Background and Policy Context
Germany is undertaking a major revision of its hydrogen strategy by proposing to abolish the EU-defined RFNBO (“Renewable Fuels of Non-Biological Origin”) standard for green hydrogen. The RFNBO criteria currently require hydrogen to be produced using renewable electricity under strict rules, including additionality (requiring new renewable energy capacity), temporal matching (power must coincide with hydrogen production), and geographic correlation (power source must be near the hydrogen facility). While intended to ensure environmental integrity, these rules are widely regarded as overly rigid, raising costs and administrative burdens for project developers.
Proposed Policy Changes
Under Germany’s proposed changes, hydrogen produced by low-carbon methods — including hydrogen from existing renewable energy, carbon capture-enabled blue hydrogen, and other low-carbon processes — would be treated equivalently to hydrogen that strictly meets RFNBO standards. This move reflects a broader trend toward a technology-neutral approach, designed to accelerate hydrogen deployment and reduce regulatory complexity. At the same time, the government is re-evaluating its 2030 target of 10 GW of electrolyser capacity, questioning whether it is achievable under the current strict regulatory framework.
Potential Implications
Relaxing the RFNBO requirement is expected to have multiple consequences for Germany’s hydrogen sector. First, it may simplify financing and attract investment, as lower regulatory hurdles reduce perceived risks for developers. Second, a more flexible hydrogen definition could accelerate decarbonization in hard-to-abate industrial sectors such as steel, chemicals, and heavy transport. Third, there is a potential trade-off in environmental integrity: “low-carbon” hydrogen standards that are too lenient could fail to deliver emissions reductions comparable to fully renewable-based hydrogen.
At the EU level, Germany’s proposal introduces potential tensions. RFNBO definitions are embedded in the EU RED III legislative framework, meaning that Germany must negotiate changes with other member states. Countries committed to stringent green hydrogen standards may resist a loosening of the rules, leading to a complex policy debate at the European level.
Strategic Outlook
Germany’s shift signals a pragmatic balancing act, aiming to reconcile industrial competitiveness, cost efficiency, and climate ambitions. By opening the door to all low-carbon hydrogen, the country may stimulate rapid industry growth, create jobs, and strengthen its position as a European hydrogen hub. However, policymakers will need to carefully manage the environmental credibility of these changes to avoid undermining climate targets. Ultimately, Germany’s approach could influence EU-wide hydrogen policy, shaping the future definitions, incentives, and deployment strategies for “green” versus “low-carbon” hydrogen across Europe.