A European Commission working document for the upcoming Renewable Energy Directive, known as RED IV, outlines potential policy changes for renewable fuels after 2030. The leaked impact assessment suggests a shift in strategy that would prioritize energy security and cost considerations alongside emissions reduction objectives. The specific direction outlined in the draft’s preferred option remains subject to revision before the Commission formally publishes its proposal.
Under the current RED III framework, hydrogen policy relies on binding national mandates, including a requirement for renewable fuels of non-biological origin to comprise 1% of transport fuels by 2030 and 42% of industrial use by the same year, rising to 60% by 2035. The draft Red IV proposal would abandon these national obligations in favor of an indicative EU-wide renewable hydrogen consumption target of 8 million tonnes applicable to industry and refineries. The assessment characterizes this figure as an “average optimal level” for the covered period, with industry analysis suggesting it represents expected annual consumption by 2040. Implementation would reportedly rely on hydrogen credits and downstream demand incentives delivered through separate legislative measures.
Analysts at Rystad Energy project total EU green hydrogen demand could reach 9.5 million tonnes annually by 2040. If the draft’s target represents 2040 consumption levels, it would account for a substantial portion of total expected demand, particularly given its limitation to industrial and refining sectors. This raises questions about the practical significance of the headline figure relative to the mechanisms ultimately designed to achieve it.
For biofuels, the draft indicates a more favorable policy direction, reflecting increased emphasis on reducing import dependence. A proposed 7% EU-wide ceiling for crop-based biofuels could expand eligible conventional biofuel volumes by approximately 30% relative to 2020 baseline calculations. Advanced biofuels sourced from European feedstocks would receive preferential treatment through multiplier mechanisms, supporting efforts to decrease reliance on imports such as the 1.8 million tonnes of hydrotreated vegetable oil the EU imported in the previous year. The treatment of advanced biofuels remains more complex, as the draft assumes expiration of the existing combined transport minimum for advanced biofuels and RFNBios after 2030, making future demand more dependent on individual member state policies. Enhanced certification standards could limit certain imported fuels and feedstocks, potentially strengthening European producer competitiveness.
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