The European Union has set ambitious targets to scale up renewable hydrogen and related technologies as part of its broader climate and industrial strategy. At the heart of this effort lies a regulatory framework for renewable fuels of non-biological origin (RFNBOs)—a key building block of the Power-to-X ecosystem.

A recent joint letter addressed to the European Commission by senior energy officials from several EU Member States—including Austria, Germany, the Netherlands, Poland, and Spain—now raises concerns about the implementation of this framework. The letter outlines concrete market challenges such as delayed investment decisions, high production costs, and slow infrastructure development. It also calls for targeted regulatory adjustments to better align the rules with economic realities and to accelerate the ramp-up of renewable hydrogen and Power-to-X projects across Europe.

The Role of Power-to-X in Europe’s Energy Transition

Power-to-X enables the conversion of renewable electricity into hydrogen and synthetic fuels such as e-kerosene, e-diesel, or e-methanol. These energy carriers are essential for defossilising sectors that are difficult to electrify directly, including aviation, shipping, and heavy industry.

In theory, the EU’s regulatory framework is designed to ensure that hydrogen and synthetic fuels are truly renewable. In practice, however, the implementation of these rules is proving challenging.

Investment Delays and Market Uncertainty

 According to the joint letter, many hydrogen and Power-to-X projects across Europe are currently facing significant barriers:

  • Final investment decisions are being delayed or cancelled

  • Long-term offtake agreements remain scarce

  • Production costs for renewable hydrogen remain high

  • Infrastructure and renewable energy expansion are progressing slower than expected

These challenges are not purely technological—they are closely linked to regulatory complexity and uncertainty.

Key Regulatory Challenges

The concerns focus on specific criteria within the EU Delegated Act on RFNBOs:

1. Additionality requirements

Projects must prove that the renewable electricity used is “additional” to existing capacity. While this aims to avoid greenwashing, it significantly increases project complexity and cost.

2. Temporal correlation rules

Hydrogen production must align closely in time with renewable electricity generation. Strict hourly matching requirements limit operational flexibility and raise costs.

3. Economic misalignment

The current framework does not sufficiently reflect real-world market conditions, making many projects financially unviable.

Proposed Adjustments

To unlock the potential of Power-to-X, the signatories call for targeted regulatory adjustments:

  • Extend transitional periods for additionality rules until 2035

  • Allow more flexible (e.g. monthly) temporal correlation

  • Provide legal certainty and investment protection for early projects

  • Accelerate the revision of the framework, ideally by 2026

These measures aim to reduce risk, improve bankability, and enable faster scaling of hydrogen and synthetic fuel production.

Strategic Implications for Power-to-X

The debate illustrates a broader lesson: regulation can make or break emerging energy markets.

For Power-to-X, the balance is delicate:

  • Too strict → projects stall

  • Too loose → environmental credibility is questioned

Finding the right balance is essential—not only for Europe’s climate targets, but also for its industrial competitiveness and energy security.

Conclusion

Power-to-X remains a cornerstone of a defossilised energy system. But its success depends not only on technological progress, but also on pragmatic, investment-friendly regulation.

The current discussion around the RFNBO Delegated Act shows that Europe is still in the process of finding this balance. A timely and targeted revision could be decisive in turning political ambition into real-world deployment.

Source: Joint Letter to the European Commission on the RFNBO Delegated Act