
Publication
International arbitration report
In this edition, we focused on the Shanghai International Economic and Trade Arbitration Commission’s (SHIAC) new arbitration rules, which take effect January 1, 2024.
India | Publication | marzo 2025
This article was written in collaboration with Partner, Nayantara Nag and Counsel, Ipshita Ahuja of Trilegal
The EU's Renewable Fuels of Non-Biological Origin (RFNBO) regulations are part of the broader effort by the EU to decarbonize the energy sector and achieve climate goals.
This note explores the intricacies of the EU RFNBO regulations and their potential impact on green ammonia production for export in India and examines the regulatory framework to provide a roadmap for how India can navigate these regulations to become a leader in the global green ammonia market.
The RFNBO rules are embedded within the Renewable Energy Directive (EU) 2018/2001, also known as RED II. This directive sets the framework for promoting renewable energy sources across the EU. RED II was amended in October 2023 by Directive (EU) 2023/2413 (RED III).
The RFNBO rules aim to support the EU's decarbonization objectives, particularly in sectors that are hard to electrify, such as aviation and maritime transport. By setting clear standards for renewable fuels, the EU seeks to reduce reliance on fossil fuels and promote cleaner alternatives.
The European Commission has adopted two delegated acts to define and regulate RFNBOs:
These rules aim to provide regulatory certainty for investors and support the EU's goal of producing 10 million tonnes of domestic renewable hydrogen and importing another 10 million tonnes by 2030.
These Delegated Acts are crucial for ensuring that hydrogen and other RFNBOs are produced from renewable electricity and meet the EU's renewable energy targets.
While the RFNBO rules provide a clear regulatory framework, they also present challenges for producers, especially those outside the EU and in markets such as India. The strict production requirements can make it more difficult and expensive to meet the standards, but they also ensure the credibility and sustainability of the fuels.1
The RFNBO legislation does not stand alone. Europe continuously focuses on the roll out of the green hydrogen economy, as a fundamental part of its economic strategy. In February 2025 this was reiterated in the context of the Clean Industrial Deal.
RFNBOs are defined in the RED III as being liquid and gaseous fuels the energy content of which is derived from renewable sources other than biomass. “Energy from renewable sources” or "renewable energy” means energy from renewable non-fossil sources, namely wind, solar (solar thermal and solar photovoltaic) and geothermal energy, osmotic energy, ambient energy, tide, wave and other ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogas.
Hydrogen produced from biomass or biogas cannot qualify as RED III compliant RFNBO.
The EU RFNBO legal framework covers the following requirements in relation to production of RFNBOs:2
In addition to these three requirements, the RFNBOs must meet the definition of RFNBO in the RED III described above.
If fuel produced cannot qualify as RED compliant RFNBO, it is still possible for that fuel to qualify as ‘low carbon fuel’. In the Clean Industry Deal, the European Commission announced that it will adopt a delegated act in relation to low carbon hydrogen in the first quarter of 2025.
There are three options to produce RFNBOs from renewable electricity (details of these are set out in the RED III and the Delegated Acts referred to above):
Grid mix: It is possible to produce fuel that counts as (partly) RFNBO with electricity from the grid, without a power purchase agreement (PPA) being entered into between a renewable electricity plant and a fuel producer. In this respect, the part of the produced fuel that counts as RFNBO will be based on the share of renewable electricity of the public grid in the respective country. So , for example, if the percentage of renewable electricity in the grid is 50%, the fuel produced will count as 50% RFNBO.3 If only electricity is taken from the grid to produce RFNBOs, the percentage of renewable energy in the grid should be 80% or higher in order to achieve the 70% GHG emission saving requirement. Such a high average share of renewable electricity is not anticipated in India in the immediate years to follow. It is however possible to produce RFNBOs by electricity sourced from both the public grid and through a PPA.
Direct line: A ‘direct line’ is defined in the First Delegated Act to mean an electricity line linking an isolated electricity generation plant with an isolated RFNBO producer or the renewable electricity production and RFNBO production takes place within the same installation. An additional requirement is that the renewable electricity installation should have not come into operation (i.e. start commercial production) more than 36 months before the RFNBO production installation comes into operation (this is to ensure the “additionality” referred to above). Where additional production capacity is added to an existing installation producing RFNBOs, the added capacity will be considered to be part of the existing installation, provided that the capacity is added at the same site and the addition takes place no later than 36 months after the initial installation came into operation. It is still permissible under the direct line option for an RFNBO production installation to be connected to the grid, however electricity offtake from the grid to produce RFNBOs is not allowed although electricity from the grid could be used to power the remaining parts of the RFNBO production installation (i.e. balance of plant). In this case at least two electricity meters would be required to measure if any electricity has been taken from the grid to produce RFNBOs.
If the RFNBO production installation has a grid connection in addition to a direct line, it would also be possible to produce RFNBOs by using only grid electricity. In this case, the applicable criteria would be those under Article 4 of the First Delegated Act instead of Article 3 of the First Delegated Act (these are set out in the grid connection section below).
Grid connection: There are four sub-categories set out under the First Delegated Act, through which a grid connected RFNBO production installation can satisfy the requirement of producing RFNBOs through renewable electricity:
The rest of this section focusses on option (iv) (i.e. buying renewable power through a PPA) as it is the most likely scenario that would apply to green hydrogen production facilities in India that are looking to comply with the RFNBO requirements under the RED III. As mentioned above, it is permissible to account for the electricity in such a way that the electricity for the balance of plant (compressor, gas cleaning, fans for cooling etc.) is not fully of renewable origin and that all the electricity for the actual production of the RFNBOs themselves within the production installation is sourced directly from a PPA. However, the CO2 content of electricity sourced from the grid should be taken into account in this case to calculate the GHG emissions savings achieved by the RFNBO produced.
For a grid-connected RFNBO production installation to satisfy the renewable electricity criteria through purchase of renewable energy through a PPA:
We look at these requirements in a bit more detail below:4
As noted above, the RFNBOs produced must reduce greenhouse gas emissions by at least 70% compared to the fossil fuel reference as set out in the RED III. The method to calculate whether this is the case is set out in the annex to the Second Delegated Act. To become certified under an RFNBO voluntary scheme (see note on certification below), a RFNBO producer must make the RFNBO GHG emissions savings calculations, thereby demonstrating that it is capable of producing RFNBOs. These calculations will be checked by the auditor from the relevant certification body.
To assess whether the 70% threshold is met, the GHG emissions intensity may be calculated as an average for the entire production of fuels occurring during a period of, at most, one calendar month but may also be calculated for shorter time intervals.
The Second Delegated Act provides that if RFNBOs are produced with electricity that can be qualified as fully renewable by virtue of the RED III (generally sourced through a PPA), the time interval for the GHG calculations should be in line with the time interval of temporal coordination mentioned in the First Delegated Act (elaborated on above), i.e. the GHG calculations must currently be made on a monthly basis and from 1 January 2030 on an hourly basis.
The mass balance rules require strict accounting for produced, incoming (purchased) and outgoing (sold) volumes of RFNBO.9 A mass balance should be made on a monthly or quarterly basis. The mass balance concerns the production, purchase and sale of RFNBOs that comply with the three RED III requirements and hence for which Proofs of Sustainability (POS) can be issued.
A POS is a declaration by the RFNBO producer certifying compliance of the quantity of the RFNBO with the sustainability and greenhouse gas emissions savings criteria set out in the RED III. A POS must contain detailed information on the sustainability of the RFNBO delivered and on the delivery itself (e.g. details of the seller and the buyer must be included).
The mass balance must include the production, purchase and sale of all hydrogen (and derivatives such as ammonia) i.e. including RFNBOs that do not meet the RED III requirements and also non-RFNBO hydrogen and derivatives. The mass balance should indicate which hydrogen is RFNBO and which is not, and which RFNBO is RED III-compliant and which is not.
Compliance with the RED III requirements in relation to RFNBO must be demonstrated by certification through an RFNBO voluntary scheme.
Such voluntary schemes/certifiers and national certification schemes of EU countries help to ensure that RFNBOs are sustainably produced by verifying that they comply with the EU sustainability criteria, as well as the relevant methodologies for RFNBOs. While the schemes are run privately, the European Commission can recognise them as compliant with the rules included in the RED III. For a scheme to be recognised by the EU, it must fulfil criteria such as:
The decision recognizing a voluntary scheme has usually a legal period of validity of 5 years. By way of example, through the Commission Implementing Decision (EU) 2024/3180 the EU recognized the “CertifHy” voluntary scheme for demonstrating compliance with the requirement for RFNBOs.
The steps for certification under CertifHy involve (i) a pre-certification, i.e. the initial step which helps identify potential compliance gaps and prepares the facility for the full certification process; (ii) full certification, i.e. once precertification is complete, the facility undergoes a detailed audit to ensure all criteria are met; and (iii) ongoing compliance, i.e., regular audits and updates ensure continued compliance with evolving standards.
Publication
In this edition, we focused on the Shanghai International Economic and Trade Arbitration Commission’s (SHIAC) new arbitration rules, which take effect January 1, 2024.
Publication
On September 18, 2024, the "Decree amending the list that sets forth goods whose import and export are subject to regulation by the Ministry of Energy" (the "Decree") was published in the Federal Official Gazette.
Publication
On September 18, 2024, the "Decree amending the list that sets forth goods whose import and export are subject to regulation by the Ministry of Energy" (the "Decree") was published in the Federal Official Gazette.
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