Cost and competitiveness of green hydrogen in Europe: Effects of the European Union regulatory framework

Abstract By passing the delegated acts supplementing RED II, the European Commission has recently set a regulatory benchmark for the classification of green hydrogen in the European Union. The controversial reactions to the restricted power purchase for electrolyzer operation reflect the lack of clarity about the effects of the delegated acts on the cost and the renewable characteristics of green hydrogen. We show that the low cost for renewable electricity economically incentivizes the integration of renewable energy in hydrogen production. Furthermore, our results indicate that a permission of grid electricity integration for green hydrogen production need not lead to an increase in emission intensity and can result in notable production cost reductions. The transitional regulations, adopted to support a green hydrogen production ramp-up, result in similar cost reductions as the permission of an unrestricted grid electricity integration and ensure a high integration of renewable electricity.