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The regulatory landscape for HDP - CXC report (1 MB)
Report in HTML

Authors

  • Sharon Chan, Xodus Group
  • Joshua Fernandes, Xodus Group
  • Caragh McWhirr, Xodus Group
  • Lara Jurgens, Xodus Group

Published

16 July 2026

Contact

Colin Seditas
Project Manager - Climate and economy
colin.seditas@ed.ac.uk
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The regulatory landscape for hydrogen derivatives and products in Scotland

Hydrogen derivatives and products (HDPs) are made by combining hydrogen with other elements. These processes make products that can be more easily used, transported or stored than pure Hydrogen.

With Scotland’s ambitious plans to increase low-carbon hydrogen production, HDPs are expected to play an important role in reducing emissions from sectors such as aviation, shipping and road transport. They could also create new export opportunities for Scotland.

This report focuses on ammonia, e-methanol, synthetic aviation fuel (SAF) and other e-fuels (made using hydrogen and captured carbon dioxide). It assesses whether current Scottish, UK, European and international regulations are suitable for supporting the production, storage, transport and use of these fuels. It identifies where they provide a strong foundation and where changes could help the sector grow.

Key findings

  • Our study found strong foundations for regulations related to: planning; technology; and health, safety and environmental (HS&E) standards. These include Scotland’s planning and environmental systems, the UK’s Control of Major Accident Hazards (COMAH) framework, and international shipping standards covering hydrogen-derived products.
  • Market regulations for hydrogen-derived products are the least fit-for-purpose. A lack of clarity and consistency mean they do not increase confidence in long-term production, and they provide uneven support across products. The key limitations identified are:
    • Support is heavily weighted towards sustainable aviation fuel (SAF). Comparable incentives are not available for ammonia, e-methanol or sustainable marine fuels.
    • Differences between UK and EU rules for renewable fuels and SAF could reduce Scotland’s export competitiveness.
    • Uncertainty in the UK Emissions Trading Scheme (ETS) creates further risk. Power-to-Liquid SAF (e-SAF) is not currently zero-rated, and it is unclear whether the ETS will extend to shipping, reducing confidence in future demand.

Recommendations

  • Regulations related to consenting and health, safety and environmental standards (HS&E) should be monitored to ensure they remain fit-for-purpose as the HDP markets and technologies develop.
  • Support International Maritime Organization (IMO) proposals to reduce emissions, encouraging future demand for hydrogen-derived marine fuels.
  • Most regulations were not designed to support hydrogen-derived products. New support mechanisms, similar to those already available for green hydrogen, could help grow the sector.
  • Address gaps and inconsistencies in market rules, including better alignment between UK and EU requirements to support Scottish exports.
  • Include e-fuels, including e-SAF, in the UK Emissions Trading Scheme (ETS) and introduce dedicated support for ammonia and e-methanol, similar to existing support for sustainable aviation fuel (SAF).
Regulatory map infographic
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