Capstone believes the European Commission is pivoting away from prescriptive green hydrogen targets, especially in industry, toward a more technology-neutral framework that supports demand for both renewable fuels of non-biological origin (RFNBO) and low-carbon hydrogen. To that end, the Commission is accelerating revisions to its hydrogen strategy and plans the release of a questions-and-answers (Q&A) document on low-carbon hydrogen.
- Bowing to sustained pressure from industry and Member States, the Commission announced on April 24th that it would bring forward the revision of RFNBO production rules to June 2026. In parallel, the Commission is expected to publish a revised EU Hydrogen Strategy in Q3 2026 alongside the post-2030 Renewable Energy Directive (RED IV) proposal.
- As part of the RFNBO revision, the Commission is expected to delay the phase-in of additionality and hourly correlation requirements until 2032–2033. This has the potential to lower RFNBO prices by approximately €2/kg (from ~€6/kg to ~€4/kg), improving offtake prospects. The Hydrogen Strategy is also expected to support RFNBO adoption through the Hydrogen Bank and dual-auction schemes for aviation and maritime e-fuels.
- By contrast, RED IV—focused on the post-2030 framework—is expected to adopt a more technology-neutral approach, less centered on RFNBOs and more open to low-carbon hydrogen, while retaining RFNBO transport sub-targets. A Q&A document on the low-carbon hydrogen delegated act is rumoured to be released alongside RED IV in Q3 2026, providing greater clarity on grandfathering provisions and supporting uptake.
- RFNBO deployment has so far been constrained despite ambitious EU targets, including requirements for the fuels to account for 42% of industrial hydrogen consumption and 1% of transport energy demand by 2030. Industry has consistently argued that overly restrictive rules have kept prices elevated, with the upcoming revisions intended to address these concerns.
RFNBO Revision Accelerated to June 2026
On April 24th, the European Commission’s One Europe, One Market Roadmap indicated that the revised RFNBO delegated act will be published by June 2026—approximately 18 months ahead of the original 2028 review date embedded in the RED III framework.
The decision follows an unusually sustained lobbying campaign by both industry and Member States. RFNBO value-chain companies, including Nel ASA (NEL on the Oslo exchange), ITM Power PLC (ITM in London), and ThyssenKrupp Nucera AG & Co. KGaA (NCH2 on the Frankfurt exchange), along with a coalition of Member States led by Germany, submitted dozens of position papers and open letters to the Commission. They argued that the additionality, temporal correlation, and geographic correlation requirements, as currently drafted, were structurally incompatible with project bankability and risked delaying final investment decisions across the EU.
At the Member State level, Germany was by far the most active, building on the so-called Habeck proposal from 2025, which recommended extending the phase-in periods for additionality and hourly temporal correlation. France, the Netherlands, and Denmark also submitted formal communications to the Commission urging revision, with the Danish and Dutch governments emphasising the constraints posed by the geographic correlation requirement on offshore hydrogen development.
Given the accelerated timeline, no public consultation is planned before the revised act. This removes the formal stakeholder-input window and increases the risk that technical details—particularly on additionality and the treatment of hydrogen produced in third countries—are resolved through bilateral engagement rather than a transparent process.
Exhibit 1: RFNBO Flexibility Proposals by Criterion
| Criterion | Current Delegated Acts (DA) RFNBO | Habeck/Germany Proposal (2025) | Other Member States Proposals (2026) | Expected Revision Proposal |
|---|---|---|---|---|
| Additionality | Electrolysis must be powered by new renewable capacity commissioned ≤36 months before; installations coming online before 2028 can use existing capacity until 2038. | Allow existing renewable capacity for installations coming online before 2035. | France: allow existing renewables until 2032. Czech Republic-led proposal: allow existing renewables until 2030 for directly connected projects, 2036 for renewable PPAs. | Extended window, likely between 2032-2033, and extending grandfathering to 2040. |
| Temporal correlation | Hourly matching from 2030; monthly until then. | Hourly matching from 2031; monthly until then. | Czech Republic-led proposal: hourly matching from 2036 onwards. Germany-led proposal: hourly matching from 2038. | Hourly matching requirement delayed to 2032-2033. |
| Geographic correlation | Same bidding zone –or interconnected (under some conditions)—as renewable installation. | No significant change. | Czech Republic-led proposal: more flexibility on interconnected zones. | No significant change. |
Source: Capstone analysis
Capstone View
Capstone believes the Commission has already decided to relax the RFNBO rules. It will bypass a formal public consultation and proceed directly to proposing targeted amendments to the delegated acts in June. The political calculus is clear: an insufficiently ambitious revision risks Member States vetoing the new delegated acts, politically cornering the Commission and forcing a restart.
- Additionality: We expect the Commission to propose delaying the additionality phase-in from 2028 to 2032–2033. The grandfathering provision will be extended commensurately, likely to at least 2040.
- Temporal Correlation: We expect the revised delegated acts to delay the transition to hourly correlation from 2030 to 2032–2033, aligned with the additionality phase-in delay.
- Geographical Matching: No material change is expected, save for potentially broader flexibility on sourcing renewable power from interconnected bidding zones.
A separate point of tension concerns the Article 4 exemption, which allows hydrogen produced from grid electricity in a Member State where renewables constitute ≥90% of the supply to claim RFNBO status. Several Member States have floated lowering this threshold to 70%–85%, a proposal that others treat as a red line. We do not expect the Commission to move on Article 4 in its June proposal.
In parallel, proponents of nuclear-based hydrogen are seeking concessions in the review, arguing that nuclear output should count toward the 90% volumetric threshold, effectively allowing a combined renewables-plus-nuclear grid mix to underpin RFNBO claims. We do not expect the Commission to grant this treatment.
Low-Carbon Hydrogen Delegated Act Q&A
On November 21, 2025, the low-carbon hydrogen delegated acts (LCH DA)—the rules for the production of low-carbon hydrogen—entered into force. At the same time, the Commission had said they would provide additional information on their publication in the future, likely in the format of a Q&A, which has been pending since then. The Q&A is expected to provide crucial clarifications on grandfathering rules for existing projects and default values for pipeline gas, among other open questions.
It is rumoured that the Q&A will be published alongside the revised hydrogen strategy in Q3 2026. Capstone views this as a deliberate sequencing decision. By publishing the Q&A alongside the strategy release, the Commission effectively pre-empts what would otherwise have been a predictable lobbying push from low-carbon hydrogen proponents.
When the RFNBO DA is revised and its requirements relaxed, carbon capture and storage (CCS)- based and nuclear hydrogen producers will likely request equivalent treatment or a reopening of the low-carbon DA. At this stage, we do not expect the Commission to reopen the LCH DA. Instead, we believe the Commission will limit action this year to publishing the Q&A and assessing the use of low-carbon power purchase agreements (PPAs), as previously promised to stakeholders involved in nuclear-based hydrogen.
Post-2030 Framework: Revised Hydrogen Strategy and RED IV Proposal
In 2025, the European Commission committed to publishing a revised EU Hydrogen Strategy, an update of the 2020 Strategy. The revision is now rumoured for Q3 2026, coinciding with the expected timeline for a RED IV legislative proposal. While a public consultation was initially discussed as a precursor, it remains unclear whether the Commission will have sufficient time to conduct one and incorporate responses before a Q3 strategy publication. Instead, the Commission will likely use responses to the RED IV consultation, which closes on June 12, to gather feedback.
Early signals from RED IV preparatory discussions suggest a significant departure from the approach embedded in RED III. The 2030 RFNBO sub-targets—most notably the 42% share of renewable hydrogen for industry under Article 22a—are unlikely to be maintained in their current form. However, the RFNBO sub-targets in the transport sector, currently set at 1% for 2030, will be maintained. Post-2030, the Commission is also expected to broaden its approach to make it a more technology-neutral framework, while continuing to have RFNBO sub-targets. This could be in the form of low-carbon hydrogen consumption obligations, with a minimum percentage of RFNBO consumption.
As a result, we do not expect the revised Hydrogen Strategy to focus primarily on targets, given the uncertainty surrounding their post-2030 trajectory, but rather on enabling mechanisms to support the uptake of RFNBOs and potentially lower-carbon hydrogen.
We expect the strategy to provide greater clarity on the future of the Hydrogen Bank, for which no long-term outlook has been provided beyond the three initially budgeted auction rounds, with only one remaining.
Beyond the Hydrogen Bank, we expect the use of RFNBO-based e-fuels in the maritime and aviation sectors to feature prominently as part of efforts to help projects reach final investment decision (FID). The European Commission is currently assessing the design of double-auction mechanisms to support these sectors and address the mismatch between producer and offtaker timelines. Producers typically require 10-year offtake agreements for projects to attract investment and reach FID, whereas aviation and maritime offtakers generally commit only to one-year supply contracts.
Investment Implications for Hydrogen
At first glance, recent developments may appear negative for RFNBOs, given lower industrial ambitions under the emerging RED IV framework, but they are likely positive over the longer term. The revision of the RFNBO Delegated Act should reduce near-term execution barriers and improve chances for project investment. At the same time, the retention of RFNBO transport targets, and their likely expansion post-2030, primarily driven by Germany, provides a more credible long-term revenue stream.
While the likely removal of sectoral blending targets under RED IV would eliminate an important source of mandatory demand, much of that demand had not materialised due to the high costs faced by industrial offtakers.
For low-carbon hydrogen, the outlook will depend heavily on the upcoming Q&A expected in Q3 2026 and on the scope of grandfathering granted to existing projects.
That said, we see growing cross-sectoral risk from the broader decline in political momentum behind hydrogen. The Commission’s shift away from prescriptive targets toward enabling mechanisms reflects increasing uncertainty about future demand. This creates longer-term risks for all hydrogen pathways, particularly as planned infrastructure buildout—including pipelines, storage, and import terminals—remains dependent on demand volumes that may not materialise at the scale or pace initially envisioned under RED III. Criticism of potential overbuild is already emerging in markets such as Germany.
What’s Next
- June 2026: Revised RFNBO Delegated Act will be published and enter a two-to-four-month review period by the European Council and the European Parliament. Neither the Parliament nor the Council can amend the text, but can only reject it through a qualified majority vote.
- Q3 2026: Revised EU Hydrogen Strategy and RED IV proposal expected simultaneously, along with the low-carbon hydrogen DA Q&A.
- Q4 2027: Targeted approval of the RED IV proposal, providing a guiding framework for post-2030 decarbonisation policy in Europe.
Read more from Capstone’s EU Energy team:
How the Iran War Is Reshaping the Case for European Renewable Energy Investment
How the EU’s Aviation Fuel Mandate Review Creates a Window for Airlines
Why EU Shipping Rules Are Creating an Opportunity for Renewable Natural Gas
