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On 28 June 2019, the National Climate Agreement (Nationaal Klimaatakkoord) was concluded. The main purpose of this agreement is to reduce greenhouse gas emissions in the Netherlands by 49% compared to 1990 levels. Hydrogen is expected to be able to play an important role in the energy transition and decarbonisation of the Dutch economy. The Dutch Government has indicated that in the mid (2030) to long (2050) term, hydrogen can and must be able to carry out a number of critical functions within the energy and raw materials management system. The principal areas of focus will be:
In its Government Strategy on Hydrogen (Kabinetvisie waterstof), the Dutch Government envisages that hydrogen will be an indispensable part of the sustainability strategy for industrial clusters, ports and the transport sector generally. Within all industrial clusters in the Netherlands, market parties are preparing for a growing role played by hydrogen, including through feasibility studies, the development of business cases and proposed investments. The plans for green hydrogen collectively add up to a total aim to achieve electrolysis capacity of over 800 MW and 15 kilotons from biogenic fuels in the Netherlands by 2025.
The Dutch Government views blue hydrogen as a transitional replacement for grey hydrogen in industry and in the expansion of infrastructure in the hydrogen production capacity. Blue hydrogen can be used on a bigger scale and green hydrogen can be further developed to be produced on a at scale during this transitional period.
The Dutch Climate Agreement contemplates that some 15,000 Fuel Cell Electric Vehicles (FCEV) are expected by 2025, potentially growing to 300,000 vehicles by 2030. The Government envisions a major future role for hydrogen as an energy carrier in mobility, especially in heavy transport, such as lorries, public transport buses and as a potential replacement for diesel trains. Hydrogen will also play a role as an energy carrier for sustainably generated energy.
The Dutch Government Strategy on Hydrogen envisages that hydrogen will be an indispensable part of the sustainability strategy for industrial clusters and ports and the transport sector generally. The North Sea industrial hub offers the potential for the Netherlands to develop a blue hydrogen market which would stimulate economic growth and the labour market.
H-Vision, Blue hydrogen as accelerator and pioneer for energy transition in the industry. More than ten companies have committed themselves towards the H-vision project, with the overall objective to make a considerable contribution to realizing the Dutch national climate goals through large-scale use of hydrogen in the port of Rotterdam industrial area. The involved parties aim to accelerate the development of solutions that enable the decarbonisation of the industry in the short term. This means that H-vision can kick start a new hydrogen economy in Rotterdam providing an opportunity to develop itself into a major hub for the production, uptake and trading of hydrogen whilst significantly contributing to the achievement of climate objectives. In H-vision, parties mainly from the Rotterdam harbor and industrial region, represent the hydrogen value chain, from production to end-users. The H-vision feasibility study, published in July 2019, shows that H-vision can deliver substantial CO2-reductions on short term. This is underpinned by a status update in July 2020 in which the H-Vision consortium has further deepened and updated the business case.
A substantial hydrogen programme is to be initiated under the Dutch Climate Agreement. A first but important step in this regard is the publication of the Government Strategy on Hydrogen (Kabinetsvisie waterstof) in March 2020. The programme will chiefly focus on unlocking the supply of green hydrogen, the development of the necessary infrastructure and collaboration with various sectoral programmes, as well as the facilitation of ongoing initiatives and projects. This programme will also allow the synergy between infrastructure and the use of hydrogen to be advanced.
In addition, the programme will focus on the development of an optimal hydrogen infrastructure. In the period leading up to 2025, it is expected that, within the various industrial clusters and energy clusters, a need for a regional infrastructure for hydrogen will emerge. In relation to an established capacity of 3 to 4 GW, a need will also arise for the storage of hydrogen and the connection of various clusters, which can largely be achieved using existing natural gas infrastructure, which may require modification. On that basis, preparations will be made in the coming years regarding the realisation of a national basic infrastructure for hydrogen (transport and storage).
The programme does not focus on the development of demand for hydrogen directly – that responsibility is more closely related to the various proposals being developed by the relevant sectors, in particular (a) built environment, (b) mobility, (c) industry and (d) electricity.
An amount ranging from €60m to €100m (as of 2023 and including green hydrogen) is available each year from the climate budget for the realisation of the roadmaps. The focus will be on pilots and demonstration projects that are required for upscaling. The underlying principle is that businesses should also invest the same amount in the roadmaps.
The Dutch Government will contribute an additional amount of approximately €30 to 40m per year for demonstration facilities and pilot projects from the climate budget funds for industry and electricity, where possible via existing schemes and funding options. Synergy with an emphasis on electrochemical conversion will also be sought within innovation programmes.
The Dutch Government considers introducing a minimum carbon price for the production of electricity. It is anticipated that this regulation following parliamentary discussions will be embedded in law in the near future. Citizens and businesses should be able to rely on a stable and reliable supply of a growing percentage of sustainably generated electricity. For that reason, the decision on the contours of the price trajectory is based on the insights that the experts, including the Netherlands Environmental Assessment Agency (Planbureau voor de Leefomgeving (PBL)), have shared on the effects of a national minimum price on sustainability and security of supply. They have indicated that a minimum price increasing incrementally by a margin below the price trajectory of the EU-ETS is essential to safeguarding security of supply, but that this concurrently provides a significant sustainability incentive due to the security it offers the market.
The Netherlands has a renewable energy subsidy regime known as the SDE+ (the Renewable Energy Production Incentive Regime). This subsidy instrument contains a number of features that allow the scheme to perform effectively according to international standards. These features include technology neutrality, mutual competition and multi-year security for investors. The SDE+ will be replaced by the Stimulation of Sustainable Energy Transition (the SDE++) scheme which broadens the SDE+ regime to ensure that, in addition to renewable energy, other CO2 reduction technologies will also become eligible for subsidies.
The Government has indicated that it proposes to include the production of hydrogen by electrolysis in the SDE++ scheme. A decision was made to include electrolysis in the SDE++, with 2000 full load hours eligible for subsidy. In this configuration, there will be CO2 reductions, given that these are hours with significant production of renewable electricity. However, due to discussions with the European Commission, which needs to approve the SDE++ scheme under State aid rules, the Dutch Minister for Economic Affairs and Climate Policy must reconsider the proposed framework to incentivize clean hydrogen by means of the SDE++ scheme. This is mainly due to the fact that the production of hydrogen by electrolysis will depend largely on fossil fuels as sufficient renewables supply is currently not available.
One of the key characteristics of the first large-scale projects current being considered will often be a substantial operating cost gap. In fact, these types of projects fall in the transition phase between existing support for pilots and demos (the Energy Innovation Demonstration Scheme, DEI+) on the one hand, and the SDE++ scheme on the other hand. This is particularly true for green hydrogen. It is expected that blue hydrogen projects are able to receive sufficient support for carbon capture (CCS) through the SDE++ scheme. Hence, the Dutch Government proposes to introduce a temporary support scheme for operating costs related to the scaling up and cost reduction process for green hydrogen.67
The Dutch government will monitor whether the current incentivisation schemes are able to provide sufficient opportunities for this phase of the development of green hydrogen.
The Government Strategy on Hydrogen examines the regulation of the future hydrogen market, including the operation of a potential future transport network. This will also involve examining the future role of Gasunie in the hydrogen supply chain. In terms of transport, storage and conversion, this review will focus on potential temporary roles to help kickstart the hydrogen market and on more structural roles once this market matures. The principal approach in this regard will be to ensure security of supply, to keep the social costs of the hydrogen supply chain as low as possible and to give the market room to manoeuvre. The future hydrogen market could include both public and private networks.
Hydrogen is not regarded as a “gas” in the context of the Dutch Gas Act. As a result, transport and distribution of hydrogen is not possible within the regulated domain of network operators. Group companies of such network operators can undertake transport and distribution activities with respect to hydrogen. However, the network operators’ view is that it would be preferred that they would be able to conduct hydrogen activities and related experiments themselves. The Dutch Gas Act offers possibilities to experiment outside the regulated framework. This requires an exemption (ontheffing) from provisions of the Dutch Gas Act. As hydrogen is not regarded as a gas in the context of the Dutch Gas Act, no exemption for experimenting with (pure) hydrogen can be requested.
Therefore, the National Climate Agreement calls on relevant parties to create statutory and regulatory flexibility for experiments to allow regional and national network operators to gain experience in the transport and distribution of hydrogen. In that case, the network operators will begin collaborating with market participants to launch hydrogen pilot projects, with the purpose of jointly exploring a workable supply chain.
A proposal for a general administrative order (algemene maatregel van bestuur (AMvB)) on ‘“temporary tasks” (tijdelijke taken) pursuant to Section 10b of the Dutch Gas Act (Gaswet) is currently pending.. It is anticipated that this general administrative order will become effective in 2021.
According to the Dutch Government, a reliable system of Guarantees of Origin (GOs) and certification is required to facilitate a market for zero-carbon hydrogen. In addition, agreements will have to be reached regarding definitions. The development of a GO system is required under the Renewable Energy Directive (RED II), for which RED II provides a framework. Co-ordination with other European countries will be sought in the development of the GO system and the aim will be to implement European rules and measurement methodology as much as possible. Vertogas, at present already responsible for the GOs for green gas, will be designated to develop the system.
Safety is an essential prerequisite for the further development of hydrogen. Though hydrogen has been used in industry under international standards for some time, new applications of hydrogen will lead to situations for which further research and monitoring will need to be carried out in order to better understand the scope and effective control of risks. This will preferably be carried out at a European or international level and be implemented based on international and European guidelines and standards. At present, the risks of hydrogen are not estimated to exceed the risks of current fossil fuel sources.
At present, on Dutch national level work is underway on the development of general principles to deal with the safety risks of the energy transition, which will be elaborated in a separate policy framework aimed at mitigating the risks of hydrogen. Thereafter, the Dutch Government will consider the role to be played by regulators in this respect and the extent to which the provisions are to be included in the regulatory framework for hydrogen.
The Government Strategy on Hydrogen states that industry has expressed a desire for clusters to be connected to allow further scaling up. Connecting clusters should take place in the run up to 2030. The availability of a hydrogen network in the near future would be essential. All industrial clusters have indicated that they consider the development of hydrogen infrastructure to be a key prerequisite for further sustainability improvements. The connection to future hydrogen infrastructure and the spatial integration of electrolysis projects deserves particular focus. Collaboration with the regions will form part of the National Hydrogen Programme.
In this context, the Ministry of Economic Affairs and Climate Policy, TenneT and Gasunie are conducting a study on the conditions under which part of the existing gas grid can be used to transport hydrogen. The aim of the study, HyWay 27, is to facilitate a decision on creating infrastructure for the transport and storage of hydrogen. Current plans call for the first parts of the national hydrogen backbone to be available in 2025. These are located in the northern part of the Netherlands, and a link with northern Germany will already have been established by then.
In addition, several industry clusters (in the IJmond and Rijnmond region) are working together with local industrial players on regional hydrogen backbones. Around 2025, a start will be made on connecting the regional pipelines with each other, with foreign countries and with hydrogen storage facilities, so that they become part of the national and the future European hydrogen backbone.75
Finally, a report was published recently on the establishment of a hydrogen exchange, similar to exchanges currently in place with regard to the gas and electricity markets. It is recommended by experts that the Netherlands follows up on the further kick-off, development and expansion of a hydrogen exchange. The growth of a hydrogen exchange should run parallel with the further expansion of a hydrogen market in the Netherlands. Important milestones for organic expansion would be: (a) an exchange in the context of trading of GOs in hydrogen or locations where hydrogen is produced and possibly a price index for such a commodity; (b) further development of regional hydrogen markets located at hydrogen hubs near industrial and port areas; and (c) trading through a virtual exchange on the basis of a well-developed and matured hydrogen market at the back of the constructed hydrogen backbone.76
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