EU's "Low-Carbon Fuels Authorization Act": A Strategic Anchor for Green Hydrogen, Not a Compromise After the Ebb Tide

On November 21, the "Low-Carbon Fuels Authorization Act" was officially published in the Official Journal of the European Union and took effect 20 days later. Opinions on this policy vary, with some viewing it as a compromise and concession by the EU amid the current cooling of the "green hydrogen fever," while others see the "Low-Carbon Fuels Authorization Act" as a supplement and refinement to the "Hydrogen and Natural Gas Market Package," with the ultimate goal still being the development of zero-carbon emission green hydrogen.

In this regard, SMM believes that the "Low-Carbon Fuels Authorization Act" represents the EU's strategic persistence in green hydrogen, not a concession.

1. The Real Reasons Behind the Ebb Tide in the Green Hydrogen Industry and the Rational Response of the Act

The reasons for the ebb tide in the green hydrogen industry lie more in the high cost of green hydrogen itself, long investment return cycles, an incomplete industry chain, and inadequate infrastructure, which have made enterprise investments more cautious and rational. However, this does not mean that official support for green hydrogen development has waned. In fact, the introduction of the EU's "Low-Carbon Fuels Authorization Act" is more of a balanced strategy born from rational deliberation. From this perspective, an industry ebb tide does not equal a policy shift.

2. The EU's Policy Bias Toward Green Hydrogen Far Exceeds "Concession"

In terms of subsidy policies, the EU clearly favors green hydrogen. The "Clean Industrial Agreement State Aid Framework" (CISAF) released in June 2025 mentions investment subsidies of up to 45% for green hydrogen production, 50% for equipment manufacturing, and as high as 60% for derivatives (green ammonia/green alcohol). In contrast, blue hydrogen is limited to a subsidy cap of only 20% and must meet a carbon capture rate of over 90% and strict emission accounting. Mandatory clauses stipulate that any subsidized project must allocate 30% of its budget to green hydrogen and its derivatives; otherwise, approval is unlikely.

From the perspective of absolute advantages in emission calculations, the full life cycle emissions of green hydrogen are approximately 0.1–2 kg CO₂eq/kg H₂, directly meeting the 70% emission reduction threshold (≤3.4 kg CO₂eq/kg H₂). The Act explicitly states that the carbon equivalent of green hydrogen electricity (renewable energy generation) is considered zero, eliminating the need to calculate complex upstream emissions and capture efficiency as required for blue hydrogen. Therefore, including blue hydrogen does not mean abandoning green hydrogen. Instead, the Act serves as a systematic solution to the ebb tide phenomenon, enhancing the competitiveness of green hydrogen through policy combinations.

In summary, the EU's true intention is to accelerate the commercialization of green hydrogen through policy guidance based on respect for market laws, rather than simply abandoning it. The current industry adjustment is not a failure but a necessary stage for green hydrogen to transition from concept validation to large-scale deployment, and the Act precisely provides the institutional guarantee for this critical leap.