A leaked European Commission impact assessment working document for the next version of the Renewable Energy Directive, RED IV, points to a potentially significant policy shift for renewable fuels after 2030. The draft’s “preferred package” would replace the binding national targets set under RED III with a more flexible EU-wide approach, while also giving more room to crop-based biofuels and favoring advanced biofuels made from European feedstocks.
On hydrogen, the document sets out three policy pathways for the post-2030 period. RED III currently underpins demand through binding national mandates, including a renewable fuels of non-biological origin (RFNBOs) target of 1% in transport by 2030, along with RFNBO shares of 42% in industry by 2030 and 60% by 2035. Under the preferred RED IV option, those obligations would be replaced by an indicative EU-wide renewable hydrogen consumption target of 8 million tonnes for industry and refineries.
The assessment describes the 8 million tonnes figure as the “average optimal level for the period covered by the policy,” which industry reporting has interpreted as annual consumption by 2040. Rystad Energy’s base case sees total EU green hydrogen demand reaching 9.5 million tonnes by 2040. If the leaked draft’s 8 million tonnes is read as annual consumption in 2040, it would represent a substantial share of expected total demand, particularly because the indicative target applies only to industry and refineries.
The draft also envisages hydrogen credits and downstream demand incentives that would need to be implemented through other legislation. Still, Rystad Energy warns that removing binding national obligations would add policy uncertainty at a time when projects still depend heavily on long-term demand visibility to secure offtake agreements and reach final investment decisions.
Frederick Andre Wessel, Product Manager of Hydrogen Research at Rystad Energy, said greater flexibility could help concentrate production in lower-cost regions. But if strong long-term demand signals remain concentrated in only a few member states, Europe’s hydrogen market could develop in separate pockets rather than as a single integrated market. In his view, the key issue is whether the final framework can provide strong and durable enough mechanisms to support demand if binding national mandates are dropped.
For biofuels, the leaked draft points in a more supportive direction, reflecting a stronger emphasis on energy security. A common 7% EU ceiling for crop-based biofuels could raise eligible conventional biofuel volumes by about 30% versus the 2020 basis used in the assessment. At the same time, advanced biofuels produced from EU-sourced feedstocks could receive preferential treatment through multipliers.
That could support efforts to cut import dependence. According to the report, the EU imported around 1.8 million tonnes of hydrotreated vegetable oil (HVO) last year, as well as more than half of its sustainable aviation fuel (SAF) supply.
The outlook for advanced biofuels is less straightforward, however. The draft assumes that the existing combined transport minimum for advanced biofuels and RFNBOs expires after 2030, which would leave demand more dependent on national policy. Stricter certification requirements could also restrict some imported fuels and feedstocks, improving the competitive position of European producers. Overall, the leaked document suggests diverging outcomes across renewable fuels: weaker policy certainty for hydrogen, but potentially stronger support for biofuels tied to domestic European resources.
