Deal reached on gas market reform to address energy security and climate change

The new directive aims to decarbonise the EU’s energy sector by ramping up the production of renewable gases and hydrogen and facilitating their integration into EU energy networks. It will also help secure energy supply, in order to address both climate change and the disruption of gas flows caused by the Russian aggression of Ukraine. During the negotiations, MEPs pushed for strong measures on price transparency, consumers’ right to be properly informed and support for vulnerable consumers, in order to protect those at risk of energy poverty during the energy transition. Member states will be obliged to take measures to prevent disconnections. MEPs also secured clear and fair pricing for renewable and low-carbon gas and a consistent energy supply during the transition.

Legal unbundling

Member states will decide whether grid operators for hydrogen, natural gas and electricity can belong to the same company. While legal horizontal unbundling – legal separation – will be the default scenario, member states may grant derogations on the basis of a publicly accessible cost-benefit analysis.

Quotes

“We have obtained that sectors hard to decarbonise, such as the steel and chemical industries, will be placed at the centre of the development of a European hydrogen market”, said lead MEP Jens Geier (S&D, DE). “This will enable fossil fuels to be phased out of industry, secure European competitiveness and preserve jobs in a sustainable economy. Investment bottlenecks in the Commission proposal, which would have slowed down the ramp-up of hydrogen, have been removed. Instead, unbundling rules for hydrogen network operators will correspond to best practices in the gas and electricity market”, he added.

Rapporteur Jens Geier will give a press conference on Tuesday at 14.00. More information here.

Next steps

The directive will now have to be formally endorsed by Parliament and Council in order to become law. The Industry, Research and Energy Committee will vote on the file in a forthcoming meeting.

MEPs are negotiating in parallel on a separate piece of legislation, the gas market regulation, on which another round of negotiations with member states will take place on 8 December.

Background

The legislative package reflects the EU’s growing climate ambitions, as set out in the European Green Deal and its ‘Fit for 55’ package. The updated directive aims to decarbonise the energy sector and includes provisions on consumer rights, transmission and distribution system operators, third-party access and integrated network planning, and independent regulatory authorities.