A leaked European Commission impact assessment working document for the upcoming Renewable Energy Directive, RED IV, signals a potentially significant shift in renewable fuels policy after 2030. The draft's "preferred pacage" would replace binding national renewable hydrogen mandates with a more flexible EU-wide target, while giving greater room to crop-based biofuels and favoring advanced biofuels made from European feedstocks. The direction suggests that energy security, cost and national flexibility are gaining weight alongside emissions reduction, although the measures remain subject to change before the Commission publishes its formal proposal.

For hydrogen, the working document outlines three policy pathways for the post-2030 period. RED III currently anchors demand through binding national mandates, including a renewable fuels of non-biological origin (RFNBOs) target of 1% in transport by 2030 and RFNBO shares of 42% in industry by 2030 and 60% by 2035. Under the preferred RED IV option, these obligations would be replaced by an indicative EU-wide renewable hydrogen consumption target for industry and refineries of 8 million tonnes. The assessment describes the 8 million tonnes as the “average optimal level for the period covered by the policy,” which industry reporting has interpreted as the annual consumption by 2040. The preferred pathway envisages hydrogen credits and downstream demand incentives, which would need to be implemented through other legislation.

Rystad Energy’s base case sees total EU green hydrogen demand reaching 9.5 million tonnes by 2040. If the draft’s 8 million tonnes figure is interpreted as annual consumption in 2040, it would represent a large share of total forecast demand, particularly given that the indicative target applies only to industry and refineries. This suggests that the headline volume itself may be less important than the question of how the target would ultimately be delivered.

“For Europe’s hydrogen market, the prospect of replacing binding national obligations adds another layer of policy uncertainty at a time when projects still depend heavily on long-term demand visibility to secure offtake and reach final investment decisions. Production, infrastructure, and demand need to develop in parallel, and greater flexibility could help concentrate production in lower-cost regions. However, if long-term demand signals remain strong in only a few member states, the market risks developing in separate pockets rather than as an integrated European market. The key question is therefore whether the final framework can provide sufficiently strong and durable mechanisms to support demand if binding national obligations are replaced.”
- Frederick Andre Wessel, Product Manager of Hydrogen Research, Rystad Energy

For biofuels, the draft points in a more supportive direction, reflecting a stronger focus on energy security. A common 7% EU ceiling for crop-based biofuels could increase eligible conventional biofuel volumes by around 30% compared with the 2020 basis used in the assessment, while advanced biofuels produced from EU-sourced feedstocks could receive preferential treatment through multipliers. This would support efforts to reduce import dependence: the EU imported around 1.8 million tonnes of hydrotreated vegetable oil (HVO) last year and more than half of its sustainable aviation fuel (SAF) supply.

The picture is less straightforward for advanced biofuels, as the draft assumes the existing combined transport minimum for advanced biofuels and RFNBOs expires after 2030, leaving demand more dependent on national policy. Stricter certification requirements could restrict some imported fuels and feedstocks, improving the competitive position of European producers. Overall, the draft points to diverging implications across renewable fuels: weaker policy certainty for hydrogen, but potentially stronger support for biofuels linked to domestic European resources.