With the delegated act on the assessment of greenhouse gas emission savings from low-carbon fuels adopted by the EU Commission, a central obligation from the Gas & Hydrogen Directive is implemented. Behind the technical title is a politically and economically explosive project: the establishment of a uniform, lifecycle-oriented assessment framework for CO2 savings – with direct effects on investment decisions, eligibility for funding and market access for low-carbon technologies in Europe.
Implementation of the Obligation under Article 9(5) of the Gas & Hydrogen Directive
The delegated act on the assessment of greenhouse gas emission savings (Commission Delegated Regulation (EU) 2025/2359) supplements the Gas & Hydrogen Directive (Directive (EU) 2024/1788 of the European Parliament and the Council of 13 June 2024 on common rules for the internal markets for renewable gas, natural gas and hydrogen) and implements the obligation arising from Article 9(5) thereof. Accordingly, the Commission had to define a methodology for assessing the greenhouse gas emission savings from low-carbon fuels by 5 August 2025.
Background: The Gas & Hydrogen Directive was adopted as part of the Gas & Hydrogen Package, which aims to support the transition to renewable and low-carbon gases, and particularly the transition to hydrogen. The Directive is part of the overall European Green Deal, which aims to ensure the EU’s path to climate neutrality by 2050 (for the successor to the Green Deal, see our article on the Clean Industrial Deal, accompanied by the Action Plan for Affordable Energy). The Gas & Hydrogen Directive is intended to facilitate the spread of renewable gases, low-carbon gases and hydrogen in the energy system. To this end, a legal framework was created that offers all market players opportunities and incentives to phase out fossil fuels.
On 8 July 2025, the European Commission adopted a final version of the act after extensive consultation with key stakeholders and Member States on earlier drafts. The European Parliament and the Council had two months to review the legislation and either adopt or reject it. The Delegated Regulation was published in the Official Journal on 21 November 2025 and entered into force on 11 December 2025.
Assessment of Greenhouse Gas Emission Savings – Regulatory Content and Methodology
The Commission’s delegated act aims – in line with the provisions resulting from the Gas & Hydrogen Directive – to establish a “single life-cycle assessment” of low-carbon fuels. Low-carbon fuels are recycled carbon fuels, low-carbon hydrogen and synthetic gaseous and liquid fuels with an energy content derived from low-carbon hydrogen.
For market players in the gas and hydrogen sector, the draft creates a clear framework for the assessment and recognition of emission savings, which has a direct impact on business models, access to funding and investments.
The delegated act establishes a scientifically sound and harmonized method for calculating greenhouse gas emission savings over the entire life cycle of a fuel. The aim is, in particular
- to avoid double counting of emission reductions (e.g. in the case of CO2 that has already been credited in other regimes),
- to consider indirect emissions from changes in the use of rigid inputs, and
- to systematically consider all process steps from the provision of inputs to transportation and end use.
The act does not regulate low-carbon fuels in the form of recycled carbonaceous fuels, as these are already regulated in another delegated regulation (Delegated Regulation (EU) 2023/1185). This existing regulation contains a minimum threshold for greenhouse gas savings from recycled carbon fuels and the method for calculating greenhouse gas savings from liquid or gaseous renewable fuels of non-biogenic origin for transport and recycled carbon fuels. In addition to the Renewable Energy Directive III (RED III), it stipulates that the greenhouse gas savings from the use of recycled carbon fuels must be at least 70% and how these greenhouse gas savings are calculated in detail.
The Commission’s regulation refers both to hydrogen from nuclear energy (so-called red hydrogen) and to fuels whose carbon intensity has been reduced through CO2 capture and storage. However, it is noted that the global warming potential of hydrogen is still unclear, so that relevant values are to be added to the methodology as soon as scientific findings are sufficiently mature.
The capture and storage of emissions is to be recognized by the new methodology as an emission reduction if these are permanently stored in a geological storage site, even if the emissions generated in third countries are stored outside the EU. The prerequisite is that the applicable national law ensures the detection and remediation of CO2 leaks in accordance with the legislation applicable in the EU and that the leaks are considered in such a way that they are not counted as CO2 reductions. Geological storage sites with repeated leaks should not be approved for injection. This major novelty opens the door to the regulatory recognition of CO2 capture and storage as a valid emission reduction. However, recognition is also linked to specific conditions, e.g. the environmental and safety standards applicable in the EU must also be met in third countries.
The methodology for determining the greenhouse gas emission savings from low-carbon fuels can then be found in the annex to the draft. The annex regulates the technical specifics in three parts:
- Firstly, the methodology for calculating greenhouse gas emissions is described. All emissions from the provision of inputs, processing, transportation and distribution as well as the end use of the fuel are recorded and corrected for the emission reductions from CO2 capture and storage or use. The total emissions of the low-carbon fuel are then compared with the emissions of a fossil reference fuel to calculate the percentage saving. Standardized emission factors are used for the individual process steps and inputs, whereby a distinction is made between elastic and rigid inputs.
- Secondly, the annex contains tables with standard values for the greenhouse gas emission intensity of inputs of various fuels used in the calculations. The previous draft referred exclusively to elastic inputs. This addition was deleted from the version finally adopted by the Commission. The Commission shall also assess the introduction of a country- or region-specific approach for standard values for greenhouse gas emissions intensities of inputs as reported in this part of the annex.
- Lastly, the annex is devoted to the methodology for calculating the greenhouse gas emission intensity of electricity. Here, emissions are calculated at country or bidding zone level by considering all potential primary energy sources for electricity generation, actual power plant types, conversion efficiencies and the power plants' own consumption.
The regulation further stipulates that the Commission will assess the possible introduction of alternative ways to reduce CO2 emissions by 1 July 2028, in particular to take into account low-carbon electricity from nuclear power plants. The Commission is to launch a public consultation on this by 30 June 2026.
Reactions to the Draft and adopted Regulation – Technical Methodology with Political Brisance
The methodological principles are received critically. The final version of the act differs only slightly from the Commission’s latest draft of April 2025.
Initial reactions on the draft showed clear potential for conflict:
- Nuclear-critical stakeholders see a preference for nuclear energy.
- Industry associations such as Hydrogen Europe warn of a regulatory disadvantage for blue hydrogen and criticize the regulations as too restrictive, particularly regarding economic efficiency and investment security.
- At the same time, green hydrogen is at risk of being pushed into the background due to high production costs and requirements.
The delegated regulation presents both opportunities and risks for the energy sector:
On the one hand, the act creates regulatory clarity regarding the requirements for the recognition of low-carbon fuels, planning security for new projects and investments is created and eligibility for subsidies and market access is improved if the threshold values are met. On the other hand, the draft creates complex verification requirements that lead to additional administrative and technical effort. There are also uncertainties due to unresolved scientific issues (e.g. hydrogen leakage, indirect emissions). The regulation may also exert considerable pressure on existing business models to adapt.
Companies in the energy sector – particularly in the areas of hydrogen, synthetic fuels and electricity generation – should analyze the regulation at an early stage and check their business models for compliance. Fields of action include:
- Evaluation of existing and planned projects using the new life cycle analysis method,
- Preparation for any obligations resulting from the act,
- Monitoring the further political discussions, particularly regarding the design of the final threshold values and calculation methods,
- Strategic and active positioning as part of the public consultation to bring in own interests,
- Examination of potential effects on funding programs, certification and regulatory recognition (adjustment od investment decisions if necessary).
Outlook
With the adoption of the act on the assessment of greenhouse gas emission savings from low-carbon fuels, the European Commission is fulfilling a key requirement of the Gas & Hydrogen Directive. The aim is a uniform, scientifically sound methodology for the life cycle analysis of such fuels, in particular considering CO2 capture and storage as well as indirect emissions. However, even the (from the final version only slightly modified) draft was met with criticism.
What at first glance sounds like a purely technical regulation will in fact become a set of rules for the permissibility of low-carbon forms of energy. This makes the regulation a key instrument for the transformation of the energy sector towards climate neutrality – with a direct influence on innovation paths, technology choices and capital flows.
On July 8, the EU Commission adopted a final version of the delegated regulation. Neither the European Parliament nor the Council raised objections within two months (Art. 90(6) of the Gas & Hydrogen Directive). Therefore, the Delegated Regulation entered into force on 11 December 2025.
The current form is a result of ongoing public consultation and minor adjustments following the comments. The final version of the act differs only slightly from the latest drafts. The energy policy debate will continue to intensify in light of this act. For affected companies, this means strategically positioning themselves at an early stage to minimize regulatory risks and take advantage of opportunities.
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