EU unveils methodology to calculate emissions savings in low-carbon fuels

The European Commission is ramping up support for low-carbon "blue" hydrogen, increasingly positioning it alongside renewable "green" hydrogen as a key pillar of the EU's future energy mix. On July 8, 2025, the European Commission published a Delegated Act with a comprehensive methodology to calculate emissions savings in low-carbon fuels, including low-carbon hydrogen. The Delegated Act provides a methodology to qualify fuels as "low-carbon,", implementing various other pieces of EU legislation that seek to facilitate the marketing of low-carbon fuels in the EU. 

Background

In 2024, the EU adopted the Hydrogen and Decarbonized Gas Market Package,¹ which supports the integration of renewable and low-carbon hydrogen in the EU energy market.

This package defined low-carbon hydrogen² as hydrogen from non-renewable sources for which total greenhouse gas (GHG) emissions do not exceed 28.2 g CO₂e/MJ,³ which corresponds to 3.38 kg CO₂e/kg of hydrogen in life cycle emissions.⁴ With this definition, the EU aligns with, or is even slightly more stringent than, other jurisdictions like South Korea and Japan, which are also enhancing support and regulation for clean hydrogen.⁵ South Korea is utilizing a 4 kg CO₂e/kg of hydrogen threshold and Japan is aiming for 3.4 kg CO₂e/kg of hydrogen, but the exact methodologies and conditions to calculate those thresholds may differ across jurisdictions.

On July 8, 2025, the European Commission published a Commission Delegated Regulation specifying a methodology for assessing greenhouse gas emissions savings from low-carbon fuels (Delegated Act), implementing the above definition of low-carbon hydrogen in the Hydrogen and Gas Markets Package.⁶

The Delegated Act complements two earlier acts⁷ that establish the legal framework for producing renewable (green) hydrogen, which already specified the requirements to be considered renewable fuels of non-biological origin (RFNBO) under EU law.

This means that hydrogen producers that market in the EU now have increased clarity on whether their hydrogen is to be classified as RFNBO (green) hydrogen or low-carbon (blue) hydrogen. If hydrogen can be qualified in either the renewable or low-carbon category, the producer may be eligible for certain benefits: 

• Renewable and low-carbon gases are privileged under the Hydrogen and Decarbonized Gas Market Package with significant network tariff discounts⁸
• The recently released Clean Industrial Deal State Aid Framework (CISAF) allows EU Member States to support renewable and low-carbon hydrogen with state aid in a simplified way as opposed to the regular state aid notification process⁹

The goal behind this EU legislation is to assist the development of renewable and low-carbon hydrogen markets as a viable alternative to grey hydrogen.¹⁰

The Delegated Act on the methodology for assessing emissions savings from low-carbon fuels

The Delegated Act covers low-carbon hydrogen alongside other fuels, providing a detailed life cycle methodology. In particular, the methodology explains how to calculate the required 70 percent savings in emissions savings compared to the use of unabated fossil fuels (leading to the maximum threshold of 28.2 g CO₂e /MJ to qualify as low-carbon hydrogen):

• The methodology covers all (non-renewable) hydrogen with abated emissions and other covered fuels, regardless of whether they are EU-produced or imported. Therefore, the Delegated Act is also relevant for importers of, among others, blue hydrogen into the EU
• The methodology allows multiple production routes, such as natural gas with the use of carbon capture, utilization and storage (CCUS), or production from low-carbon electricity sources from the grid. With respect to CCUS, it is worth noting that the methodology aims to ensure that any leaks are properly accounted for in the calculation
• The methodology accounts for GHG emissions from the supply of inputs, processing, transport and distribution, and the combustion of the fuel in its end use. One particular concern with the use of natural gas is methane emissions upstream. In this respect, the Delegated Act refers to the EU Methane Regulation,¹¹ which lays down detailed rules on the monitoring of emissions in the oil, coal and gas sectors
• The Delegated Act also sets a deadline for the European Commission to evaluate, by July 2028, the role of nuclear energy. This evaluation will examine its effects on the energy system, emission reductions, and the need to maintain fair competition with other electricity sources.¹²

This Delegated Act will now be submitted to the European Parliament and the Council, which have a period of two months (extendable with another two months) to accept it or object to it.¹³ The Delegated Act will enter into force only after it passes this period of review.¹⁴

Elinda Karpoutzoglou (Legal Trainee, Brussels) and Francisca Pinto (Legal Trainee, Brussels) contributed to the development of this publication.

1 See White & Case alert, 'The European Hydrogen and Decarbonized Gas Market Package', available here. 
2 Articles 2(11), (13) of Directive (EU) 2024/1788 ('Hydrogen and Gas Market Directive'), available here.
3 This corresponds to a 70% GHG emissions reduction compared to a set fossil fuel comparator of 94g CO₂e / MJ. See recital 9 and paragraph 2 of the annex to Delegated Regulation (EU) 2023/1185 establishing a minimum threshold for GHG savings of recycled carbon fuels and specifying a methodology for assessing GHG savings from renewable liquid and gaseous transport fuels of non-biological origin and from recycled carbon fuels, available here; paragraph 2 of the annex to the Delegated Act published by the European Commission on July 8, 2025, available here.
4 EPRS | European Parliamentary Research Service, "EU rules for renewable hydrogen Delegated regulations on a methodology for renewable fuels of non-biological origin," available here. 
5 S&P Global, 'South Korea is expected to issue a new 3,000 GWh low-carbon hydrogen-to-power tender this year', available here; White & Case alert, 'On the path to decarbonisation: Japan enacts its first legislation on hydrogen and CCS', available here. 
6 European Commission, 'Clarity to hydrogen sector with new EU methodology for low-carbon hydrogen and fuels', July 7, 2025, available here; European Commission, 'Questions and answers on the Delegated Act defining low-carbon hydrogen and fuels', July 7, 2025, available here; Article 9(5) of the Hydrogen and Gas Market Directive, available here; Delegated Act, available here. 
7 Delegated Regulation (EU) 2023/1184 establishing a methodology setting out detailed rules for the production of renewable liquid and gaseous transport fuels of non-biological origin, available here; Delegated Regulation (EU) 2023/1185 establishing a minimum threshold for GHG savings of recycled carbon fuels and specifying a methodology for assessing GHG savings from renewable liquid and gaseous transport fuels of non-biological origin and from recycled carbon fuels, available here.
8 Article 18 of Regulation (EU) 2024/1789 on the internal markets for renewable gas, natural gas and hydrogen, available here.
9 Communication from the Commission, Framework for State Aid measures to support the Clean Industrial Deal (Clean Industrial Deal State Aid Framework), available here.
10 See also EPRS | European Parliamentary Research Service, "Renewable and low-carbon hydrogen: State of play and outlook," available here.
11 See White & Case alert, 'Are you ready for the new EU rules on methane emissions in the energy sector?', available here.
12 Recital 7 and Article 3 of the Delegated Act, available here.
13 Article 90(6) of the Hydrogen and Gas Market Directive, available here.
14 Article 4 of the Delegated Act, available here.