HyBex: Hydrogen market design

In line with the goals of the Belgian political hydrogen strategy, HyBex was set up to develop a robust Belgian hydrogen market and to position Belgium as an import and transit hub for renewable molecules in Europe.

HyBex as a hub and trading spot

Given the imbalance between local hydrogen supply and demand in the EU, there is a clear need for import and interconnected open-access pipeline networks in order to create liquid markets. Therefore, a Belgian hydrogen infrastructure backbone is being developed in phases by Fluxys, enabling the connection of industrial valleys with import terminals and neighbouring countries. Through the pipeline infrastructure, physical connection is established between different types of producers and consumers, supplying and demanding hydrogen with different possible attributes.

 

A good functioning market also requires a liquid trading place, where buyers and sellers can efficiently and transparently trade standardized products. HyBex aims to be a trading exchange platform and one-stop shop for hydrogen products. It brings together a hub function (interface/transfer between physical product transport and virtual product trading), a trading place and a balancing market (to ensure balance within the hydrogen network). Through the HyBex platform, different hydrogen products (commodities, certificates, balancing products) can be traded.
 

HyBex is the hub platform linking together all the key players of this value chain from hydrogen producers and consumers to the underlying infrastructure, a balancing market and the national/regional certification registries and issuing bodies.

Regulation and certification

European policies and regulations, such as REDII(I) and CBAM, are rapidly changing the European hydrogen landscape. Through targets and carbon taxes, they will increase demand for renewable and low-carbon hydrogen. If fulfilled, these targets could lead to a significant demand for RFNBO-hydrogen (compliant ‘renewable’ hydrogen in the EU market) by 2030. Next to this, other types of hydrogen can be used to fulfil specific targets set by REDII(I), FuelEU Maritime and ReFuel Aviation (e.g. in biofuels, non-fossil low carbon fuels or recycled carbon fuels). These targets (together with EU ETS/CBAM) will likely lead to (the need) for import of hydrogen and hydrogen derivatives such as ammonia and methanol.

 

Hydrogen can be traded through different commodity and assorted certificate products. For RFNBO-hydrogen to be defined as such, several rules are to be complied with, eg. additionality, temporal and geographical correlation and a 70% GHG reduction requirement as compared to a fossil comparator. An according Proof of Sustainability (PoS) certificate has to be issued by the economic operator and traded together with the commodity (mass-balance principle) in order to provide evidence for the product’s sustainable provenance (the primary trading market). A nationally authorized body certifies the PoS and issues an RFNBO ticket, that can be used directly to comply with sustainability quotas (for quota obligated parties) or they can be sold independently from the commodity product to other obligated parties on a secondary trading market. This secondary market is therefore able to drive RFNBO demand by integrating them at lowest cost in the market through optimized trading of certificates. Next to RFNBO, low-carbon certificates can be issued in the same way on the compliance market, and both are deemed to be of high value.

 

Besides the compliance market, a different class of certificates can be traded on the voluntary market, ie. Guarantee of Origin certificates or voluntary (non-governmental) certificates. They differ from compliance market trading principles insofar that they follow a book-and-claim chain of custody, ie. their Proof of Origin certificates (provided by Issuing Bodies) are traded separately from the physical commodity product, and they are used for disclosure (of lower value) as compared to compliance (of higher value). HyBex is the hub platform linking together all the key players of this value chain from hydrogen producers and consumers to the underlying infrastructure, a balancing market and the national/regional certification registries and issuing bodies.
 

Webinar on HyBex: Hydrogen market design

On March 20th 2024 a HyBex webinar was organized to discuss the first results of the mapping and pre-analysis phase (work package 1) and briefly touch on commercial and balancing products (work package 2).

Slide deck of the webinar held on March 20, 2024: 'Belgian Hydrogen Strategy and the development of HyBex'

Slide deck

22/5/2024
Slide deck of the webinar held on March 20, 2024: 'Belgian Hydrogen Strategy and the development of HyBex'
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