For heating and cooling, Member States must increase renewables by at least 0.8% per year until 2026, and 1.1% per year from 2026 to 2030, with further country-specific targets added.
Delegated Acts
The RED framework includes two delegated acts for RFNBOs. The first defines when electricity for hydrogen and related fuels counts as fully renewable, focusing on additionality, and temporal and geographical correlation. The second sets the method for calculating life-cycle greenhouse gas emissions for RFNBOs and recycled carbon fuels.
Additionality: the Directive states that renewable electricity used for RFNBOs must come from new assets built solely for RFNBO production. Specifically, the energy installation should be commissioned within 36 months before the electrolyser, without public funding. Delegated acts introduce a transition period: RFNBO installations operational before the end of 2027 will follow additionality rules only from January 1, 2038; those operational after 2027 must comply with additionality immediately.
As for emissions, the maximum GHG emission intensity threshold is defined at 70% of the fossil fuel comparator which is 94 gCO2eq/MJ. In other words, RFNBO produced must have a GHG intensity of no more than 28.2 gCO2eq/MJ, delivered to the final consumer.
Thus, to be considered as RFNBO, four ways of sourcing renewable electricity are recognised under this framework:
- The default option is to use electricity from the grid. To determine the share of renewable energy, the average share of electricity from renewable source in the country, as measured in the two years before the year in question will be used. However, in most Member States, this will not deliver RFNBOs production, as most countries are not able to achieve the abovementioned 70% GHG emissions reduction, either because of the GHG intensity of the power grid is too big or because the RFNBO output would be too small.
- The second option is to source fully renewable electricity through a direct connection between the RFNBO facility and a renewables generation installation. However, two preconditions must be fulfilled to count the electricity as fully renewable:
- Additionality, as explained above;
- The installation producing electricity must not be connected to the grid or if it connected to the grid, it must have a smart meter to measure all electricity flows, in order to show that no electricity from the grid has been taken to produce RFNBOs;
- The third case under which electricity can be counted as fully renewable is when electricity is taken directly from the grid, as long as it is produced exclusively from renewable sources and the renewable nature is demonstrated and claimed only once. In other words, this case covers situations, where electricity for RFNBO production is sourced via a Power Purchase Agreement. To be counted as fully renewable however, three conditions must be met:
- Additionality, as explained above;
- Temporal correlation, which is the requirement that RFNBO production matches temporally the electricity production unit with which it has a PPA;
- Geographical correlation, where the electrolyser and renewable power plant are located in the same bidding zone or in an interconnected bidding zone, where the prices are higher compared to the bidding zone where the electrolyser is located.
- Considering that the different ways to source electricity can be used at the same time, a mix of fully renewable electricity (via direct connection or PPA) and electricity taken from the grid can also be used. This is advantageous as it can enable the utilisation of the electrolyser and to adjust the hydrogen production profile to the needs of the off-taker.
If non-renewable grid electricity is used, the second GHG delegated act offers three methods to calculate its carbon intensity. Only one method can be used per calendar year—mixing methods is not allowed. The three methods are:
- Taking the average annual emissions intensity determined at the level of bidding zones;
- Attributing, depending on the number of operational full load hours of the electrolyser, where the number of full-load hours is equal or lower than the number of hours in which the marginal prices of electricity was set by installations producing renewable electricity or nuclear power plants, it can be considered zero-emission. If the number of full-load hours is exceeded, grid electricity is to be attributed the GHG emissions value of 183 gCO2eq/MJ;
- Based on the GHG emissions value of the marginal unit generating electricity at the time of production of RFNBOs in the bidding zone.
Implementation
Member States had 18 months to transpose the revised RED into national law, with the deadline being May 2025. Since many Member States missed this deadline, the Commission issued infringement procedures, not least due to delaying the implementation of the acceleration areas, RFNBO targets on industry and transports etc.
By November 2025 only 4 out of 27 Member States managed to transpose the RFNBO mandates into law for both the transport and industrial use of RFNBOs (Romania, Czechia, Slovakia and Lithuania). A further two countries (Finland and Denmark) transposed only the elements linked to the use of RFNBOs in the transport target.
What’s in it for hydrogen?
The revised Renewable Energy Directive (RED) will have a major (positive) impact on the deployment of clean hydrogen technologies, in particular the production and storage of renewable hydrogen as well as the integration of renewable hydrogen in end use sectors.
To reach the 2030 renewable energy target of 42.5%, large-scale deployment of hydrogen technologies is essential for increasing renewable integration. PtX technologies are crucial for storage, grid balancing, and sector coupling. PtX offers long-term energy storage, supports grid stability during high renewable penetration by meeting fast demand and supplying electricity when renewables are unavailable, and connects electricity, gas, and heat systems for more efficient infrastructure use.
The Directive lacks specific guidance on renewable energy for heating and cooling but clarifies goals for hydrogen technologies in industry and transport. With the Fit for 55 package, demand for renewable hydrogen is expected to rise significantly.
Lastly, the delegated acts create a complex regulatory framework for RFNBO production. While designed to prevent RFNBOs from diverting existing renewable electricity, strict sourcing requirements may hinder hydrogen technology adoption, particularly in industry and transport, since available renewable energy may not meet 2030 targets.
Links to the original document and additional information:
Directive (EU) 2018/2001 of The European Parliament and of The Council of 11 December 2018 on the promotion of the use of energy from renewable sources
Proposal for a Directive as regards the promotion of energy from renewable sources
Directive (2023/2413) as regards the promotion of energy from renewable sources
