Commision proposes new EU framework to decarbonise gas markets, promote hydrogen, and reduce methane emissions

Yesterday, December 15, European Commission has adopted a set of legislative proposals to decarbonise the EU gas market by facilitating the uptake of renewable and low carbon gases, including hydrogen. One of the main aims is to establish a market for hydrogen.

The proposed package (regulation and directive), in particular:

• Creates the conditions for increasing the share of renewable and low-carbon gases in the EU energy system and decreasing the share of fossil natural gas;
• Establishes the appropriate framework for market actors. It enables the creation of a European-wide market for renewable and low-carbon gases, introduces a comprehensive certification scheme, and ensures at the same time energy security and market liquidity, and competitiveness;
• Facilitate the integration and access of renewable and low-carbon gases into the existing gas grid;
• Foster integrated network planning between electricity, gas, and hydrogen networks;
• Establishes the European Network of Network Operators for Hydrogen (ENNOH), promoting the creation of a dedicated hydrogen infrastructure, cross-border coordination, and interconnection, and elaborates on specific technical rules.

The European Union has set the ambitious goal to become the first climate-neutral continent by 2050. To achieve this, Member States and the European Parliament have agreed in a European climate law to reduce greenhouse gas emissions by at least 55% by 2030.

Fossil gas accounts for about 95% of today's gaseous fuels consumed in the EU. Gaseous fuels now account for about 22% of total energy consumption in the EU. Gaseous fuels will play an important role in the energy balance by 2050, which will require the decarbonisation of the gas sector through a promising design for competitive decarbonized gas markets.

Despite the small contribution to the EU's current energy balance, biogas, biomethane, renewable and low-carbon hydrogen, and synthetic methane (all together renewable and low-carbon gases) will account for about 2/3 of gaseous fuels in the 2050 energy complex, with fossil gas from CCS/U (carbon capture, storage and use), which is a residue. This initiative is also part of the Fit-for-55 package. The package covers the design of the gas market, including hydrogen. This will remove existing regulatory barriers and make it cost-effective. This is an important part of the transition to an integrated energy system, which minimizes the costs of transition to climate neutrality, particularly for consumers, and opens new opportunities for lowering electricity bills and active market participation.

Hydrogen is expected to be used mainly in areas where electrification is not possible, including modern energy-intensive industries (for example, oil refineries, fertilizer production, steel production) and certain heavy transport sectors (maritime transport, aviation, long-distance heavy vehicles). The development of special hydrogen infrastructure is needed to unleash the full potential of this energy source for specific end-use applications.

Get the most out of green hydrogen from 2030: According to the EU Hydrogen Strategy, green hydrogen production in the EU should reach 1 million tonnes by 2024 and up to 10 million by 2030. Since then, green hydrogen must be widely deployed and replace low-carbon hydrogen.

The deployment of different renewable and low-carbon gases is likely to occur in parallel and is expected to develop at different rates in the EU:

• hydrogen-based infrastructure will gradually complement the natural gas network;
• gas infrastructure in which fossil gas will be gradually replaced by other sources of methane.

In addition, developments in energy prices have reminded us that the sustainability of Europe's energy system is becoming increasingly important as the EU's energy system integrates decentralized renewable energy and fossil fuels are gradually phased out. Security of supply and risk preparedness mechanisms in the gas sector must be commensurate with the transition to clean energy.