The EU package contemplates the adoption of a contract for difference (CFD) system for carbon for green hydrogen projects, effectively acting as a hedge against carbon prices. Such a system would see green hydrogen users bid the level at which they can offset a ton of carbon with their project and still make a return. If the carbon price moves above that strike price, they would pay back the difference. If the carbon price fell below that level, the EU would make up the shortfall, just like a renewable CFD system based on power prices.
