CertifHy Working Group 3 Meeting 3

Date: Tuesday 23rd January 13:00 – 15:00

Location: Online/ GoToMeeting

Minutes of Meeting (MoM)

Participants - Bart Berendsen (BB), Statkraft Markets - Tim Brandt (TB), Wind to gas Südermarsch - Isabel François (IF), WaterstofNet - Laura Franke (LF), BMW - Oliver Germeroth (OG), Bischoff & Ditze - Gerhard Gissibl (GG), BMW - Dominik Herzog (DH), Hydrogenious - Jon Jordan (JJ), HyER - Antti Kuronen (AK), GREXEL - Michelle Morton (MM), Shell - Joel Neave (JN), Hinicio - Frank Schnitzler (FS), Air Products - Alexander Simmat (AS), H&R - Mandy Trachsel (MT), Bischoff & Ditze - Valentine Willmann (VW), HyER - Hans Vandersyppe (HV), Engie - Wouter Vanhoudt (WV), Hinicio

Item Objectives Points of discussion 0. Presentation of the Meeting 3 agenda & roundtable

1) Presentation of the meeting agenda 2) Presentation of attendants

Presentation of the meeting agenda JN presented the meeting agenda. The meeting agenda was not commented. Presentation of attendants Each attendant presented themselves succinctly.

Item Objectives Points of discussion

1. Review of the WG3 work programme

1) Update WG3 members on where we stand wrt to the Work Programme

Review of the WG3 work programme WV presented the status of advancement of WG3 wrt to its work programme. - WG3 is slightly late on its planning. It was foreseen that WG3 would have provided input on user

requirements by this meeting. There has been a slight delay to ensure all WG members have a common understanding of CertifHy phase 1 and GO systems.

- Following this meeting, a questionnaire will be circulated which will lead to the definition of user requirements and bring WG3 back on schedule.

- The following meeting will address: o The definition of user requirements wrt the GO pilot system; o A review of the preliminary GO scheme; o A validation of the pilot monitoring scheme.

Other WG next steps WV provided a summary of the other WG next steps: - WG1 is working on the definition of the preliminary GO scheme; - WG2 is working on defining use cases;

o WG3 will be invited to make comments on the use cases. - WG4 will be meeting soon to discuss the latest Council and Parliament amendments of the Renewable

Energy Directive recast.

Item Objectives Points of discussion

2. Presentation of the GO scheme design

1) Provide WG3 members with a clearer understanding of the design of a GO scheme and how it works

See Annex 1 for the slides presented during the meeting. The summary below provides only the key lessons learnt from the renewable electricity GO scheme for the CertifHy project. - There is a demand for Green/Low Carbon hydrogen. - Currently, there are only corporate or limited Green/Low Carbon hydrogen disclosure implemented

through contractual linkages which allocate GHG emissions. - It would be easier, more transparent to allocate GHG emissions via a GO scheme. - The more information is available within the GO market:

o The slower the system; o The more expensive the system is to maintain

- The greater the risk of reducing market liquidity; o With too many different products, there could be limited trading on the GO market with most

of the trading taken place through bilateral contracts (like in the RE GO market).

Item Objectives Points of discussion

3. Q&A/Discussion

- Q1 (MM): How successful have GO schemes been? To what extent have they contributed to the development of RES? Are all RE GOs sold or are there leftovers?

- AK: It is difficult to say how successful RE GOs have been in supporting the development of RE production because each MS implemented other support schemes (e.g. Feed-in-Tariffs, Feed-in-Premiums…).

- What one can say is that GO scheme are the only way to give information on the origin of electricity to end users.

- Without a GO scheme, the only option would be contractual trading. - Q2 (MM): Isn’t one of the problems of GOs to have a limited drive for consumers?

o For example, Norwegians who live next to hydropower plants will not buy GOs because they believe that their electricity is green, produced by hydropower.

- AK: You are referring to the problem of double counting.

o To take your example, the Norwegian statistics show that of the over 95% renewable production only one third is tracked and disclosed for domestic consumption and other GOs sold abroad. It is hard to say whether this is a problem of consumer perception or not.

- In the past, European Directives did not impose a common disclosure standard -through GOs- for producers. This allowed certain suppliers to double-count (claim that their electricity is green despite having sold the GO).

- Although this remains an issue, it is increasingly less problematic. - WV: GOs were designed to empower consumers; to disclose to consumers what kind of electricity they

were consuming, not necessarily to support RE deployment. - However, in certain countries, such as Flanders, there has been an impact on RE deployment.

o In Flanders, to claim to the FIT, the audit process was taken from GOs. The fact that a GO system existed simplified the process to determine eligibility for FIT.

- On the question of the success of GOs (how many traded, how many unsold), please see GREXEL’s report on the Development of the Guarantee of Origin Market, 2017.

- What is clear is that more and more plants are producing GOs and that an increasing volume of GOs are being traded.

- The system is not a full capacity yet, not all GOs which are emitted are sold but it is heading in this direction.

o This can be partly explained by the fact that when the RE GO system was launched, there was an oversupply of GOs from amortised hydropower.

- Hydrogen assets which produced Low and Green Hydrogen in Europe today are unlikely to oversupply the hydrogen GO market.

- The hydrogen GO market should therefore not face the same problem as the RE GO market. - Q3 (FS): You (AK) made a comment that GOs are considered in the residual mix, can you explain? - AK: What I meant is that to calculate the residual mix, GOs are deducted from the energy production

mix. - WV: To clarify, the mix becomes dirtier as GOs are cancelled, otherwise there is double counting. - Q4 (FS): In the RE GO system, there is no link between the physical product and the GO. But in the

biogas, GO market, there is ongoing discussion about linking the physical product and the GO. o As hydrogen and biogas are both gases, why does the CertifHy GO system not emulate the

biogas GO system? - WV: There is a notable difference in the history of RE and biogas/biomethane GO systems.

o The RE GO system was started by a group of industrials and became a default standard. o The biogas/biomethane GO system was developed nationally by policy makers.

§ As a result, achieving a common European system is complicated. § The question of grid connection and mass balancing is the result fragmented

biogas/biomethane markets. - We are not facing these barriers for hydrogen which is why we picked a book and claim system.

Item Objectives Points of discussion

4. Presentation of the demo registry tool

1) Present to WG3 members what a GO registry looks like and how they would be able to use it

AK provided a presentation of the demo registry and its functionalities from the perspective of the user. - AK informed WG3 that the more information is placed on the registry and made available, the more

expensive and complex it gets. In the case of the EECS system, a lot of information is required. This creates high administrative and IT costs as well and IT problems.

Item Objectives Points of discussion

5. Q&A

- Q1 (BB): Is it possible to have sub-accounts with different names for 1 legal entity? - AK: Yes. - Q2 (FS): What is the expiry date for a GO? - WV: In the case of electricity GOs, the GO expires 12 months from the date of production of the

underlying electricity. - In the case of the CertifHy pilot, GO may have a longer lifetime. It is an issue which needs to be set. - Q3 (FS): What is the rationale for a GO 12-month lifetime? - WV: For renewable electricity GOs, it is necessary to cancel them to calculate the residual mix. If they

were not cancelled, it would be difficult to know the residual mix for that year. - Also, this lifetime limits the impact of an oversupply of GOs. - HS: This a way to ensure that the GO market does not collapses from an oversupply of GOs. - BB pointed out that electricity cannot be stored whereas hydrogen can. As hydrogen can be stored, it

should be possible to have longer hydrogen GO lifetimes. - Q4 (FS): how will you calculate the residual mix? What is the methodology? - WV: Within the CertifHy pilot, we have decided that pilot plants will calculate their residual mix within

the hydrogen batch production period. - This will allow us to gather real life experience from the pilots. - Based upon pilot producer experience, the best methodology will be determined. - Q5 (FS): What is the role of GREXEL? - AK: GREXEL will develop the IT platform for the GO system. - Also, GREXEL will act as the GO issuing body as part of the pilot.

o This means that after the pilot plant and batch audits by TÜV SÜD, GREXEL will input the information within the IT system and issue GOs to the accounts of the producer.

o Thereafter, the account holder will be able to sell the GO via the IT system. If the customer does not have an account, the seller (who has an account) will cancel the GO. Otherwise, the customer cancels the GO.

- Q6 (FS): The plant and batch audits are in March. What do I do with the hydrogen I produced in August?

Is it still Green/Low Carbon? - WV: As part of the pilot, you will need to ask TÜV SÜD to do a new batch verification audit. - Q7 (FS): If my plant is certified, why do I need to do I need an audit for every new batch? - AK: In the renewable electricity GO system, batches do not need to be audited systematically.

o However, as we are in pilot phase, we cannot be sure that the fuel allocation calculation will be correct.

o To ensure that we do not issue GOs which need to be redeemed later, it is better that TÜV SÜD does an audit for each batch. This will create less problems from the registry perspective.

- WV: It is likely that beyond the pilot phase there will be only 1 plant audit and a 1 batch verification audit at the end of the year.

Item Objectives Points of discussion

6. Presentation of the WG3 questionnaire

1) Inform WG3 members of the content of the questionnaire on what level of disclosure on the information contained within the hydrogen GOs they wish and how they would want to access it

JN presented the principles of the WG3 questionnaire (for more information, see Annex 1 with the slides presented during the meeting). - When you purchase Green or Low Carbon Hydrogen, you will systematically be given the associated GO’s

cancellation statement. - We want to know what information you want on this cancellation statement. - There are 4 cumulative options:

1) Is a label stating that the hydrogen is Green or Low Carbon sufficient? 2) Do you need a label, and, in addition, the definition of what Green and Low Carbon hydrogen is? 3) Do you need a label, the definition as well as access to further information?

4) Do you need a label, the definition, access to further information but also more information on the cancellation statement?

- If you want access to more information systematically on the cancellation statement, we want to know

what that is. - If you want access to more information upon demand, we want to know what that is. - Each piece of information, whether on the cancellation statement or accessible on demand will have a

cost. The more information, the greater to cost. WV also pointed out that the more information, the greater the likelihood that there will be a multiplication of hydrogen GO products (for example, people will want hydrogen GOs for hydrogen produced in Denmark with offshore wind power). The greater the number of GO products, the more illiquid the hydrogen GO market will be.

Action points - JN to circulate the questionnaire to all members.

Item Objectives Points of discussion

7. Q&A

- MM pointed out that option 1 could be sufficient for the pilot. It is better to keep it simple.

- HV asked to make sure it is clear whether the hydrogen is Green or Low Carbon. - FS pointed out that the GHG intensity of the GO is important for industrials. Industrials need to know

the GHG intensity of the hydrogen as part of their GHG intensity disclosure obligations. It could also be interesting for mobility applications.

- Q1 (MM): Do these questions apply only for the pilot or for the scheme following the pilot? - AK proposed that this questionnaire serve to understand user requirement during the pilot. A second

similar questionnaire will be sent at a later stage to understand user requirements for the final scheme.

Action points - The current questionnaire will define user requirements for the pilot. A

2nd questionnaire to define user requirements for the full-scale deployment.

Item Objectives Objectives

8. Any other business 1) Address unforeseen issues 1) Address unforeseen issues

Call for pilot users WV asked whether any member of WG3 would like to participate in the pilot. - Today, we have defined the pilot specifications. We have 4 pilot producers. But we do not have pilot

users. - We would like to test a minimum of 2 configurations of use:

o One where the end-user is the account holder and purchases a hydrogen GO from a producer. o The second where the account holder is different from the end-user.

§ In this case, the account holder purchases the hydrogen GO to the producer and sells it to the end-user. Once the account holder has sold the GO to the end-user, he cancels it and provides the end-user with the cancellation statement.

- Pilot users will benefit from visibility on the CertifHy website, during presentations we make of CertifHy

(WHEC, WindEurope…), etc. - Being part of the CertifHy pilot can also help you meet your corporate social responsibility objectives by

demonstrating you have purchased Green/Low Carbon hydrogen and are spearheading this innovative project.

- We would be interested in working more closely with pilot users to define their use case. - To become a pilot user, contact the pilot producers to purchase Green or Low Carbon hydrogen GOs. MM & BB are willing to buy a token amount, for example, 1 GO, to try out the system.

Annex 1: Slides presented during the WG3 meeting