The ambitious transition towards a sustainable and decarbonized hydrogen economy in Europe faces a roadblock due to ambiguous regulatory language in the European Union’s upcoming hydrogen and decarbonized gas markets package.

Developers planning to build terminals for the import of green ammonia have delayed crucial investments, citing concerns regarding the implications of a specific clause within the package.

Green ammonia has emerged as a promising carrier for hydrogen transportation, attracting many developers worldwide. Its advantages, such as greater volumetric density and ease of transport compared to compressed or liquid hydrogen, make it an appealing choice for export-focused hydrogen projects, especially those aimed at supplying the European market.

The clause in question, proposed by the European Commission, has raised questions and concerns among industry stakeholders. It states: “Terminals for the conversion of liquid hydrogen or liquid ammonia into gaseous hydrogen constitute a means of hydrogen import, but they compete with other means of hydrogen transport. While third-party access to such terminals should be ensured, Member States should have the choice of imposing a system of negotiated third-party access with a view to reducing administrative costs for operators and regulatory authorities.”

The interpretation of this clause by some companies has led to concerns that third-party access must be guaranteed for ammonia crackers. Ammonia crackers are the machines responsible for converting ammonia (NH3) into hydrogen and nitrogen, a critical step in utilizing imported green ammonia for various applications, including hydrogen fuel cells.

This interpretation could potentially prevent these projects from securing long-term contracts for ammonia cracking capacity, a crucial aspect of project financing. Investors seek to maximize the utilization of cracking facilities from the start to ensure a rapid return on their significant investments.

Companies like EnBW, VNG AG, JERA, Uniper, Mabanaft, and Air Products, which are actively involved in green ammonia projects, have expressed concerns regarding regulatory requirements that could hinder investment and delay project timelines. Discussions between the EU and the German government are ongoing, further complicating the investment landscape.

However, the European Commission suggests that these fears may be exaggerated. Several factors contribute to the uncertainty surrounding the regulatory landscape. Firstly, the hydrogen and decarbonized gas markets package is still navigating the legislative process, with the final text pending agreement by the European Parliament.

Secondly, the proposal for “negotiated third-party access” is intended for ammonia terminals connected to Europe’s hydrogen pipelines. From the Commission’s perspective, this proposal does not necessarily prevent companies from entering into long-term agreements for access.

Moreover, the Commission emphasizes that the proposal includes exemptions for significant new infrastructure, such as ammonia terminals, particularly when developers require these exemptions to make a final investment decision (FID).

While the European hydrogen industry grapples with regulatory concerns, it remains to be seen whether third-party access will become a focal point of contention for developers. As the sector matures and regulatory frameworks evolve, the clarity of ammonia import regulations will play a pivotal role in shaping the future of green hydrogen in Europe.

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